The Tisza Party would ban the mass importation of guest workers from June 1, instead the party aims to involve 400,000 currently inactive people in the labor market program. Tisza wants to orient the Hungarian economy towards activities with higher added value, but for this a lot needs to be spent on measures promoting labor market integration. Meanwhile, several large factories will soon start production, and these cannot necessarily operate without guest workers.
In this article, based on the insights of labor market experts, we present what trends await the new government and what challenges it faces based on the labor market measures outlined in its program.
Ten-year record, then slightly declining unemployment
The February unemployment figure of 4.8 percent was at a height not seen in ten years, according to the KSH according to. Although in March decreased the ratio to 4.5 percent, according to MBH Bank’s analysis, the picture is clouded by negative demography, i.e. the continued decline of the 15-74-year-old population. The shrinking and aging of the population limits the possibility of expanding employment.
According to Gergely Gáspár, the business development manager of Gi Group Holding, which deals with recruitment and hiring, we see the effect of the economic stagnation of the last three years appearing in the higher unemployment data, after companies waited to start downsizing. The lesson of the Covid crisis for companies was that it is costly and time-consuming to replace the downsized workforce. Since then, however, the companies have increased their reserves more and more, so the specialist sees that the downsizing wave is still ongoing. According to József Nógrádi, commercial director of the Trenkwalder company group, which provides other HR services in addition to temporary staffing, the situation has also been worsened by the fact that in recent years the government has increased the minimum wage several times above inflation, which many companies could not achieve despite the successive crises, and therefore collapsed.
At the same time, several processes can counter rising unemployment, for example, the fact that several large international manufacturers – such as the CATL or EV Power battery factories in the Debrecen area, and the BYD car factory in Szeged – will start production in the near future. Rising unemployment affects low-skilled workers the most, while increasing demand for higher-level blue-collar skills is expected due to start-up investments.
According to József Nógrádi’s experience, the labor market is starting to become more active again, as the economic environment becomes more predictable with the establishment of the new government. By the end of the summer, you can imagine a significant decrease in unemployment, but until then we can also see a movement in the opposite direction. Many companies are currently on the verge of collapse: according to Opten’s report, the solvency of 160,000 companies is uncertain, and we are currently in one of the highest waves of layoffs in recent years. After the election, the group downsizing received a new impetus, even though the companies close to the NER have not yet started downsizing, which may be triggered by the expected decline or termination of government orders. At the same time, the Tisza Party’s commitments include bringing home the suspended EU funds. This can significantly stimulate the construction industry and the manufacturing industry, where there have been serious layoffs in recent years.
The employment indicator of GKI Gazdaságkutató Zrt. indicates a decrease in employment in this quarter. “In the next three months, 8 percent of businesses are preparing to expand their workforce, while 11 percent would reduce it. In the construction industry and commerce, there are a majority of those seeking to reduce the workforce compared to those planning expansion, in industry these two proportions are practically the same, while in the field of services, the latter are the majority,” the institute said in its analysis.
What if no more guest workers come?
“From June 1, 2026 until further notice, we will prohibit the mass importation of non-Hungarian guest workers from outside the EU,” says the Tisza Party program. We contacted the party to find out which groups would be affected and in what form the ban would take, but we received the answer that “the questions raised relate to the period following the government’s appointment. After the formation of the ministries, we intend to implement our election program within the framework of broad professional participation and develop the details of our government program.” The details of the planned measures are thus not yet known, but we were curious to see what kind of reactions the proposed ban would elicit from the actors of the labor market.
“Based on the feedback from large employers, several sectors would be very sensitively affected by the reduction in the number of guest workers. These include the processing industry and manufacturing, logistics and warehousing, the food industry, tourism and hospitality, and even the construction industry. In my opinion, a sudden restriction would cause operational problems and loss of capacity in many companies,” Magdolna Mihályi, Jobtain HR Service Provider Kft., told our newspaper. owner-manager, chairman of the supervisory board of the National Association of Hungarian Labor Providers, chairman of the Qualified HR Service Providers Section of the National Association of Entrepreneurs and Employers (VOSZ). He emphasized that the planned measure creates uncertainty among third-country nationals (non-EU) already working here, which has a negative effect on the economy, for example by increasing turnover. Within the VOSZ, the Mihályis are already preparing their summary material on the domestic labor market and their related proposals, and will initiate negotiations with the new government.
Gergely Gáspár also does not see the growth of the Hungarian economy as sustainable in the current structure and based on demographic trends without third-country nationals. Large investments like CATL and the supply and logistics chains built around them require tens of thousands of workers. These companies are increasing their recruitment area, for example starting bus services and providing relocation assistance to workers, exerting some suction effect on regions with higher unemployment. However, according to Gáspár, the demand for labor caused by huge investments will not be met by domestic labor migration alone.
This is also true despite the fact that in recent years, due to the tightening of the laws governing guest workers, employers have already begun to target domestic workers more and more. In the case of a guest worker, it takes several months to start working, and this has become an additional factor of uncertainty in the current economic situation, when many companies experience rapidly changing demand.
Both József Nógrádi and Gergely Gáspár emphasized that workers from third countries are needed not only because of the quantitative but also the qualitative labor shortage affecting certain sectors. It is still worthwhile for many domestic companies to employ guest workers, as they get a ready-made blue-collar workforce that is in short supply at home.
As for the domestic workforce, Nógrádi considers re-education and the development of a vocational training system that provides marketable knowledge to be key, and highlighted that while in the EU, on average, half of job seekers participate in some form of continuing education, this percentage is only 5 percent at home. The Tisza program also emphasizes the training system, but the details are not yet known.
The labor reserve is significant, but for now only on paper
Tisza’s program mentions 400,000 employable workers from the currently inactive strata, and wants to base its economic policy on the labor market integration of these strata instead of guest workers. We asked the party about what groups the 400,000 people include and what pace they consider it possible to put these groups to work, but we also received the answer that the question refers to the period after coming to power.
Magdolna Mihályi believes that there is currently no labor reserve of 300,000-400,000 people available. Within this, he estimates the proportion of those who can perform value-creating work regularly and reliably to be 8-10 percent.
Scharle Ágota, the leading researcher, founder and managing director of the Budapest Institute for Policy Analysis, does not consider the estimate of 400,000 to be far-fetched, but he sees a significant part of the inactive to be integrated into the labor market only in the longer term. Currently data from KSH according to the labor force reserve is roughly 305,000 people. Added to this are the 60-70 thousand public workers, who are officially listed among the employed, but in their case the goal is to work on the primary labor market. Hungarians who commute abroad or permanently live abroad can even form part of the labor force reserve. Based on Scharle’s insights, a few tens of thousands of people could be integrated into the labor market relatively quickly, and in the case of larger state expenditures, it may become possible to involve additional groups in the longer term.
According to Scharle, the easiest inactive group to involve are mothers raising children of kindergarten age. The expansion of nursery places is essential for this, which could be promoted relatively easily in case of more extensive funding. Even in villages – where the proportion of inactive people is typically higher – family crèches could be quickly established, which do not require a separate building, and one caregiver can deal with five to seven children. In addition, he emphasized that it would be important to change social attitudes, as it is still a typical expectation that women stay at home until the child is three years old.
According to the researcher, activity could be increased relatively quickly even in the case of women close to retirement. This could be the re-adjustment of the “women 40” discount. This currently allows women to retire after 40 years of eligibility, but it could be an incentive to work longer if those who use the discount only received the full pension amount from the age of 65. Support for part-time and telecommuting schemes can help retirees and mothers-to-be activate. The promotion of these forms of employment is also included in the Tisza program, but the conditions of the “women 40” would not be changed, and the “men 40” program would also be created, which would be implemented “gradually and while ensuring the sustainability of the pension system”.
The third group includes those who live in deprived regions – mainly in small settlements in eastern and southwestern Hungary – where there are hardly any job opportunities. Many of them would be able to get to work quickly if there was a transport infrastructure connecting the smaller settlements with the surrounding industrial estates. Mentoring and skill development are also important so that they are prepared to go to work: according to Scharle, this can be achieved in many cases even after a short preparation, for example in Borsod there was an example where Roma people living in a village were able to take on factory work after 30 hours of skill development training. In these trainings, it is important to get to know the factory shift schedule and to build self-confidence. The state should invest significant amounts both in training and in mapping out where potential employees can be found.
The last group includes people with altered work ability: in their case too, skill-building rehabilitation programs are needed, as well as sensitization of employers. Many of the latter do not know how to hire and retain people with disabilities, despite the fact that over 20-25 employees must pay a penalty if at least 5 percent of the employees do not belong to this group. There is the domestic professional knowledge to start rehabilitation programs, but there is a significant lack of capacity, so this also requires significant funding from the state.
There is also the possibility of attracting Hungarians working abroad, but a serious obstacle is that this is difficult to imagine without a significant increase in the wage level, even though these workers typically belong to the highly educated group. According to the program of the Tisza Party, tax and contribution discounts could be used to encourage people living abroad to move home. However, according to József Nógrádi, if this is implemented, it may cause displeasure among those who have been working here so far.
It emerges from this that there is indeed a significant labor reserve in the country, but the mobilization of a significant part of the groups belonging to it is possible over a longer period of time and only with the implementation of significant state investments. The question of the coming months is what measures the new government will take on the labor market in the face of the poor budget situation and the additional commitments.
