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Investing in Education to Promote Talent, the Economy and Social Well-being

Hungary is widely recognized for its contributions and innovation in the sciences and mathematics, with disproportionately high numbers of Nobel laureates and inventors relative to its population. We have Hungarian innovators to thank for many of the positive aspects of our daily lives: from color television to Vitamin C to ballpoint pens. Yet like many countries in our rapidly developing world, Hungary is experiencing a skills-gap. 

In October 2016, the Manpower Group reported a near crisis in terms of the labor shortage in Hungary. A record 57% of companies reported difficulties finding workers for open positions, a 10 percentage-point increase from 2015 and well above the average of 40% among the 42 countries surveyed. Positions with the highest vacancy rates included engineers, doctors, information technology experts and accountants, leaving companies like Samsung to source labor from neighboring countries. 

The reasons for the shortage are multi-fold and include emigration and low wages, among other factors. It also is clear that, for many, the skills gap has roots in the primary and secondary education system. The 2015 PISA survey, a world-wide study of 15-year old students’ scholastic performance, found that Hungarian students performed below the OECD average in reading, mathematics and science, and in general scores in these subjects have been declining since 2006. Moreover, according to the World Bank, Hungary’s students show a gap in digital literacy and problem-solving skills, as well as large income-based disparities in achievement.

Central European University’s own research on the skills gap in Hungary and across the European Union has confirmed these trends, yet it has also underscored the incredible potential of the Hungarian labor force. Data shows that Hungarian youth who have completed higher education in high-demand subjects have greater opportunities to find employment and can realize significantly higher wages. However, for those with lower levels of education and training, employment is more difficult to obtain despite the growing number of open positions.

As detailed on these pages, Jörg Bauer, CEO of GE Hungary Kft. won the Budapest Business Journal’s Expat CEO of the Year Award. The honor is well-deserved, given Bauer’s leadership and GE’s growing investment in Hungary. The company has more than 10,000 employees, a new Global Digital Development Center in Budapest, and an increasing number of job opportunities that are both highly-skilled and highly-paid. These are the kinds of jobs that Hungary (or any nation, for that matter) endeavors to attract, as they provide pathways to long-term economic and career success.

And GE’s investment in Hungary extends beyond job creation. As part of its broader skills development strategy, GE’s philanthropic arm, the GE Foundation, has invested an estimated USD 1.2 million in Hungary, including a scholar-leaders program to support Hungarian secondary and higher education scholarships with the goal of creating a network of future leaders. This is part of the GE Foundation’s larger global strategy to play a critical role in helping students develop skill sets that better prepare them for higher education and careers in a 21st century digital world.

Beyond GE, companies like Apollo Tyres, Audi Hungaria, Coca-Cola Hellenic Bottling Company, Erste Bank, Morgan Stanley, MSCI, Nokia, OTP, Siemens, and Velux are also making significant investments in education and training in communities throughout Hungary. Additionally, several private foundations founded and supported by successful Hungarian business leaders are working to ensure that deserving students, regardless of socio-economic background, have opportunities for a high-quality education.

As companies relocate and expand in Budapest and in Hungary, each should consider making deeper, strategic investments in education at all levels to help the leaders of tomorrow develop the skill sets they need for success in the labor market. This will not only prepare our students for the rapidly changing world economy, but it will help create talent pipelines for companies that require skilled employees. In time, these emerging philanthropic partnerships between the corporate and educational sectors will impact Hungary’s economic growth and social development for the benefit of future generations.

This column is part of a continuing series of opinion pieces from experts at the CEU Business School in Budapest. The opinions stated here do not necessarily reflect those of the Budapest Business Journal.