Hungarian market: opportunities and skills mismatch for companies in Hungary

Hungarian market: opportunities and skills mismatch for companies in Hungary

Overcoming Hungary's employment crisis in the face of a shortage of qualified candidates is a major challenge requiring an innovative and collaborative approach. The Hungarian labor market is currently complex, with both positive and worrying trends. The overall activity rate remains high (around 74.6%), indicating a willingness to participate in the labor force despite a declining population. However, the situation is worrisome considering that the number of candidates with the right skills is decreasing, suggesting a potential mismatch between applicants' skills and labor market requirements.

The educational level of current candidates only exacerbates the problem. A significant percentage of them (42.4%) do not have a high level, highlighting a potential skills gap that employers may need to address. This gap is likely to be even more pronounced in some regions of the country, where there is a higher concentration of job seekers and a potentially lower level of education on average than the national data.

To bridge the gap between available talent and the needs of employers, a different approach is needed.

Panorama of the Hungarian market

Hungary achieved a GDP growth rate about 5.9% over the last two years, outpacing many European countries and maintaining an inflation rate about 3.8% in the beginning 2024. This growth is attributed to a combination of factors, including rising exports, a vibrant services sector and strategic government policies. The manufacturing industry, particularly automotive and electronics, has been a major driver of export-led growth.
As we have already highlighted, however, the unemployment rate in Hungary jumped from 4% to 4.6% between November and January.
According to new data published by the Hungarian Central Statistics Office, this increase means that the number of unemployed people aged 15 to 74 has risen by 30,000 to 226,000.
The reason for these statistics is mainly due to the COVID-19 pandemic and the beginning of the full-scale invasion of Ukraine by Russia, but not only.

Overcoming the skills shortage in Hungary: Challenges and solutions of the agencies in Hungary

Although the Hungarian economy is experiencing significant growth, driven by dynamic key industries, a major challenge is emerging: the lack of qualified candidates, aimed at filling the growing demand from employers, who refer to a specific job description. This situation is particularly acute in the automotive, information and communication technology, financial services and tourism sectors, where the need for specific skills is high.
It should be taken into consideration that these mismatches do not only affect Hungary, but also go to other EU countries. The chart below, provided by Eurobarometer, highlights what percentages of skill shortages are currently being faced:

main skills lacking in Hungary in 2024

The gap between the qualifications in demand and the profiles available in the labor market is thus becoming increasingly worrisome. Several factors contribute to this shortage of skilled labor, not the least of which is an aging population. The age pyramid in Hungary shows an increasing proportion of older people and a declining working population. In addition, the brain drain is drawing many young Hungarian graduates to better-paid career opportunities abroad, particularly in Western Europe.

Faced with this challenge, the Hungarian government has introduced a number of measures to try to solve it, such as the development of vocational training programs. The goal is to equip job seekers with the specific skills sought by companies. Encouraging language learning is also a priority: improving the English level of Hungarian workers is a key element in enabling them to adapt to the demands of the international market. In addition, incentives are being put in place to attract skilled foreign workers and facilitate their settlement and integration.

However, these efforts alone will not be enough to fill the skilled labor shortage.

Against this backdrop, we at RED. Recruitment, an international recruitment agency in Hungary, are positioning ourselves as a major player in the search for and selection of qualified employees in Hungary, offering effective smart solutions to meet the needs of the Hungarian labour market.

Comparison with the trends in EU

From data collected since 2018, a comparison can be made between the EU and Hungary regarding the talent shortage.
The survey, released in October 2023, showed that global talent shortages represent a significant challenge. The annual global talent shortage survey data has increased significantly, as the need for skilled workers is becoming increasingly acute, as shown by the Eurobarometer survey.
This, in fact, provides exhaustive information on staff shortages, highlighting the difficulty in finding employees with the right skills as a trend that approximately 54% of SMEs in the EU have identified.

European countries facing general labor shortage - Eurobarometer survey

This figure as we see is equal to or above 50% in 20 out of 34 countries, indicating that skills shortages are a common and serious problem.

This was by far the most identified serious issue for businesses, followed by regulatory barriers or administrative burdens (34%).

In this analysis, Hungary recorded a difficulty of approximately 50 percentage points, suggesting a smaller but equally worrying deterioration. This disparity could be attributed to various factors, such as national policies on education and vocational training, as well as economic opportunities and incentives to stay or migrate to other regions that offer better prospects.

The growing problem of staff and skills shortages is the result of several interconnected challenges, the European Commission points out. Over the past decade, these shortages have increased in all member states mainly due to demographic changes, increasing demand for new skills related to technological developments, and challenges related to working conditions.

The importance of using a recruitment agency in Hungary

To meet this challenge, we have therefore seen that investment in training is crucial. Many agencies in Hungary and organizations in fact are adopting in-house training strategies, through the best hr services, to ensure that their employees acquire the necessary soft skills and fill professional gaps, but not all companies can afford substantial organizational changes, given the high costs and timeframes.

Turning to recruitment agencies in Hungary that are specialized in the international recruitment services can be an effective solution in order to hire the best talent.

These international recruitment companies, such as RED. Recruitment, are experts in finding highly qualified talent suited to the specific needs of each client company. With their extensive network of contacts and industry proven track record, they can quickly identify the best candidates for hard-to-fill roles and in industries with staffing shortages.

By facilitating the human resources recruitment process, reducing job search time and ensuring a smooth experience for both companies and candidates, it will help you find the best employees in Hungary and improve talent acquisition.

Instead of malfunctioning job centers or expensive and non fruitful job portals, relying on an effective international recruitment agency like RED. Recruitment can be a valuable investment for companies seeking to meet the challenges of the skills crisis, ensure growth and success in the contemporary job market.

Hiring new talents in Hungary? Time to book a free intro call with our consultants here.