Executive Search in Hungary– 2015 Outlook
Job Market Widens to Other Countries
Executive Search in Hungary continues to favour searches in neighbouring countries as the domestic economy begins a gradual recovery. After five consecutive years of stagnation or shrinking, the economy grew 3% percent in 2014. This was due to a few main factors:
- A growing automotive sector having large OEMs such Audi (10,000+ employee) Mercedes (recent investment, 3,000+) Suzuki, GM, and 27 TIER 1-2 suppliers in country.
- Intense use of EU funds mainly in large infrastructure projects. The forecast is for 2.5% growth for 2015.
- Exports are 90% of the value of the GDP, and more then 70% percent of GDP is created by foreign owned companies. The economy is very much dependent on the German economy, with most of our export being to Germany from large producers, such as Audi, Mercedes, Bosch, etc)
The government of Hungary continues to be on the front line of international criticism in Washington, New York and Brussels. This is originally fueled by ex left and liberal politicians who have written irresponsibly about our political scenario and misled left-driven political leaders elsewhere.
In fact, in recent years the government has introduced many extra taxes for industries such as Banking, Telco, and Retail which have not been publicized. The government is also working to create a more local Energy/Utility structure in the country to reduce the cost to households and increase competitiveness for industries.
The clear and public goal is to become a country of innovation and production. The recent initiatives have hurt some foreign investors in certain sectors and created tension. However, as a positive result, the budget deficit has remained below 3% in the last four years, compared with 8-9% during the previous socialist liberal regime.
Beside the deficit goal, the new government in Hungary plans to lower the prime rate from 8% down to 2.3 % in less than two years. The Hungarian government has been very much against the sanctions applied to Russia which is blocking our exports. The government has announced THE EASTERN OPENING which is to re-establish economic and cultural relations with old COMECON (Council for Mutual Economic Assistance) countries and new Eastern partners.
Hungary continues to remain a popular destination for contract manufacturing and is still an attractive and inexpensive location for corporate headquarters.
GDP per capita of $13,500 USD is still one third of its neighbouring Austria and significantly less than most of Western Europe, and this is reflected in wages and incomes.
Beside low wages, Hungarian managers have now more than 20 years in a modern market economy and have very effective work forces both blue collar and white collar. Hungary has great logistic infrastructure compared to other Central and Eastern Europe countries.
Hungarians are becoming increasingly flexible and mobile, many of them now working in Western Europe or other zones such as the Middle East. Reportedly there are 300,000 Hungarian working in England.
The number of retained searches has dropped dramatically since 2008 and a bigger percent of our work is across borders.
Hungary is still an attractive and inexpensive location for corporate headquarters, and CEE centers. Employment is slowly growing year by year. Unemployment is stronger in the 50+ age category, (lack of language skills, flexibility and mobility), and among the people in the eastern part of the country.
Labour cost remains inexpensive, 20-30% lower than in the Czech Republic or Slovakia, which is the opposite to the mid-1990 years.