Experts draw serious conclusions about battery factories at the Hungarian Economic Association's conference

The introductory presentation of the conference was given by Márton Czirfusz, founder of the Periféria ["Periphery"] Public Policy and Research Centre, who wrote a comprehensive study on the Hungarian battery value chain companies, including the labour market and employment characteristics of the sector. The researcher said that according to government estimates from 1-2 years ago, the number of people employed in the domestic battery value chain (basic material producers, component producers, cell producers, recyclers), which is dominated by East Asian companies (South Korean, Chinese, Japanese), is

expected to exceed 30,000 by the middle of the decade.

By autumn 2021, 14,000 jobs will have been created in battery manufacturing, according to government data.

"The government is pursuing a very intensive policy to promote investment in this sector, but there is a lack of a specific employment policy for this sector. We see investors coming in all the time, but how the new plants will employ workers is much less well thought out," the researcher stressed.

Indeed, the sector faces considerable difficulties in securing staff. Firms are trying to address this by either

• attracting workers from surrounding areas (higher wages, wider employee benefits, better working conditions), or
• by increasing labour attraction (mainly through company bus services), or
• by hiring out workers (increasingly to third-country workers).

  

Low added value

The expert underlined:

as battery production is labour-intensive and low value-added, the battery chain's domestic plants have a high share of low-wage jobs.

The basic wages for operators on the production line are not enough to live on, so higher or fairer wages can be achieved through overtime, bonuses, allowances and fringe benefits. But if a worker falls short of these in a given month, for example, because he or she has been on sick leave for a few days, it is very difficult to make a living.

Béla Galgóczi, senior researcher at the European Trade Union Institute (ETUI), said that the low added value of battery production does not help the country's upgrading in international value chains.

"In previous decades, there was a lot of discussion about upgrading, how to break out of a subordinate, vulnerable position based only on low wages, flexible employment, and not on the quality of human resource potential, innovation, and increasing domestic added value." According to the researcher, this now seems to have been forgotten, or at least is not an issue, because specialisation in battery production reinforces and even entrenches the already outdated competitiveness strategy based on low wages.

So this is not a breakout point for the country,

he noted.

In his study, Márton Czirfusz pointed out that the share of skilled jobs in battery manufacturing is high, especially in cell production. To ensure the supply of machine operators and assemblers, the government sees the "import" of foreign (third-country) skilled workers through temporary employment agencies as more efficient and cheaper than increasing the employability of low-skilled people with labour market disadvantages in Hungary and supporting their employment through complex social programmes.

Blue-collar jobs predominate

The study cites estimates from national and European academic literature that

• the share of blue-collar jobs in the overall battery value chain is 72.5%,
• while the share of white-collar jobs is 27.5%.

For battery cell manufacturers,

• the proportion of blue-collar jobs in manufacturing is 80-90%, and
• 50% in maintenance (with a higher proportion of engineers and managers in maintenance).

These ratios are broadly in line with the data for the Hungarian companies in the value chain. At the Komárom plant of the South Korean cell manufacturer SK in 2021, roughly 70% of direct employees were manual and 30% were manual, while at Samsung SDI's Göd plant, also a cell manufacturer, 70% of employees worked directly in production.

The fact that the proportion of blue-collar jobs in cell manufacturing is 80-90% means that a large number of production line operators and skilled workers are needed here,

the researcher noted.

Andrea Éltető, Senior Research Fellow at the Institute of World Economics of the Centre for Economic and Regional Studies, pointed out that the Chinese CATL battery cell production plant in Debrecen will also need operators and skilled workers, as the leading operators and managers will be Chinese, and a similar trend can be observed in other factories of the domestic battery value chain.

The researcher also added that since the EU-China relationship is not smooth, Chinese manufacturers that are very advanced in R&D and innovation, such as CATL, will not bring R&D and core innovation to their European subsidiaries. Márton Czirfusz's study also highlighted that the experience so far shows that there has been no R&D activity in Hungarian battery companies.

Half of the employees in Göd are foreigners

Speaking about the work in battery factories, Andrea Éltető said:

there is a high degree of automation in these factories, but also a high degree of monotony (pushing buttons), with workers having to perform the same few movements for 12 hours, in three shifts, 6 days a week, so it is no wonder that there is a very high turnover.

"An OECD study has highlighted the trend that after Covid, people are less willing to accept poor quality or unsafe jobs, so it is not clear that many people necessarily want to work in battery factories," she added.

The unattractive nature of the work and the shortage of domestic labour have made it necessary to recruit guest workers from outside the EU, mainly from East Asia.

At the Samsung factory in Göd, half of the 6,000 workers are foreigners, while the number of local workers from Göd is less than 100,

the researcher said.

"As car manufacturers switch to electric cars, there will indeed be a freeing up of labour around the world, including in Hungary, but I have not yet seen any calculation of how fast this will happen and how much labour will become redundant. In fact, in the short term, what we see now is rather that the shift to e-car production is having a draining effect, with BMW's factory in Debrecen or Volvo's in Slovakia pulling labour away from battery factories," Andrea Éltető stressed.

Cover photo: Getty Images