In May, the whole sector decreased significantly, and the huge producers are going to stop shortly. As a result, 10-15 thousand workplaces may be in danger, and the problem is not only with the big factories but the companies in their supply chains.
According to Nepszava, the problem is with the companies in the supply chain of the huge factories which already depleted their resources during the epidemic. Furthermore, their employees do not have any more paid holidays, so Zoltán László, deputy leader of the Vasas Trade Union Association, said that
thousands could remain without income in the automotive industry.
In the automotive industry, it is not surprising that production stops for a couple of weeks during the summer, allowing companies to do the necessary maintenance work, replace production lines and machines, and, of course, to send their employees on holiday. However, these are planned pauses. In spring, of course, nobody planned to stop, but they had to because of the coronavirus epidemic.
From March until May, production went on with decreased volume or nothing at all. However, in the meantime, they replaced the machines and did the necessary maintenance work so suppliers rightfully thought that there would be no stops during the summer. However, the emission scandal of 2015 ravaged the sector, so demand fell for traditional cars while it is not enough for the new technologies.
The huge automotive companies offer paid holidays for their workers during the pause, but the suppliers cannot do so in most cases. This problem is significant because 90 pc of the 170 thousand Hungarians working in the sector are employees of the suppliers which are now in trouble. Therefore, they plan to fire their workers, and if the situation stabilises, they will employ them again.
And this is the scheme the government’s grant system encourages as well since they pay the wages of the workers for only 6 months. Therefore, the
suppliers are not interested in keeping their employees
if they do not have enough orders. Népszava said that, probably, this is why the government changed the rules of claiming wage help.
The Hungarian Central Statistical Office said that the recovery would not be quick in the sector which decreased by 30 pc in May. The bottom was in April, but demand is still low for new vehicles. Dávid Németh, a leading analyst of K&H Bank, said that it could not be excluded that
the decrease rate of the Hungarian industry would reach two-digit by the end of the year.