As we already reported, Hungary struggles hard with labour shortage which affects almost every sector of the economy. In fact, commerce is among the most affected ones. The reason is simple: more and more work abroad for better wages. Therefore, multinational supermarket chains like Aldi decided to raise salary. However, it is more and more difficult hold their ground for food supply chains like Coop owning mostly small shops in the countryside. The situations of their shops in villages and small towns are especially bad because of the lack of workforce and purchasing power. Thus, many of their shops open only for a couple of hours during the whole week – according to index.hu.
Labour shortage cause serious problems
In fact, Coop has more than 5,000 shops countrywide, and it has the second biggest revenue after Tesco. Moreover, it has 30 thousand shop assistants, cashiers, stock associates and other employees altogether. Thus, it is one of the biggest employers in the sector having shops mostly in villages and small towns.
However, these shops close one after the other or reduce opening times.
The main reason is the labour shortage. Though the Hungarian economy and salaries are growing, there are huge inequalities between the different regions of Hungary. For example, purchasing power is not the same in Budapest and a small country village. Thus, salaries and consumption cannot be the same, as well. As a result, Coop does well big cities, but
their shops struggle for survival in small villages.
Government’s compulsory wage increase can be the finishing stroke
Coop is principally strong in small villages where people are poorer. In fact, these shops provide them with the only opportunity to buy what they need. Thus, their closure affects the most vulnerable social classes badly and reduces the population retention capacity of the villages.
The government is also responsible for the current situation. Orbán’s cabinet decided in 2016 that it would raise the guaranteed minimum salary from 129 thousand forints (EUR 416.8) to 181 thousand forints (EUR 584.81) which means a 40% rise.
Many say that this decision can be the finishing stroke for the small shops. This is because
these shops cannot pay that much money since they do not have enough income to do so.
Coop needs government’s help
Financially strong chains like Aldi and Tesco could give even a bigger increase. While Aldi pays at least 272 thousand (EUR 882) per month as a starting gross salary to each shop assistant from 2018 on, for small shops, even the compulsory 181 thousand forints is unbearable. As a result, they started to lose their workforce to big chains. As a matter of fact,
they cannot fill 10-15pc of their positions at present.
Coop has already warned many times that they cannot tackle alone with problems caused by compulsory wage increase and labour shortage. While their shops in the cities function well, there are already 40-50 shops in small settlements which open only for a couple of hours during the whole week. Though the government promised to help with differentiated tax cuts or even direct financial support nothing happened yet. Moreover, experts say that
Brussels will probably abolish any governmental tax cuts positively discriminating shops in small settlements.
This means that helping these shops will not be easy.
Source: index.hu, Daily News Hungary