Why workers have become more cautious about changing jobs

Last year's recession did not affect different industries in the same way, with the change in turnover varying from sector to sector. In the manufacturing sector, turnover fell significantly to 28 percent last year, down from 36 percent a year earlier. In contrast, it increased slightly to 33 percent from 31 percent in the service sector and to 26 percent from 23 percent in trade.

Turnover of temporary and student workers fell dramatically, accounting for 9 percent of the total. Turnover of Temporary workers fell from 192 to 129 percent, and that of students from 210 to 144 percent, but is still at critical levels. Turnover of own staff has fallen from 26 to 23 percent.

Employee turnover has dropped to 16 percent from a peak of 19 percent a year ago, and blue collar churn has dropped from 40 to 35 percent.

Firms' demand for labour has fallen

"The economic difficulties of the past year have presented companies with significant challenges, which has directly affected worker mobility. This has led to a decrease in companies' demand for labour, which has made many employees more cautious about changing jobs and has reduced turnover rates" - explains Katalin Csikós-Nagy, fluctuation management expert and managing director of HR-Evolution Kft.

This explanation is supported by the fact that 23% of companies have deliberately not replaced their leavers, engaging in passive redundancies. In addition, the frequency of wage increaseshas fallen significantly: while 44 percent of firms raised wages at least twice in 2022, only 20 percent gave at least two wage increases last year.

There is also a shift between sectors. In previous years, turnover was highest in production. This has changed for the first time this year, with now the highest turnover in services.

Labour demand is being offset by surplus labour in less fortunate sectors. However, supply and demand do not always match. For example, trade and services may not be able to employ a worker released from production

Contract workers ease labour shortages in the manufacturing sector

The need for labour in the manufacturing sector has also been alleviated by the arrival of foreign workers. Half of the manufacturing companies surveyed employ foreign guest workers. They employ mainly workers from Ukraine and the Philippines, but also workers from South East and Central Asia and Serbia

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The reasons cited by companies for hiring foreigners include a shortage of sufficient quantity and quality of Hungarian labour, lower and more predictable turnover due to typically fixed-term contracts, and better performance and workload of guest workers.

"Of course, there are plenty of downsides to employing guest workers. The main disadvantage is the language difficulties, as translations, multilingual information leaflets and interpreters are needed, which complicates processes and organisation. In addition, cultural and religious differences are a problem, which requires training for managers and an integration programme for staff. In addition, employing guest workers is more costly, for the above reasons, as well as providing accommodation and meals," points out Katalin Csikós-Nagy.

It is natural to ask: If guest workers are expensive, why employ them anyway? Many have reported higher levels of reliability, lower absenteeism rates and greater flexibility for guest workers. In many cases, permanent Hungarian employees of companies also prefer to work with motivated guest workers rather than with unskilled nationals who do not want to adapt and work, the expert said.

Labour market paradox

"A kind of labour market paradox has emerged. Although turnover has fallen, it is still very high, more than double the ideal. Although many people are looking for work, employers are still finding it difficult to find workers with the right skills. And the situation on the labour market is unlikely to get any better," says Katalin Csikós-Nagy.

The active labour force will continue to shrink, with nearly 30,000 more workers leaving the labour market each year than entering it, while more and more factories are being built. And the younger generation has a different attitude to the monotonous work and high expectations of a manufacturing company.

A turnover management expert says a paradigm shift is needed in this situation. It is not a question of finding ready-made employees, but of retraining and developing candidates with the right skills and potential. This approach allows for much greater immersion. And in the case of intensive expansion, the use of foreign workers should be considered where possible, because in the light of today's labour market trends, this is increasingly inevitable in the long term.

A changing world demands new rules and a different approach from employers. Workplace rules need to be reviewed and brought to life. For example, it must be recognised that wifi has been added to the list of essential needs that must be provided for workers. A compromise must be found on how to allow its use within a controlled framework, because it cannot be banned.

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