The shocking reason behind companies choosing guest workers over Hungarian labour

In recent years, Hungary has experienced a surge in the arrival of foreign guest workers, primarily from Asia, which caused widespread moral unease. This influx of foreign workers has sparked protests and outrage, drawing disapproval from Hungarian labourers.

Several incidents demonstrate the outrage of the Hungarian people, such as protests in Nagymaros against a Korean company’s plan to accommodate Asian workers, outbursts over Hungarian workers allegedly being replaced by Vietnamese workers at the Bumchun factory (later proven false) and false rumours circulating about Indian owners of Dunaferr in Dunaújváros replacing Hungarian workers. Furthermore, Arriva’s (Operator of Budapest Transport Centre) recruitment of Filipino drivers also sparked political controversy, as reported by Telex.

The Orbán Government, previously known for its poster campaigns promoting hostility towards foreign workers, initially drafted legislation to regulate the situation of guest workers but later withdrew it. Shortly afterwards, they introduced a new regulation to tighten controls on the importation of guest workers. Despite their anti-immigrant rhetoric, Prime Minister Viktor Orbán said that:

The country could need up to 500,000 workers.

Guest workers statistics

The latest data from the Hungarian Central Statistical Office (KSH) reveals that in November 2023, there were 98,500 foreign nationals employed in Hungary, with over 76,000 being from outside the EU. This marks a 13% increase in foreign workers over the past year largely due to the arrival of nearly 14,000 more third-country workers since November 2022. While guest workers were previously predominantly from neighbouring countries like Serbia and Ukraine, their numbers have declined especially since the outbreak of the Russian-Ukrainian conflict in 2022.

Since then, Asian workers, particularly from Vietnam and the Philippines, have been increasingly replacing the Serbian and Ukrainian guest workers. However, despite this uptick, the proportion of guest workers in Hungary remains lower compared to Western Europe, with roughly 9% of workers in that region being guest workers, as opposed to less than 2% in Hungary.

The government has facilitated the import of Asian guest workers through the Immigration Act, making it easier for Vietnamese, Indonesian, Mongolian and Filipino workers to enter Hungary. Guest workers receive a two-year residence and work permit, renewable for up to one year. Upon expiration, they may return to their home or relocate, as their EU residence permit remains valid for a longer duration. This legislation also introduced qualified temporary employment agencies, initially designating 13 companies for this purpose, which was later increased to 28.

However, recent amendments to the Immigration Act have imposed limitations by setting a yearly maximum of 65,000 non-EU workers allowed into Hungary, corresponding to available job vacancies. Moreover, companies can only hire guest workers after notifying local labour centres of their labour needs and receiving certification of insufficient Hungarian candidates. These measures are expected to somewhat mitigate the influx of workers.

Reasons behind companies’ choice of guest workers

Despite temporary employment and recruitment agencies emphasising the significantly higher costs associated with employing guest workers (approximately HUF 1 Million (EUR 2,500) in one-off fees for a Filipino worker, lower costs for Vietnamese and Indians) compared to hiring Hungarian workers, employers still find themselves compelled to opt for them. Hungary boasts a high employment rate of 74.8% and a low unemployment rate of 4.2%, indicating a perceived lack of usable labor reserves.

Many unemployed individuals face challenges such as lack of skills, geographic constraints or health issues, rendering them less employable. When foreign companies seek to establish operations in Hungary, they often require a large workforce that is difficult to fulfil locally. Therefore, despite potential improvements in employing local unemployed individuals, foreign companies often opt for guest workers due to their perceived higher productivity compared to domestic workers (despite the slightly higher costs involved). According to employment agencies:

 Guest workers cost employers 10-20% more, but they outperform domestic workers by 20-30% in productivity.

Some argue that Hungarian/European workers perceive work as a necessary evil and may not put in their best effort. In contrast, others suggest that different life situations may be the cause. Guest workers’ lack of family and responsibilities and short-term outlook may motivate them to maximise earnings through overtime and dedication to work. Similar trends are observed with Hungarian workers who temporarily migrate to Western countries, where their productivity often increases.

Read also:

• Hungarian CEOs’ surprising experiences with foreign worker – HERE
• Non-EU citizens can apply for Hungarian Card, 65 thousand guest workers may come – HERE