Hungary’s labour market tightens: Guest workers become essential due to shrinking workforce

Official figures paint a reassuring picture of Hungary’s labour market. Unemployment is low, while employment levels appear stable. Yet behind these headline numbers, the reality is far more complex and increasingly tense. Read about why guest workers are unavoidable in Hungary’s labour market below.

According to Melinda Mészáros, President of the Liga Trade Unions (Liga Szakszervezetek), Hungary is entering a period of structural labour market strain marked by economic slowdown, shrinking industrial output, and a growing mismatch between available jobs and available workers.

A hidden slowdown beneath stable employment figures

Despite the absence of mass layoffs, employment is quietly eroding. Companies are not actively dismissing workers; instead, they are choosing not to replace employees who leave. This form of “silent downsizing” gradually reduces workforce numbers without triggering visible shocks in the statistics.

Demographic decline plays a key role in masking the problem. Each year, Hungary’s working-age population shrinks by an estimated 35,000–40,000 people. This natural decrease absorbs labour market tensions that would otherwise surface more clearly in unemployment data.

As a result, while registered jobseekers number around 216,000, no significant improvement in employment levels is expected in the near future, HR Portál writes.

Industry under pressure, capacity left unused

Hungary’s industrial sector has been struggling for nearly two years. Weak demand, falling orders, and the prolonged difficulties of the German economy have all taken their toll. In manufacturing, particularly in machinery and automotive production, companies are operating with unused internal capacity.

Trade unions report that many firms are carrying a hidden surplus of labour, estimated at 2–5% of their workforce. Rather than cutting staff, companies are burning through reserves in the hope of a future turnaround. In some factories, entire sections are closed off, production cycles have been scaled back, and three-shift schedules have been reduced to one.

Overtime, which was once a key source of income for many workers, has largely disappeared. The result is a tangible drop in take-home pay, even where base salaries remain unchanged.

Qualified workers are no longer safe

Contrary to expectations, job losses are increasingly affecting white-collar and highly qualified employees rather than low-skilled workers. Administrative staff and engineers are among the most vulnerable groups.

Two trends are driving this shift. On the one hand, digitalisation and efficiency improvements are reducing the need for certain office-based roles. On the other hand, several Western European countries, including Germany, Austria, and Poland, are bringing high-value-added activities back home.

Research and development, management functions, and even production itself are being relocated as governments pursue more protectionist economic strategies to support domestic employment. While these moves may raise costs for multinational companies, they reduce social spending pressures at home, often at the expense of jobs in Central Europe.