Seasonally adjusted unemployment rates reported by Eurostat in July 2020 across CEE were the lowest in the Czech Republic at 2%, followed by Poland at 3.2%. Rates of below 5% were also reported in Bulgaria, Romania and Slovenia. At the same time, salaries have increased, in some years, reaching double digit growth. Candidates have started to become aware of their value on the scarce labor market and have become more selective in terms of their future employers. With numerous possibilities available, even though the salary remains to be the main selection criteria, other factors have started to play an important role. These include the company’s reputation on the market, good working conditions and atmosphere, career progression opportunities and work-life balance.
Skilled, blue-collar candidates remain the biggest challenge in terms of recruitment for the production and logistics industries. After the fall of the vocational school system in most of the countries, the availability of skilled employees is slowly growing thanks to the efforts of employers, who train their personnel, on a regular basis to ensure production continuity. There is also a relentless need for engineering and R&D roles.
The COVID-19 pandemic has had and continues to have an impact on labour markets. Production stoppages have forced companies to reorganize their workforces. Although a reduction of part of the personnel might seem like the quickest solution to cut costs, most of the companies were hesitant to do so, having in mind the effort and funds invested in building up their teams. Instead, reductions in salaries and hours worked, asking employees to use up their outstanding holidays and freezing bonus systems were introduced. Many companies stopped using contingent workforce and utilizing the advantage of flexibility in such contracts. As a result, and rather surprisingly for many, the pool of available candidates didn’t increase as much as one would expect and unemployment rates went up but remained relatively steady. Candidates coming from different industries also hit hard by the pandemic, like the HoReCa sector, were not interested in taking jobs in production or logistics. There were also other industries that had growing needs for personnel during that time, like pharmaceutics, medical equipment and e-commerce.
Currently, as the situation is slowly improving, we are again observing limited availability of the most desired positions on the market. However, companies are rather rebuilding their workforce than increasing headcount, still having in mind the possibility of a second wave of COVID-19. As a result, we predict that the temporary workforce will become an even more popular solution on the market. The pandemic also made further changes to the way employees look at their future employers. In the near future, we expect that job security and a company’s financial stability will close the gap to the salary and benefits in the job selection criteria.
Payments in Hungary
In case of the logistics sector, white-collar salaries have not changed significantly other than the typical 2-5% inflation-tracking growth. Regarding the production sector, until COVID-19 salaries had been increasing by 5-10% YoY, especially for electrical engineering and automation positions, due to new large investment projects in Hungary. In the case of the R&D sector, it differs slightly in that salaries are generally 5-10% higher than in other technical positions, however since the start of COVID-19 they are all stagnating and we do not expect a huge change during the remainder of 2020.
The most sought-after positions in the production sector are currently for electrical engineers, HVAC engineers (electrical and mechanical areas), automation engineers, electrical technicians and maintenance technicians. In the logistics sector, companies are mainly looking for demand and supply planners, logistics specialists, procurers (buyers), transportation coordinators, forklift
The logistics sector has recently seen an increased number of applications and higher level of application willingness in the market. At the beginning of 2020, we saw an increased number of open positions compared to the decreasing number of quality candidates. Due to the virus, this has started to change, and open positions compared to the number of active candidates were less and less day by day throughout the second quarter of the year. As for the production sector, the candidates' availability has also increased, and we are recording more active applications in the market. On the other hand, passive candidates are showing less willingness for new opportunities since they prefer a stable and financially healthy current employer. Certain profiles of electrical engineers and freshly graduated white-collar workers are currently the most available group of candidates, and we do not expect this to change over the coming months.
The highest level of employee availability can be seen in Budapest, Miskolc, Veszprém, Debrecen, Győr, Szeged, Kecskemét and the Jászság region. Overall, the North Transdanubia (Győr, Veszprém), Budapest and its suburbs and the Northern and Eastern parts of the Great Hungarian Plain region (Miskolc, Debrecen, Kecskemét,
Logistics started to develop dynamically in order to accommodate production needs and will most probably get back on track by 2021, resulting in the need for a greater number of white-collar professionals (engineering, quality, logistics, maintenance, etc.). Manufacturers are also increasingly demanding innovative solutions in warehousing and inventory management. The growing use of automation and robotics in their facilities to achieve a "smart factory" may result in greater blue-collar jobs and availability in the future.
Numerous large-scale new investments in the automotive industry have been made recently in Hungary, mainly in the areas of electromobility and other areas that support innovation in the sector. After the effects of COVID-19 have subsided, we expect this trend to swiftly bounce back. These investments always shake-up the market in terms of the need for candidates, often with hundreds of new vacancies, create greater candidate availability through the willingness to change for something new and often a slight upward pressure on salaries.