Employers' plans for pay rises are indeed smaller than workers' needs - Hays Hungary

Employers have become a little more optimistic in a year, but most are still rather pessimistic about macroeconomic changes in the next 1-2 years. However, finding the right candidates is still a major challenge this year. "Although nearly a quarter of respondents believe there are more jobseekers on the market now than in previous years, the difficulties are caused by a lack of skills and wage demands," the Hays Hungary survey found. The firm surveyed more than 2,600 employers and employees.

Almost half of the employers surveyed said there are not enough qualified candidates on the market to choose from, and salary demands are unrealistic.

The overall skills shortage has also worsened in a year, with employers still facing fierce competition for talent, the research says.

2024 brought only minimal changes in terms of the strategic goals set. The development of the product and service portfolio was knocked off the podium: the top three goals for the new year are to increase profits, revenue and competitiveness. However, employers surveyed remained confident about staffing: a large majority of them believe that their companies have the right skills to achieve their business goals this year.

If anything could stand in the way of the 2024 plans, respondents said that apart from financial constraints, it could be the difficulty of retaining valuable staff and the shortage of qualified candidates in the market.

• The employers who completed the survey recruit 85% of their staff from the domestic labour market.
• The vast majority do not need foreign workers or do not want to hire international professionals.

Practical reasons such as legal and resource constraints or lack of knowledge of foreign markets play a part in this. It is worth noting that more than half of those who cited other reasons noted that knowledge of Hungarian is essential for their positions - which in itself would presumably make the search for foreign candidates redundant.

The skills shortage is apparently a long-standing and still growing problem in recruitment.

The qualilfied professional, specialist, senior and manager positions are the hardest to fill. This phenomenon is also responsible for the fact that, although companies are still recruiting mainly for permanent jobs, temporary contract work is now a much larger segment of the employment mix than before.

• As for pay rises this year, four out of ten companies are planning to increase salaries between 5% and 10% this year, but almost 30% would increase salaries between 10% and 15%.
• Last year, the 10-15% range was the most common, but this year companies are planning smaller increases.
• Only 6% of workers can expect a wage increase of more than 15% this year.

A survey by Randstad Hungary found similar results. They found that more than half of companies want to increase wages by 6-10% to attract and retain talent. It also found that this falls short of employees' expectations. The majority of workers consider a 10-20% increase to be realistic, with a quarter wanting an increase above that.

While last year's 10-15% increase in wages did not even compensate for inflation - so real wages fell - this year's planned 5-10% increase could already reach inflation. The latest forecasts suggest that the average annual fall in money supply could be 4-6% this year, but there is also a lot of uncertainty among analysts. In any case, it is very likely that many workers will not be satisfied with a 5-10% increase after last year's real wage decline, so that meaningful activity in the labour market is expected among those who do not see a substantial increase in their real wages.

The proportion of those surveyed by Hays who work in a traditional, fully office-based job has fallen further compared to a year ago, and is now less than 20%. Most respondents go to the office only 2-3 days a week.

87% of responding employers do not plan to change their current working patterns in 2024, but there is a turnaround from a year ago among those who do: the majority who would change would do so in favour of office work. The proportion of workers who would not take a job without this flexibility has fallen slightly in a year. 15% would not mind working from the office only on the condition of a 15% pay rise and 5% better benefit. 34% of workers surveyed said they would look for another job if they had to work every day from the office again.

Cover photo: Daniel Ingold