They come to Hungary for work, only to find out that life is no bed of roses here either
September 28. 2022. – 03:19 PM
- The number of foreign guest workers in Hungary has been steadily increasing since 2015, and the government has introduced a series of measures to make it easier for them to work in the country.
- Some Ukrainian workers left when the war broke out, while Asian workers are dissatisfied with their wages because of the recent depreciation of the forint.
- Although many employers are disappointed by the high turnover of guest workers, their numbers continue to rise and it is difficult to imagine the future of the Hungarian economy without them.
- In this article we will examine the conflicts between guest workers and their Hungarian colleagues with the help of some of the key market players, and will also look at the experiences of the employers and what is in store for the sector.
Although the number of Ukrainians working in Hungary has been steadily declining and the deteriorating forint makes Asian guest workers frown on payday, the government continues to look to foreign workers as a solution to labour shortages – in vain. Experience has shown that it is not nearly as easy to absorb them into the Hungarian labour market as many had hoped. The fact that over the past 6-8 years, the government has made it easier for foreigners to work in Hungary, and companies have been trying to recruit from a wide variety of countries, has not helped much.
The labour shortage in Hungary began at the 2014 end of the financial crisis which started in 2008. Almost all the market players we interviewed agreed that 2015 was the first year when there were not always immediate applicants for the jobs that were advertised, and since then, it has become increasingly difficult to find people every year. While 2020 (and part of 2021) was an exception due to the coronavirus epidemic, this year the problem has reappeared, according to some, more acutely than at any time in recent decades.
Estimates differ on how many people are missing from the Hungarian labour market. According to some studies, there are about 100,000 workers missing from the country, i.e. this is the number of people companies are actively looking for. However, a significant number of experts agree that the shortage is in fact not in terms of the number of workers, but in terms of competency and work ethic.
This situation is of course also influenced by the large-scale emigration of professionals which has continued since 2008, and which has created a permanent shortage in certain professions. The fact that the Hungarian education system, which is heavily underfunded and suffering from structural problems, often produces functional illiterates doesn't help either.
Hungary doesn’t need economic migrants. No, wait…it does!
Foreign guest workers have been working in Hungary in large numbers since the fall of communism. While in the 1990s, most of them were Romanians and Hungarians from neighbouring countries, after EU accession, most Romanians continued further west, and almost all Hungarians from neighbouring countries acquired Hungarian citizenship, thus leaving the guest worker category.
The demand for foreign labourers has started to increase again since 2015. At this time, most of them came from the surrounding countries (mainly from Ukraine and Serbia), and since 2016 the number of Asian workers has been steadily growing as well. Previously, citizens from all non-EU countries were required to obtain a work permit for employment in Hungary, but since the mid-2010s, employers have been able to register Serbians and Ukrainians without a special permit.
Similar, simplified employment without a work permit was later made possible for nationals of ten more countries from September 2021. This way, now, in addition to Ukrainians and Serbians, citizens of Vietnam, Mongolia, the Philippines, Montenegro, Belarus, Indonesia, Kazakhstan, Northern Macedonia and Bosnia can also be employed in Hungary through a simplified procedure. (The distinction between foreigners working in Hungary with a work permit and those with an employer's declaration will also be relevant later in this article, as the two groups are shown separately in the graphs and maps. The former are shown in green, the latter in blue.)
But the statistics reveal something. While Hungary issues work permits to thousands of foreign nationals every year, the number of people working in the country on 31 December with such a permit is not much higher than the number of people who received a permit that same year. In other words: there are a lot of people who start working here but go home or move on within a year or two.
Most work visas are valid for 1-2 years, so naturally when they expire, many people go home and are replaced. However, it is telling that few workers extend their expiring visas. In most cases, Hungarian employers do not manage to offer a good enough deal which would encourage migrant workers to stay for a long time.
In order to find out more about foreign workers, we asked several market players to tell us about their experiences with guest workers. And players on all sides of the labour market agreed on one thing:
it is a huge mistake to think that guest workers will bail the Hungarian economy out overnight, as European countries are already competing with each other for every hard-working hand. And in this competition, Hungary is lagging behind in terms of the wages it can offer.
Most of those we spoke with also agreed that it is worth making a distinction between guest workers from nearby countries and those from Asia. The situation of Serbian and Ukrainian workers who go home every few weeks or often every weekend is quite different from that of Mongolians or Vietnamese who sometimes spend 2-3 years in the country.
Most of those from neighbouring countries come to Hungary in the hope of earning money quickly, and they choose Hungary because of its proximity and the ease of administration. Many used to come for seasonal work, the construction industry, or to jobs that were much needed for a while.
Today, however, their mass employment is declining. In Austria, less than three hours' drive from Budapest, salaries in most professions are more than double those in Hungary. Serbians and Ukrainians know this, and most of them (like Hungarians) do not hesitate to take the first opportunity to move on. Austria and Germany have traditionally had a large number of Serbian workers, and the situation of Ukrainians last changed at the outbreak of the war this year.
Poland and Slovakia, which are better off in terms of wages, and closer in language, started attracting Ukrainian workers in droves even before Hungary in the early 2010s. And when the war broke out this spring, Western European countries, including Germany, opened their labour markets to Ukrainians, and there is no way to compete with them in terms of wages. (The statistics on how few Ukrainian refugees want to stay in Hungary are also telling.)
This was the reason why after the outbreak of the war, the number of Ukrainian workers, long seen as the main solution to the labour shortage in Hungary, suddenly began to fall sharply. Some of those who had previously worked here went home to fight, while others, usually gathering up their families, moved on to Western Europe, where most of them earn several times their Hungarian salary. There is no sign that this trend would ever be reversed.
The diligent Asians will work instead of us!
Although as previously mentioned, the number of Asians working in Hungary has been growing since 2016, their importance has become even greater since the outbreak of the war in Ukraine. They are generally perceived by employers not only as willing to work for very little money, but also as more hard-working than Hungarians. And while most market players believe the latter to be true, they say the former is a big misconception.
We contacted Péter Bogdanovits, managing director of headhunting and recruitment agency Aarenson Consulting, who expects the role of Asian labourers to continue to grow in the coming years. Aarenson mainly recruits Vietnamese workers to Hungary, but it also has experience with several other Asian countries.
According to Bogdanovits, the majority of Asians come to the country for 1-2 years, but if wages were to rise sufficiently, they would stay longer. Almost all of them immediately exchange their salaries into dollars and transfer them back home. This is where the biggest problem arises. While Hungarian employers often pay guest workers the Hungarian minimum wage (currently USD 332), this is no longer an attractive salary for most Asians.
The situation has worsened with the sharp depreciation of the forint in the last six months. Whereas a few years ago it was 250 forints to the dollar, it is now hovering somewhere around 400, which is a deterioration of more than 35 percent. This means that an Asian worker employed in Hungary can send that much less money home to their family today.
And although most employers are aware of the situation in the market, there can be considerable differences in wages in the low productivity part of the SME sector. It has also occurred that a small Hungarian company hires Asian workers for the same wages as Hungarian workers, trains them, and after a few months they leave for a better-paying Hungarian firm or Western Europe. They have a right to do so, but this obviously puts the employer who is left high and dry in a difficult situation.
Guest workers have a different experience. Although they know exactly what salary they are coming to Hungary for, they do not always take into account the depreciation of the forint, and often only find out about the better wages offered by the competition once they are here. In addition, they are not always able to work as much overtime as they would like to, given that many would prefer to work much more than is legally allowed in Hungary.
At this point, the question of productivity must be discussed. Market feedback shows that the use of guest workers in relatively higher value-added jobs is proving to be a particular success for many firms. Hard-working Asians, willing to work overtime and on public holidays – for appropriate wages – have been able to increase productivity in many companies, sometimes much more efficiently than Hungarians.
In fact, according to one market participant who wished to remain unnamed, it is easier to train Asians for certain jobs than Hungarians, who tend to respond by saying that "they have been in this business for ten years, so no one should tell them how to do things". These tend to be companies with good work organisation and well-organised trainings, and sometimes even the Hungarians there are happy to see the results, and potentially even the wages improve because of the guest workers.
On the other side, there are the typically medium-sized firms that would only hire the cheapest labour for the lowest value-added jobs, and are unable to afford competitive wages for low value-added work. These firms are often faced with guest workers quickly looking for other employment, which is not surprising given their non-competitive wages.
It is also worth noting that even among Asian guest workers, there are often huge differences. At present, workers from several Asian countries are being brought in through the facilitated process, a significant proportion of them through temporary employment agencies. According to Bogdanovits, the four most important source countries today are Vietnam, the Philippines, Mongolia and Kazakhstan, and the market will be focusing on them in the future.
Vietnamese workers are the most sought-after ones among these, as they tend to be hard-working and diligent, and their country's relatively good education system makes it easy to train them for more complex jobs. On the other hand, they are also the most knowledgeable, and are often familiar with European legislation and wages, so keeping them in the long term is the biggest challenge for employers. First and foremost, this means decent wages, as working conditions and accommodation in Hungary are not bad by European standards.
Filipinos are also considered by many to be a good labour force. Their country not only supports, but even organises the emigration of guest workers, who usually even speak English well. However, they are the most expensive to import and many of them prefer to move on to the West.
The situation is different with workers from Central Asian countries with relatively weak education systems. Mongolians and Kazakhs are mostly low-skilled, they do not speak English, and can often only be trained for simple jobs. Their general awareness and, accordingly, their wage requirements are low, which is why many people prefer to employ them.
Cooperation is not without difficulties
Wages are not the only source of conflict in the triangle between employers, Hungarian workers and migrant workers. While the Hungarian government has been waging a hate campaign against people of other cultures, and specifically against economic migrants since 2015, it has secretly been opening Hungary's doors wider and wider before them. Resolving this conflict in everyday life is not easy, so problems of several kinds tend to occur frequently.
For example, according to our interviewees, some tend to be troublemakers: many Serbian and Ukrainian migrant workers like to drink, and they don't all feel that they should be grateful for the opportunity to work in the country. This often leads to conflicts with the local population, especially around accommodation facilities, as well as with Hungarian workers at their place of employment.
We asked Zoltán László, vice-president of the Vasas Trade Union Federation about this, as he is very familiar with the situation of guest workers. He says that since the outbreak of the war, there have been several cases of Ukrainians fighting with pro-Putin Hungarian or Serbian workers over who is cheering for whom in the war.
In addition, racism is not a negligible problem either. After seven years of anti-immigrant policies, it is perhaps no wonder that many treat Muslim migrant workers as enemies from the outset, but exclusion usually affects all people of colour. In recent years, more than one countryside town has been hit by panic when locals first met these guest workers, most notably in Hajdúnánás in January.
However, in addition to racism, there are of course cultural differences. According to one employer who spoke to us, this is the case when it comes to having to explain the use of the English toilet to Central Asian workers, or when they need to be taught about the norms of living with others in Europe. Hungarian workers are also annoyed when Muslim workers start praying while working, even though in most cases foreigners do not work less overall.
Of course, cultural differences can sometimes be disturbing in the opposite direction as well. Bogdanovits says that, for example, the Vietnamese from big cities are often very cultured and fashionable, so when they arrive in a rural industrial zone in Hungary, they often feel they came to the end of the world. Some of them end up moving on to the capital or to Western Europe, sometimes not only because of the wages, but also because they can't find adequate recreational facilities around the industrial estates in the countryside.
There are also differences in work culture. In Asia, most people work six days a week, 10-12 hours per day, and expect something similar in Hungary. Because of this, they don’t understand why the Hungarians who work the same number of hours as them do not take on some overtime, or why the Hungarians extend their 30-minute lunch break to an hour, or why they go out to smoke all the time. In other words: while some Hungarian employers want to take advantage of their Asian employees as much as possible, the Asians sometimes see the Hungarians as lazy.
Finally, exploitation and overwork must also be mentioned. Some of the guest workers (especially from Central Asia) are not aware of Hungarian labour laws or how they might take action against their employers. This can lead to unlawful overtime work, or employers threatening to terminate contracts and not allowing their workers to return home for several years.
The latter is also a major problem, according to Zoltán László. Among others, he told us about the case of a Mongolian woman who flew to Hungary to work 2-3 weeks after the birth of her child, and then couldn't return to her family for 3 years. The company that employed her said that they would have given her the 14 days' leave (which is how much can be used together in total) but flying home was so expensive for her that she did not want to go home for such a short period of time. The Hungarian employer refused to grant her unpaid leave for three years.
The town where Indians replaced Ukrainians
In order to examine the above mentioned occurrences and problems, we chose a Hungarian town where the presence of foreign guest workers has been a topic of discussion for years. Suzuki, which was one of the biggest factories in Hungary in the first decade of the century, is located in Esztergom. There are also several subcontractors serving the car industry operating in the vicinity.
Other than attempting to remedy the lack of labourers by increasing wages, Suzuki’s Esztergom factory is also trying to solve the problem by employing foreign workers. When answering Telex’s question, the company told us that they have been affected by a lack of labourers since 2015, and that they have regularly been raising salaries since then (others say this is especially true since 2019).
Suzuki Esztergom was one of the biggest employers in Hungary in the 2000s and it currently employs nearly 3,000 people in-house, but also has a temporary workforce. Between 2018 and 2020, the company tried to fill its ranks with nearly 100 temporary guest workers from Ukraine, but they were sent away from the Esztergom plant in the first half of 2020.
According to our external sources, since they had EU work permits in their pockets, most of them took off for Western Europe immediately. This was most likely the reason why the company has been trying to employ workers from Asia since the fall of 2021. According to information we received, other than the 25 deployed Japanese employees, there were 137 Indians working at the factory this August – the latter with a fixed-term contract, but for the same pay as their Hungarian counterparts.
One of our interviewees in the recruitment industry told us that Suzuki's recruitment in India is a successful model for employing guest workers. The reason for this is that Suzuki did not use mediators, but relied on the company’s own Indian infrastructure to begin recruitment, and the workers were then selected by the Hungarian management who had traveled to the location. The company even started an integration process, which made both communication and training much more smooth.
As many guest workers from the same country would for sure be noticeable in a town the size of Esztergom, we asked around to find out the locals’ experience with them. Suzuki is not aware of any ethnic conflicts. They claim that the Hungarians and the Indians are getting along exceptionally well, and some even spent their summer holiday together by lake Balaton.
Some of Esztergom’s population on the other hand claims that cooperation with the Ukrainians wasn’t always without difficulties. In May, László Kiss, who used to be part of the Suzuki Workers’ Union said that the Ukrainians who used to work there used to be loud and drank often, and caused trouble in town, so they were not liked. The Indians on the other hand, are diligent, peaceful folk, and he has no knowledge of any conflicts connected to them.
The same was anonymously confirmed by a local opposition politician too, who said that the Ukrainian workers were often housed in nearby villages, and there were several cases where the police had to get involved. He hasn’t heard anything like that about the Indians either. János Lantos, the local politician of Mi Hazánk told Telex about the other side of the guest workers’ presence. He said that since many of Suzuki’s subcontractors also employ foreign guest workers, this makes increasing the wages in the region impossible.
Others, however, denied that there were ever any problems with the Ukrainians. Some claimed that those who had conflicts with the locals were Hungarians from the east of the country staying in workers’ hostels, or in apartments in groups of 6-8.
János Cserép, a member of the local council, who was the opposition’s candidate for mayor in 2019, agrees. In his opinion there are no more problems with the foreign workers than there used to be with Hungarian workers coming from other parts of the country. He added though, that since Suzuki primarily recruits for low added-value jobs, it is not necessarily the workers’ fault if they are not able to perfectly fit in. Cserép added that he fears that with the approaching recession in the fall, many could lose their jobs in Esztergom, and some of the guest workers may not have anywhere to go home to work.
These experiences are shared by many. Most of those we spoke with agreed that Esztergom’s example is quite typical. There aren’t any huge problems anywhere, and the biggest problem is still the huge fluctuation of people and the difference in ideas about how much they should be paid.
It’s a lot of work, but there is no alternative to the guest workers
An analysis of the situation of foreign guest workers in Hungary reveals that employing them is not nearly as easy as the government, or even some market players had previously imagined. In fact, with some other European labour markets opening up, Hungary is now part of a wage race in which it is one of the lowest bidders.
At the same time, there are some employers for whom the employment of guest workers has most definitely been successful. These are high value-added, professionally organized companies that can often offer globally competitive wages. However, companies with lower productivity and lower wages often find that guest workers leave at the first available opportunity.
In conclusion, it can be stated even though the government has facilitated the process, importing foreign labour will not solve the labour shortage problem that has existed in Hungary for years. And if the forint continues its depreciation against the dollar at the pace seen in recent months, companies employing foreign workers could soon find themselves in an even more difficult situation. This will certainly have to be dealt with, as Hungary has little choice but to employ guest workers if it is to overcome labour shortages.
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The translation of this article was made possible by our cooperation with the Heinrich Böll Foundation.