Labour shortage: too few potential employees

As we reported before, the labour shortage has become critical in Hungary in the last few years. The most affected sectors are public transport and service, tourism and IT. The main reason is that people go West for higher wages and better working conditions. As a result, according to portfolio.hu, there are too few potential employees firms can hire. A solution could be wage union initiated by opposition party Jobbik, but the government does not support it.

Unemployment rate is at historical low

According to Hungarian Central Statistical Office’s (HCSO) newly published data on the issue, only 322 thousand people from the 15-74 age groups put themselves in the unemployed category this year. In fact, this rate is 16% less than it was a year before. To put it in another way, the number of unemployed people fell by 47.2 thousand compared to previous year’s same period. Thus,

unemployment rate reached 4.3% so it is at a historical low in Hungary.

Based on avowal and International Labour Organization’s definition of unemployment, number of unemployed has not changed lately. However, the number of registered jobseekers is noticeably mostly because of the government supported public work program.

In the category of potential workforce reserve, there were only 348 thousand people this year. In contrast, their number exceeded 401 thousand in 2016. Potential workforce reserve covers not only unemployed people but also those who are employed but not in their professions. Additionally, the notion covers people who would or would not like to work though they are able to do so. However, due to the labour shortage, this reserve is decreasing quickly. According to HCSO,

even those get a job who would not have got one before.

Out of potential employable workforce?

In fact, a number of employable inactive people is falling constantly partly because of demographic and labour market trends. For example, a number of people in this category were 87 thousand less in the first three quarters of the year than it had been in 2016’s same period in. In fact, pensioners are the biggest group in this regard and their number decreased by 46 thousand. In addition, there are 20 thousand fewer students.

According to HCSO’s survey, the main reason behind the falling number of pensioners is the higher retirement age. However, since women can retire after 40 years of work this effect is to some extent counterbalanced. In addition, the government introduced some measures to help women return to work after childbirth thus, they are not inactive anymore.

So where are the missing people from the Hungarian labour market?

Many or most of them are abroad working for much higher wages in Western-Europe.

Labour shortage: wage union might be a solution

Thus, the biggest problem is skilled workforce leaving the Hungarian labour market. As we reported,

they already work in Western Europe for higher salaries.

Therefore, long-term solution to ease labour shortage would be convincing them to come home. However, this is not easy. Many Eastern-European governments started programs to help people get a suitable job in their home country with moderate or even no success.

According to some economists and the biggest opposition party, Jobbik a solution could be wage union. This aims to

raise Eastern-European wages to Western-European level,

so Eastern-European countries would not become empty because of emigration. As a result, labour shortage would not hinder the economic growth of the countries in the region. Therefore, Jobbik started a European citizen’s initiative and collects signatures to bring the issue on European Commission’s table. However, due political reasons government does not support Jobbik’s wage union initiative.

Source: portfolio.hu, Daily News Hungary