Hungary’s increasingly heated debate over guest workers has evolved far beyond immigration policy. While businesses warn that restrictions on recruiting foreign labour threaten billions of forints worth of investment, critics argue that the country risks using migrant workers to preserve an economic model built on low wages and low value-added manufacturing rather than addressing long-term structural weaknesses.

The discussion intensified after Master Good managing director László Bárány Jr. warned in June that without access to foreign workers, the company would be unable to complete a HUF 120 billion investment. The remark quickly became emblematic of a wider dispute over whether Hungary genuinely faces a labour shortage—or whether companies are reluctant to adapt through higher wages, better working conditions and greater investment in productivity.

Businesses warn of investment risks without guest workers

Few dispute that the government’s recent tightening of guest worker regulations created uncertainty for employers. Critics of the policy argue that changing recruitment rules with only a few months’ notice undermines legal certainty, jeopardising ongoing investments, financing arrangements and production plans. For companies that have already committed to major industrial projects, access to overseas labour had become an integral part of their business planning, writes Telex’s G7.

At the same time, many observers argue that public debate has exaggerated the scale of foreign employment in Hungary. Around 107,000 foreign nationals currently work in the country—just over 2% of all employees, significantly below the European Union average, where roughly one in ten workers is foreign-born.

Labour shortage—or labour retention problem?

A central criticism of the current debate is that it has largely reflected employers’ perspectives while giving relatively little attention to trade unions, Hungarian workers or guest workers themselves.

Many companies describe persistent difficulties in filling assembly-line positions, with some reporting annual turnover rates of around 15% among semi-skilled workers. However, critics argue that high staff turnover does not necessarily indicate an absolute labour shortage. Instead, labour economists distinguish between several different phenomena:

  • an absolute shortage of available workers;
  • skills shortages;
  • geographical mismatches between jobs and workers; and
  • shortages at current wage levels and working conditions.

According to this view, much of Hungary’s manufacturing sector falls into the final category. Companies may receive numerous applications, but struggle to retain employees because of wages, shift patterns, physically demanding work, lengthy commuting times or workplace culture.

Guest workers, whose residence permits are tied to their employer, are often less likely to change jobs, making them appear more “stable”. Critics argue, however, that this stability stems partly from legal dependence rather than improved working conditions.

Official figures suggest unused labour reserves remain

Supporters of structural reform also point to official labour market statistics. According to the Hungarian Central Statistical Office (KSH), around 319,000 people belonged to the country’s potential labour reserve during the first quarter of 2026, including unemployed people, underemployed workers and economically inactive individuals who would like to work.

That figure is roughly three times larger than the current number of guest workers. Meanwhile, employment has declined compared with a year earlier, unemployment has risen to between 4.3% and 4.7%, and the number of vacant jobs has fallen.

These figures suggest that Hungary’s labour market is no longer operating at full capacity, although many of those outside employment face significant barriers, including health problems, inadequate skills, transport difficulties or caring responsibilities.

Wage pressures remain politically sensitive

The debate also raises uncomfortable questions about wages. Business leaders frequently argue that labour costs cannot increase indefinitely without undermining competitiveness or investment returns. Critics counter that such statements represent commercial decisions rather than unavoidable economic realities.

Master Good’s publicly available financial results illustrate the complexity of the issue. The group reported HUF 291 billion in revenue and HUF 29.7 billion in after-tax profit in 2025, while paying HUF 6.5 billion in dividends and receiving HUF 6.5 billion in state support. Based on publicly available employment data, critics estimate that a 10% wage increase would absorb only a fraction of annual profits.

That does not necessarily mean higher pay would be commercially prudent, particularly as retained earnings may finance future expansion. However, opponents of widespread guest worker recruitment argue that there is an important distinction between saying wage increases are impossible and saying they do not fit current profitability targets.

Guest workers remain the missing voice

One aspect of the debate receives comparatively little attention: the rights of the guest workers themselves. Under Hungary’s 2023 guest worker legislation, residence permits are temporary, tied to a specific employer and generally offer neither family reunification nor a pathway to permanent settlement.

Critics argue that workers whose legal status depends entirely on their employer possess considerably weaker bargaining power than Hungarian employees, even if official wages are identical.

Some labour experts therefore argue that if Hungary continues relying on guest workers, stronger safeguards should accompany the system, including greater freedom to change employers, minimum accommodation standards and stricter regulation of recruitment agencies.

A broader question about Hungary’s economic model

The controversy ultimately reaches far beyond labour market policy. Supporters of current recruitment practices often point out that many Western European economies have relied on migrant labour for decades to fill jobs that domestic workers increasingly avoid.

Critics respond that those countries combine foreign labour with higher productivity, stronger collective bargaining, more extensive adult education systems and more sophisticated industrial structures.

They argue that if Hungary relies on guest workers primarily to sustain industries based on relatively low wages and limited domestic value creation—while simultaneously providing substantial public subsidies to sectors such as battery manufacturing—it risks locking itself into a less competitive long-term development path.

What alternatives are being proposed?

Economists advocating structural reform argue for a combination of short- and long-term measures. In the immediate term, they suggest sector-specific guest worker quotas linked to transparent labour market assessments, alongside greater legal certainty for investments already under way.

Over the medium term, proposals include expanding adult education, supporting retraining with income assistance and childcare, improving worker mobility through housing and transport programmes, and linking state investment subsidies more closely to wage growth and productivity improvements.

In the longer term, proponents argue that industrial policy should place greater emphasis on technological upgrading, innovation and higher value-added production, particularly among domestically owned companies.

More on guest workers: New survey shows what Hungarians think about migration from poorer countries and foreign labourers

More than an immigration debate

The guest worker controversy has become a proxy for a much broader discussion about Hungary’s economic future. The central question is no longer simply how to supply enough workers for today’s factories.

Rather, it is what kind of industrial structure Hungary wants to build over the coming decades—and whether guest workers should serve as a temporary solution to labour shortages or become a permanent pillar supporting an economic model that many believe now requires fundamental reform.

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