True to my promise I am sending you the accumulated data of the salary survey. I was delighted when I saw that this year the questionnaires were filled in by almost three times more people than in the past 2 years.
The results are summarised with regard to the entire market and broken down based on the number of employees, regions and company types.
One thing that I highlight every year, and this year is no exception, is that it is important for everyone to interpret the data with due regard to their situation. I.e. the rate of increase is obviously different where salaries are above the market average compared to those companies that have lagged behind the competitive market rates for years. This is particularly important to bear in mind now, as significant wage developments have already been implemented at a lot of companies in the last 2-3 years.
- Nearly 2,000 companies were solicited
- types of companies: commercial, service sector, manufacturing companies
- the composition of industry sectors is intentionally mixed: automotive, banking, insurance, pharmaceutical, construction, entertainment, FMCG, retail, B2B, advertising, heavy industry
- geographical locations: East, West Hungary and Budapest
- This year’s results seem to be more diverse than last year’s, reflecting a possible weakening of the economy. Last year there were not any companies where they said that they were not going to plan a salary increase. This year there were a few respondents who indicated no salary increase at all. In general a more restrained, more cautious approach is noticeable among companies. Some companies are expecting an economic stagnation or even an economic slowdown. As a result, despite the fact that there are still a lot of companies where they are planning to hire, some companies are considering redundancies and at even more companies no changes are planned with regards to staffing.
You can find all the details in the attached excel table but some of the most important findings are also included hereafter:
- manual workers: this is where plans were shown to be the highest i.e. 0-10%, especially in the manufacturing sector where at certain companies an increase of even 10-20% was indicated
- white collar workers (excluding engineers): 50% of the companies are planning an increase of 0-5 %, 50% of them an increase of 5-10%
- white collar workers (including engineers): an increase of 5-10% is planned
- managerial level: 1/3 of the companies are not planning an increase, most of them are planning an increase of 0-5 %, 20% of them an increase of 5-10%
In the past few years you could hear a lot about the abolishment of the Cafeteria elements as benefits and turning it into cash payment. According to the results of the survey this has not be the case, or not entirely J. Cafeteria is provided by all the companies, its value being between HUF 100-300,000, or a value even higher, above HUF 400,000 at 25-30% of the companies.
Increase in staff:
As I mentioned earlier most companies are not planning an increase, approximately 10-15% of the companies are planning an increase which is of 0-5%, cutting down of workforce is a new phenomenon which is indicated by 15-20% of the companies.
Difficulty of finding workforce compared to last year:
In most cases, companies said that it was equally difficult or even more difficult to find suitable employees. However in certain regions (e.g. in Western Hungary) and sectors (e.g. commerce and service) companies on the contrary said that it was easier, which is a new phenomenon. Based on our experience there have been some noticeable signs in the past quarter year indicating this trend which was reflected among the candidates as well in some cases. Candidates have become more considerate and there have become fewer offers for them to choose from. Finding the right candidate however, still seems to be a problem.
Where are the hard-to-fill vacancies:
It is typical that companies with a workforce below 10 do their own recruiting and very often hire among their acquaintances. For this reason this is not a relevant question for these small companies. 70% of the larger companies clearly indicated that they struggled to find manual workers. 30% of them are still finding it difficult to search for white collar workers and engineers. On the other hand, finding employees for management levels did not seem to be an issue for anyone.
Remarks and advice: The reason why companies do not seem to struggle with finding managers is because they usually entrust consulting companies who do the search for these people. This way, the companies only see the end result of the recruiting process. They do know how difficult it is for the consulting companies to find the right candidate for them. It would be highly recommended to let professional recruiters look for other professionals as well. Trust me, you would not end up paying more than by doing the search on your own. Adding up all your associated costs (repeated self- placed adds, loss of time, getting several people assigned with the recruiting process) a consultant’s fee would not be higher.
I tend to suggest that if you know a consulting company you trust, talk through the position with them. Discuss the given searches if you wish to be executing them partly. Ask for the consultant’s advice about what aspects of the search could be done by you and which part could be done more efficiently if a consultant handled it. They should also be able to give you accurate advice whether another consultant company would be able to provide a more tailored service to your particular needs. You ought to receive trustworthy advice from a really professional consultant. They will not just tell you that they can do everything.
How do companies look for specialists:
Only half of the respondents said that they use external help. A lot of the respondents do the recruiting for specialists on their own or use temporary staffing agencies. I must add though that clients still very often mix up the terms ‘temporary staffing agency’ and ‘headhunting agency’, so results might not reflect the reality.
Once again, what I advise is to talk though your search plans with a professional expert in the recruiting field.
Expectations for 2020 regarding the economy:
One third of companies are expecting growth, the majority of them are expecting stagnation, 15-20% of the respondents are expecting the economy to slow down and recess. Interestingly, smaller companies seem to be more hopeful that the bigger ones. However, bigger companies indicated that they are planning a bigger increase regarding the number of workforce than the smaller ones.
This year I would like to share some remarks with you that were pointed out in the surveys by some respondents which I can combine with our specific experience and opinion.
- Do we have data and experience about the rate of Hungarian employees in the Hungarian job market who are returning from abroad: In the past few months we have been approached by employees working in the UK with the request that if we happened to have opportunities, they would not mind returning. It is not obvious whether it is down to Brexit or not, but clearly no one likes insecurity. There are certain indications that people would like to return to Hungary from Germany, Austria, Switzerland as well. However, the majority of these employees would rather stay because of the higher salaries, more secure and peaceful life these countries can provide. Based on our experience, more and more employees are willing to accept regional tasks if their private base is guaranteed to be in Hungary.
- Quite a few respondents mentioned what I pointed out earlier as well, that searches seem to have become easier but the quality has gone down quite a lot in the past 2-3 years. I believe that it would take a good one or two years for the job market to stabilise due to a potential economic slowdown, expected lay-offs and newly appearing candidates.
- University apprentices, training and loyalty: many complaints were expressed about providing training for apprentices who then change their minds and leave the company. Justified or not this seems to be characteristic of young people. However is not only true for young people nowadays. It can be seen base in the CVs of candidates of the 40-50s that they worked at 2 or 3 workplaces in the first 5-6 years of their career. That is how long it took them to gain enough experience to see what they really wanted to do in life. You can only fill gaps from time to time by employing trainees and you have accept the fact that they will soon need to be replaced as well. Another reason why companies like employing trainees is that they are cheaper workforce. Companies hope that with a little bit of investment they end of having well trained, solid employees. As very often seen, trainees having gained enough experience will leave if better conditions are offered to them elsewhere.
Therefore, it would be a good idea to give these trainees little by little more tasks and increase their wages making the company attractive enough for them not to leave.
- It is also important to take into consideration where your trainees graduated from. If they graduated from a prestigious university they would certainly feel the need to something interesting. If as trainees they are employed only to make coffee, they will lose enthusiasm very quickly. My advice regarding trainees is the same as for any employee. You should only take the ones on who fit in with the profile of your company and who would feel proud of working for you.
- Some respondents mentioned that they had to implement a pay rise because neighbouring companies would otherwise attract their employees to work for them instead.
I have the following two suggestions for this issue. You should look into whether your salaries and wages are still compatible in the market. You can do it by looking at more distant regions as well (it is important to bear in mind the sector and the size of company when comparison is made). It is perfectly possible that it is not the salaries at the neighbouring company that are too high but the salaries you give are too low. If this is not the case, then the best thing to do is for the local managing/HR directors to gather and agree on not taking employees away from each other within the at least the same industrial estate.
- dual education system, apprenticeship: there are a lot of criticisms regarding the education, the education system and the quality of education. With many years of interviewing experience what I can say is that if young people focus on speaking at least one or two foreign languages fluently, try to be open and flexible, do sports (as life has become rather stressful and it is an essential form of stress release) then, apart from highly specialised positions, everything else can be learnt. With this in mind you also need to have employees with an open spirit and be willing to train them rather than just looking for fully trained specialists. Companies should try to search for candidates whose personality best suits the profile of the company, the rest can be taught to them. Companies should have a well-planned concept for training successors regularly and continuously.
This way companies can avoid panicking and rushing around when some of their employees resign. They should have at least one or two people who are ready to take over these tasks without having to start the training of complete beginners from scratch.
- efficiency: I totally agree with the comment of a respondent, about the fact that we tend to talk about the lack of workforce and salary increase a lot and not much or at all about efficiency. Hungary is still behind a lot of countries. In Hungary it is still very common that people find it difficult to accept newly introduced systems or new processes to be implemented which would contribute to facilitating their work and would encourage efficiency. It is important to add though, having visited a lot of international companies that are based in Hungary that there is a difference between the operation of their offices abroad and in Hungary. Abroad they have a specific person assigned to each task, whereas in Hungary very often the same person needs to fulfil two or three different positions. This very often results to constantly having to deal with emergency situations.
- robots: you can mainly see them used in the production sector, but they have started to appear elsewhere as well. So far the impact of robots on the workforce has not come up as a question in the surveys but their role is constantly increasing year after year. First, in the field of mechanical, repetitive tasks, but due to artificial intelligent they will also be able to take over more complex tasks in the future.
- environment protection: we did not see any remarks about this topic, despite the fact that there are a lot of companies who spend a lot of money on a greener work environment. The reason why I find it important to point this out is because it is becoming more and more important for the younger generation to know that the company they work for have policies set out for a sustainable life and environment awareness.
The market from the point of view of available jobs was positive this year as well. Candidates all the way through the end of the last quarterly year could choose from several job offers. There is one sector I would like to point out though that struggled, which was the automotive industry. We have been hearing from the clients nearly for a year that due to less orders coming in they had to cut down on staff. The construction sector is still thriving, nevertheless there are a lot of unfinished projects which are likely to remain unfinished in the future too. By the end of next year, or by 2021 the latest, this sector is forecasting decrease.
Companies have become a little bit more caution with regards to salary increase. Finding quality workforce still remains challenging for everyone including both companies and consultants. The salary expectations of candidates are very varied. There are candidates who still have no idea about the value of their skills in the job market, there are candidates who over estimate themselves, and there are also those who just say a random figure when asked about their salary expectation and see if it is expected or not. The average was taken from the salary expectations given by the majority of the candidates.
Similarly to my advice of last year, despite the difficult situation of the job market you should only employee a candidate if he or she proves to be as suitable as possible for your expectation. If you employ someone who is only half good, you will end up spending more on the person that not having employed them in the first place. Take your time, wait for the best specialist, it has been proven many times that it is worth it. You will see that with a new search, just a few weeks later the right candidates will appear.
According to experts the economy is either going to stagnate or decrease in 2020. However, you should not worry about it too much. The 2008 crisis lead into the training of skilled crisis managers who will be there to help if needed. The economy is a system with ups and downs, it cannot be up all the time, if it was the case companies would get lazy. It might be the case that you need more energy to achieve your desired goals, but the goals can be achieved. To do it successfully you need to be able to innovate, be open to new things and change some of the old ones if necessary.
I wish you all my best for the future and a prosperous year in 2020!
I do hope that with this summary I could provide some useful, additional information compared to a standard salary survey.
If you have any questions, please do not hesitate to contact me.