Hungary’s labour market tightens: Guest workers become essential due to shrinking workforce

Official figures paint a reassuring picture of Hungary’s labour market. Unemployment is low, while employment levels appear stable. Yet behind these headline numbers, the reality is far more complex and increasingly tense. Read about why guest workers are unavoidable in Hungary’s labour market below.

According to Melinda Mészáros, President of the Liga Trade Unions (Liga Szakszervezetek), Hungary is entering a period of structural labour market strain marked by economic slowdown, shrinking industrial output, and a growing mismatch between available jobs and available workers.

A hidden slowdown beneath stable employment figures

Despite the absence of mass layoffs, employment is quietly eroding. Companies are not actively dismissing workers; instead, they are choosing not to replace employees who leave. This form of “silent downsizing” gradually reduces workforce numbers without triggering visible shocks in the statistics.

Demographic decline plays a key role in masking the problem. Each year, Hungary’s working-age population shrinks by an estimated 35,000–40,000 people. This natural decrease absorbs labour market tensions that would otherwise surface more clearly in unemployment data.

As a result, while registered jobseekers number around 216,000, no significant improvement in employment levels is expected in the near future, HR Portál writes.

Industry under pressure, capacity left unused

Hungary’s industrial sector has been struggling for nearly two years. Weak demand, falling orders, and the prolonged difficulties of the German economy have all taken their toll. In manufacturing, particularly in machinery and automotive production, companies are operating with unused internal capacity.

Trade unions report that many firms are carrying a hidden surplus of labour, estimated at 2–5% of their workforce. Rather than cutting staff, companies are burning through reserves in the hope of a future turnaround. In some factories, entire sections are closed off, production cycles have been scaled back, and three-shift schedules have been reduced to one.

Overtime, which was once a key source of income for many workers, has largely disappeared. The result is a tangible drop in take-home pay, even where base salaries remain unchanged.

Qualified workers are no longer safe

Contrary to expectations, job losses are increasingly affecting white-collar and highly qualified employees rather than low-skilled workers. Administrative staff and engineers are among the most vulnerable groups.

Two trends are driving this shift. On the one hand, digitalisation and efficiency improvements are reducing the need for certain office-based roles. On the other hand, several Western European countries, including Germany, Austria, and Poland, are bringing high-value-added activities back home.

Research and development, management functions, and even production itself are being relocated as governments pursue more protectionist economic strategies to support domestic employment. While these moves may raise costs for multinational companies, they reduce social spending pressures at home, often at the expense of jobs in Central Europe.

Half of jobseekers may never return to the primary labour market

One of the most sobering conclusions drawn by Mészáros in her interview with Világgazdaság is that a significant share of Hungary’s registered jobseekers may be permanently excluded from the primary labour market.

Based on the experience of complex reintegration programmes, at least half of the 216,000 registered unemployed are unlikely to find stable employment: not within a year, nor even within a decade. Health issues, mental health challenges, low qualifications, limited mobility, and housing constraints often overlap, creating barriers that are difficult to overcome.

This structural shortage becomes especially visible around major regional investments, such as large-scale industrial projects in Debrecen or Szeged. Local labour supply simply cannot meet the demand for thousands of experienced workers.

Why guest workers remain unavoidable

Against this backdrop, calls to fully exclude non-EU guest workers appear unrealistic. While the government has reduced the official guest worker quota from 65,000 to 35,000, trade unions argue that certain sectors cannot function without them.

Hungary lacks a sufficiently large, immediately available domestic workforce capable of supporting major industrial investments. In practice, guest workers are not replacing Hungarian employees but filling gaps that cannot be closed locally, particularly in manufacturing and construction.

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Wages are rising, but tensions persist

Wage growth is slowing, but it has not stopped. Most wage agreements for 2026 foresee average increases of 5–7%, although higher rises have been secured in parts of the public sector and municipal services.

At the same time, wage tensions are intensifying. Employers are often forced to offer higher salaries to attract new entrants, while long-serving employees see slower pay progression. This imbalance fuels dissatisfaction and workplace friction.

Can average earnings reach one million forints?

The government’s long-term goal of a HUF 1 million (EUR 2,620) gross average monthly earning is not entirely unrealistic, according to Mészáros, provided current trends continue.

It is important to note that this figure refers to average earnings rather than base wages and includes bonuses and allowances. With average earnings already approaching HUF 700,000 and annual growth hovering around 10%, the milestone could be reached by the end of 2028.

However, Hungary is still lagging behind regional peers. Wage levels remain lower than in Poland and are increasingly being matched by Romania. Several studies suggest that multinational companies operating in Hungary could afford higher wages relative to their operating costs.