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The worrying growth of labor shortages

Even accounting for the inclusion of fostered workers and those employed abroad, unemployment in Hungary is at record lows. This is unequivocally good news, and to be welcomed. 

But three reports in a matter of days highlighted something else that is becoming an ever more pressing problem: a shortage of workers.

Some areas are, perhaps, not a surprise. Business daily Világgazdaság reported earlier this month that there were around 22,000 too few IT professionals for the Hungarian labor market last year, a number said to have grown even further in the past six months. The segments most affected are apparently vehicle and transport engineering, and mechanical and electrical engineering, but other mechanical and IT industries are also affected.

The very next day the online daily reported on a survey it had commissioned from consultants Aon Hewitt, which found that Hungarian companies considered the shortage of engineers on the local labor market to be the biggest problem they face, and one so serious it could pose risks for their strategies by as soon as the end of next year.

Engineers and IT professionals command generous salaries in Hungary, and not just because of all the education that goes into making them, or the skills they bring. They are well paid, in part, because there are not enough of them.

The third report was perhaps more eye-catching. Just a few days after the first two stories broke, MTI carried an interview with Zoltán Paár, the head of cleaning industry association MATISZ, in which he told the state news agency of a “severe” labor shortage, with at least 8,500 positions registered as unfilled at local employment offices throughout the country; he believed the actual number could be much higher, as most companies do not even advertise with such offices, the news agency reported.

A lack of workers is not unique to Hungary; similar problems are being reported across the region. All suffer from the effects of a brain drain, with highly qualified individuals able to earn far more in Western Europe. A more peculiar problem to Hungary is a lack of mobility. People living in the east of the country, often in their own house, are unwilling to move across the country, not least because it is generally more expensive in the western areas.

Governments and educationists can try to encourage more students to take up STEM subjects (science, technology, engineering and mathematics), and apparently there is a need to do so. Despite the high salaries and large number of open jobs, Világgazdaság noted that 5,000 fewer students had applied to universities educating IT professionals over a 10-year period (down from 15,000 in 2001 to 10,000 in 2014). The Hungarian Investment Promotion Agency (HIPA) has previously told this newspaper that it is looking at a system of incentives to encourage people to travel within the country to find jobs, and it also gives a high priority to foreign direct investors who move into lower employment areas of the country.

The government has sent mixed messages about importing labor to fill open positions, most recently dismissing the notion and insisting domestic solutions must he found. There are no easy, or quick, answers here, but answers there must be.