Western companies in Hungary, including Unilever, Philips, IBM and General Motors, are investing considerable time and money in training and in changing the mentality of their Hungarian employees. By doing so, they are bringing about changes in the local labour market. These are the results of interviews with personnel and production managers representing 50 western industrial companies in Hungary. The interviews were carried out by economic geography researchers from Utrecht University with funding provided by the NWO¹s Foundation for the Social and Behavioural Sciences. Changing the Hungarian labour market is an important step in the transition from a planned economy to a market economy.
The companies invest a great deal in training production workers, who often learn the qualities necessary to deal with modern production methods on the job. The companies make use of the high level of education of Hungarians in technical disciplines and of their willingness to learn.
The companies are also helping the Hungarians to acquire management skills. All foreign companies in Hungary are facing a shortage of managerial staff for human resources management, logistics, production, sales, marketing and financing. Under the hierarchical structure of the old socialist regime not enough people were prepared to take decisions. Moreover, the Hungarian education system is not sufficiently attuned to the market economy to train enough people for these new professions. Finally, the number of foreign companies setting up in Hungary is increasing, so that there is a growing need for managers.
The western companies also train their employees in so-called tacit knowledge. This refers to the way of thinking and working in a market economy. After 40 years of socialism, the way of thinking and working in Hungary is very different from that in western countries. Under the socialist regime, workers hardly ever substituted for one another, and production would come to a standstill for a long period when machines stopped. People also often worked on projects of their own during working hours. Companies are attempting to train employees to be more flexible in the way they approach their work, to work as part of a team, and consider what is best for the company. The researchers also found that the unemployment resulting from the privatisation of state-owned enterprises was only temporary. Radical shake-ups led to a large number of people being made redundant. Five years later, however, the number of employees in half the privatised companies is already back up to the old level as a result of increased production and the setting up of new departments for marketing, sales and distribution.
Some western companies have set up branches in Hungary so as to take advantage of cheap labour and thus reduce their production costs. Other companies have done so in order to increase their share of the Hungarian market.
Further information:
Hans van Hastenberg (UU)
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