Hungary is the 3rd-cheapest country in Europe – it is not such good news as it may seem
According to the latest statistics presented by Eurostat, Hungary is the third-cheapest country in the European region in terms of the cost of the labour force.
Although this is a promising number for multinational corporations, employees might not find it that appealing. The cost of the labour force is only cheaper in Romania and Bulgaria, but Forbes writes that, according to current trends, Hungary might soon be the cheapest.
Within European Union Member States, Hungary has the second-cheapest labour force; corporations pay approximately €10.4 (3,840 forints) for each working hour per employee.
It is no surprise that foreign corporations are happy to see these numbers as they are looking for a well-trained but easily affordable workforce to set up their subsidiaries or to expand their reach.
However, as Forbes points out, employees are not that happy to see these statistics. Moreover, this also means that Hungarians are one of the lowest-earning countries within the EU.
To make matters even worse, this €10.4 even includes every expense a company has to pay after their employees, meaning that the actual wage the worker receives is even lower than this.
Currently, corporations have to pay €8.5 per working hour for workers in Romania and €7 per working hour for workers in Bulgaria. If Hungary is not careful, it can easily fall to the bottom since Romania doubled and Bulgaria also increased wage costs by two and a half times, while Hungary has only managed to do so with an increase of 33.3%.
It is no wonder that the leaders in the cost of the workforce are Scandinavian and Benelux countries. Leading the list sky-high is Norway,
followed by the constantly growing Denmark, while the third place goes to Iceland just by a hair’s width. France, Austria, and Germany have all managed to be in the top ten as well.
Hungary is performing quite badly even among countries that started out with similar conditions in 2008. Forbes highlights that while that year, Estonia was only 10 cents more expensive, their workforce now costs €4 more than Hungary’s. Additionally, while 14 years ago, the workforce in Slovakia cost around €7, they have managed to double that number and stand at €14.2, leaving Hungary quite behind.
If we compare Hungary to the EU 27 average, which is €29.1 at the moment, Hungary is way behind.
It is important to mention that since Hungary is using its own currency, its growth is also susceptible to the fluctuation of the cost of the euro. And while Hungary might have somewhat increased wages, the increase in the price of the euro compared to the forint is negating this effect in euro-based statistics.
Unfortunately, these factors have led to many Hungarians moving or working abroad to earn more; according to the findings of G7, the number of Hungarian people living in other EU countries increased nearly 2.7 times between 2010 and 2020, Forbes highlights.