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When Hungary is busy, recruiters get busy too

If you consider increased hiring as a sign of healthy business, then Hungary is doing fine, according to the people who work at finding workers. We spoke to temporary and permanent recruitment agencies about current growth and their business in general.

Those seeking a sure sign that the Hungarian economy is improving need look no further than the recruitment agencies. The top earning permanent and temporary employment agencies, in Budapest as well as the rest of the country, indicate that employers are hiring to the point where good help is getting hard to find. That is precisely the time when most companies turn to recruitment agencies, to find the remaining good job candidates, or to obtain temporary help while they permanently retool.

The Budapest Business Journal interviewed the top earners among recruiting firms and temp agencies, and obtained some interesting insights into the current economy and the employment business.

Business improving

“The number of hired employees has been increasing rapidly for the last 12 months,” said Péter Berta, CEO of WHC, a recruiting company with an office in Budapest and four other towns in Western Hungary. “The business situation is getting better and better, especially in the automotive sector. We’ve noticed a strong demand on hiring.”

Ottó Vég, CEO of the Budapest temporary agency Adecco said his firm was also seeing growth. “The manufacturing and automotive industry is experiencing an increasing number of incoming orders. As a result they are in need of qualified and experienced employees, who are getting difficult to recruit,” he said. “In response to changing needs, partner companies have revised their work infrastructure, requirements and former agreements with temporary agencies.”

For Csongor Juhász, managing director of the Prohumán temp agency, the improvement was overdue. “The economic crisis had an markedly stronger impact on the HR sector. Factories reduced the headcount to reduce costs. A huge number of employees moved to the neighboring countries,” he said
. “As more investment is coming to Hungary, more employees are needed, so that we need to invite back the employees from abroad, and we need to find high number of appropriate employees in the whole country.”

Other firms also spoke of impressive demand. “Last year the consolidated sales revenue of Pannonjob Ltd. increased by 28.5% compared to that of 2013, therefore it can be concluded that considering the apparent economic growth and the demand for labor increasing parallel to it, we have achieved significant improvement,” said a statement from Fatime Touré and Attila Molnár, the general managers of Pannonjob Ltd., a recruitment firm with seven offices around Hungary. “A pre-crisis trend can be seen in the labor market, meaning there are a huge number of open positions, while there is a limited number of candidates with relevant qualifications, experience and language skills.”

László Mátyás is managing director of HSA Kft., which handles temporary and permanent employment out of a Budapest office, four offices in eastern Hungary and one just over the Romanian border, in Oradea. He said rapid improvement is leading to a demand for his firm’s services. “A swift increase has been noticeable in the labor market since last summer. Thanks to this, we have managed to regain the same level of business we had prior the depression of 2008,” Mátyás said. “In the last couple of months, many companies that had been our partners prior the recession have contacted us, as they have just regained their footing well enough to need extra labor again. Due to this tendency, a ‘vacuum’ was created in the labor market, and the available workforce has shrunk significantly – thus, the external recruitment agencies’ role and responsibility in satisfying these labor needs are revalorized.”

Sándor Baja of Budapest-based recruiters Randstad Hungary said his firm is doing well too. “We are experiencing very strong, double-digit growth as compared to last year,” he said. “The reason is probably the positive economic environment: Companies are looking at enlarging the number of employees in almost every sector, but especially car manufacturing and SSCs [shared service centers].”

At Hays Hungary, a recruiting firm headquartered in Budapest, “business is good and has been increasing and continues to increase”, according to Tammy Nagy-Stellini, CEO. “All our specialties have seen an increase in recruitment projects. Accountancy and finance, sales and marketing, IT, engineering, business services (specializing in shared service centers), logistics, supply chain and HR have all seen an increase – along with life sciences, which for some time had seen a decrease in projects though this has also turned around.”

Who’s getting hired

While Nagy-Stellini noted growth for all types of work, the growing demand that these recruitment and temp agencies are seeing seems especially strong in certain areas. “Engineers are always in demand and is very much a candidate-driven market. In Hungary, our experience is that the demand is high in the fields of quality management, R&D, mechanical and electrical design engineers,” Nagy-Stellini said. “Most OEM [original equipment manufacturer] factories have outstanding cooperation with technical universities, but the demand is not filled totally, because the growing automotive sector always needs skilled engineers. […] We are continuously putting effort into building strong connections with the biggest players all around the country. Thanks to these connections and this knowledge we have access to great numbers of engineering experts.”

Mátyás of HSA said industrial growth has reached eastern Hungary as well. “Fortunately, in the last three years, many serious investors have arrived to this region as well, building up new service parks and manufacturing plants. These companies have taken up most of the foreign-language speaking candidates and the qualified workforce in the fields of engineering, IT and logistics – even human resources professionals!” he said. “To react to the elevated demand for these highly qualified professionals, we are also recruiting in neighboring countries like Romania, Serbia, Slovakia, and Ukraine, since there are just not enough qualified candidates in Hungary.”

According to Berta from WHC, it’s not only engineers who are getting harder to find. “Several other occupations such as production executive, logistic, supply chain and quality management positions are in high demand,” he said. “We are filling that demand.”

Baja from Randstad noted that the growth in production in Hungary is increasing demand in several key areas. “The car and car-related industries are booming. Hungary is a big logistics center as well,” he said. “So forklift drivers, CNC operators, welders, quality engineers and mechanical engineers are in great demand.”

Molnar of Pannonjob noted another area where demand is high: “There is a significant shortage of IT professionals, as well. With those positions requiring secondary qualifications and less specialized skills, in-house training has become more common, while in other areas, primarily those involving developers, this cannot solve the problem,” he said. According to the statement from the Pannonjob managers: “In the case of scarce professions, or jobs with special requirements, we use evermore specialized methods and techniques, extending them continuously to meet the market demand.”

SSCs impact on hiring

Along with production, another type of business that has been growing in Hungary is that of SSCs, where big corporations locate all their back-office services for the region in one office, with employees who specialize in areas like IT, accounting, HR, or other services that can be centralized. These offices can have several hundred staffers, who must all be hired at once, and the trend of opening SSCs has had a big impact on recruitment agencies here.

According to Baja of Randstad, when it comes to SSCs, “More and more jobs are filled through headhunting versus databases, which shows the scarcity in the work force.” He said companies have to turn to his recruitment agency to deal with the shortage, which is “due to a lower number of young people and migration to the West”.

Hays Hungary is another firm that does a lot of work with SSCs. “We have a special team purely dedicated for shared service centers. We have played, and still play a major role, with supporting new centers to establish their team when they decide to set up here in Hungary,” says Nagy-Stellini. “We also support existing shared service centers who are expanding by bringing in further processes to Hungary, or simply needing further talent.”

Temporary hiring

In this improving market, a lot of firms find that temporary help is a good solution to meet sudden demand. Temporary agencies say they are ready to adjust to meet demand. “Increased market competiveness, orders with tighter deadlines and a continuously evolving business environment have motivated companies to change their approach and cooperate with temporary employment agencies,” according to Adecco CEO Vég.

“There might be occasions when they have to employ a hundred new employees in a short period of time due to volatile demand. In the past two years, our partners have increased expectations in terms of work experience, work ethic and the character of candidates. There is a constant need to seek out the best candidates, who become scarcer as demand increases.”

According to Juhász of Prohumán, both employers and employees like temporary assignments because it lets them try each other out. If an employee does well in a temporary job, they may be offered a permanent position, and by then they will know if they want it.

Juhász said there are certain times when companies find special benefits in hiring temp workers:

  • to supply the number of staff required to increase production processes;
  • to resolve any obstacles caused by a recruitment freeze or by exceeding the allocated remuneration budget;
  • to employing semi-skilled or skilled workers to meet production needs;
  • to implement cost savings or reallocations;
  • to substitute own employees (for periods of sick leave, paid leave or maternity leave);
  • to provide labor supply on a continued basis for seasonal, temporary activities, and to manage fluctuations in a flexible manner;
  • to provide numbers of staff for fixed term projects. 

When it comes to placing temps outside of Budapest, Mátyás of HSA said that part of the challenge has been teaching companies the true benefits of temporary workers. “Back in 2000, when we started our business, temporary staffing firms were not widely known or understood in eastern Hungary, so our first task was often to explain what opportunities this solution can hold for our partners,” explained Mátyás, adding that firms were originally surprised to discover that temp workers can cost more than permanent workers. “The problem was never just to make the companies see temporary staffing for the great opportunity it is, but to also make them accept the costs of it. It is still a challenge sometimes.”

Location, location, location

As Mátyás notes, working outside the capital involves different needs and attitudes, and not only when it comes to temporary workers. “We have local knowledge, we understand the special needs and hardships in our region, and know the solutions for them as well,” he said “We never aspired to cover the entire country; instead we focus our expertise to provide full service in eastern Hungary. Our partners know this too; we have become recognized for it.”

According to Molnar of Pannonjob, it is essential for a recruitment agency to be physically close to its customers. “Currently there are seven Pannonjob offices in Hungary, and our eighth is on the way,” he said. “As a countryside-based HR service provider, the basis of our business model has always been that in regions of potential business prospects we provide our labor services with locally based offices,” said the Pannonjob manager, Attila Molnar. “We highly consider local presence an advantage since, with the current labor market conditions, knowledge of the area, geographical proximity and availability have gained importance, for employers and candidates as well.”

According to Berta of WHC, which has most of its offices in western Hungary, “in the north-west of Hungary, it is more difficult to recruit than in the capital because of the lower salary rates and the near location to Austria. We’ve established our business model to meet these challenges, so we have solutions.”