COMPETITIVENESS OF THE HUNGARIAN LABOUR MARKET Mr. György Rétfalvi CEO. Budapest, 26 th June 2009

Transcription

1 COMPETITIVENESS OF THE HUNGARIAN LABOUR MARKET 2009 Mr. György Rétfalvi CEO Budapest, 26 th June 2009

2 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

3 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

4 Global trends The role of the business services is increasingly important Average project size 15% smaller in 2009 compared to 2008 In a technology-based industry the knowledge is the driving force The push factors of investments: Low costs Incentives and grants Low taxes Flexible labour markets Ease of establishing and running a business Logistics Infrastructure and accessibility Language skills Source: fdi Markets

5 Analysis of criteria used by international executives in selecting investment locations 1. Getting to market 2. Labor and productivity 3. Taxes and laws 4. Environment and region Hungary has proven to be one of the most popular locations in Europe 1.New individual and corporate taxation 2.Government incentives and tax relief granted to foreign companies 3.Hungarian Outsourcing Association highly supportive of Business Process Outsourcing (BPO) and shoring activities 4.High quality graduated labour pool with strong language skills 5.Low wages compared to Western Europe 6.Stable interest for multinational working environment 7.Rising office vacancy, high level of new supply, low rents 8.Flexible leasing conditions, tenant-favoured market Source: Ernst&Young European Investment Monitor, Jones Lang LaSalle, 2009c

6 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

7 Many investors became successful in Hungary Han ankoo ook

8 Growing equity and reinvested earnings (million HUF) Inflow (million HUF) Source: National Bank of Hungary, 2009

9 FDI stock by sector in % Manufacturing Electricity, gas and water supply 36% Services Other 56% 5% Food products, textiles, leather products 36% Services 1% 27% 1% Wholesale and retail trade; repair of vehicles Hotels and restaurants Transport, storage postal services and communication Financial intermediation Manufacturing 1% 9% 5% 30% 17% Wood products, paper products Coke, refined petroleum products and nuclear fuel; Chemicals and chemical products Rubber and plastic products Other non-metallic mineral products Basic metals and fabricated metal products Machinery and equipment 22% 13% Real estate activities and business activities Other Services 17% 4% 8% 5% 4% Electrical and optical equipment Transport equipment Manufacturing not elsewhere classified Source: National Bank of Hungary, 2009

10 Hungary is shifting towards a service profile Districution of industrial/services projects over the period (number of projects) Source: Ernst&Young European Investment Monitor, 2009

11 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

12 Hungary ahead in labour productivity 80 GDP in Purchasing Power Standards per person employed relative to EU-27 (EU-27=100) Slovakia Hungary Czech Republic Poland Romania Bulgaria (f) Source: Eurostat, 2009

13 Labour availability IMD s World Competitiveness Yearbook ranks 55 countries by the availability of skilled labour Hungary is among the best 10 European countries 1 Taiwan Israel Philippines Switzerland Ireland Japan USA Singapore Solombia Austria Hungary Slovak Republic Lithuania Czech Republic Bulgaria Poland Romania Estonia 2.44 Source: IMD, World Competitiveness Yearbook 2008

14 Liberal labour regulations Labour regulations do not hinder business activities, Denmark Singapore Hong Kong Switzerland USA Thailand Canada Israel Taiwan Japan Jordan Australia Austria Hungary Slovak Republic Romania Czech Republic 3.94 Source: IMD, World Competitiveness Yearbook 2008

15 High standard of educational system Traditionally high-quality schooling Comprehensive knowledge Pupil/student-oriented Focus on foreign language Qualified Flexible Creative } Workforce Globally recognised in: Software development for mobile applications Telecommunications Document management IT, data security and data protection

16 Well trained, creative and flexible human capital Number of institutions in higher education 71 Number of school-sites 173 Number of students in higher education 397,704 Majoring in: Business and Administration 100,553 Engineering 33,020 Informatics 15,084 Number of graduates in ,166 University Towns Veszprém 10,600 Budapest 161,300 Pécs 33,100 Pécs Miskolc 13,600 Szeged 30,00 Debrecen 25,200 90% of students speak English 2nd most popular foreign language: German, followed by: French, Italian, Spanish All diploma with foreign language certificate and computer skills! Source: Ministry of Education and Culture 2007/2008

17 The talent challenge - Quality Suitability rates are empirically based on 83 interviews with HR professionals working in countries. Source: McKinsey Global Institute, 2008

18 Competitive average wages Monthly gross average wages, 2007 ( ) Source: Eurostat, National statistical offices, ANPE, 2008

19 Labour force in Hungary Economically active population: 4.2 million Employed population: 3.9 million Services 65% Agriculture 3% Labour force by sector Industry 32% Examples for strenghts of the Hungarian labour force: Hungary Slovak Republic Availibility of skilled labour Czech Republic Finance skills International experience Poland Source: Hungarian Central Statistical Office, IMD Competitiveness Yearbook, 2008

20 Testimonials The decision to select Budapest was as a result of a detailed location analysis conducted across a number of European cities. Selection criteria included suitable labor availability (population size and growth, skills and language availability), costs (labor and real estate) and risks (economic, political and social factors). Budapest offers a highly skilled and diverse workforce, with the broad language skills and the technical and customer facing skill sets we are seeking. Furthermore, it has an established and proven service industry track record recognized across Europe. Kevin James, Vice President of Business Services Transformation, BP Refining & Marketing Segment Hungary was and remains an attractive market for Shared Service Center type of operations since we have very good professionals with strong language skills and work ethics, and besides, the flexibility of the labor market and the advanced infrastructure are also significant contributors to our strengths. Needless to say that these factors need to be combined with a competitive cost structure what we also found appropriate in this country. Attila Bukovszki, CEO, Citi Shared Service Center Locals have all the necessary skills to constitute a high quality workforce. Balázs Horváth, IBM Communications and Customer Relationship Manager

21 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

22 The new package of the Hungarian government in order to promote employment and improve the situation of employers Reduction of employers contributions: instead of the current 32% employers will be obliged to pay 27% (26% social security contribution plus 1% employer s contribution) on employees salaries that do not exceed twice the amount of the minimum wage. The sick pay rate for the first 15 days of sick leave as prescribed by the Labour Code: employees will be entitled to 70% of their salaries (instead of the current 80%). The corporate income tax rate will increase from 16% to 19%. At the same time, the special profit tax payable by corporations will be abolished (-4%).

23 Agenda 1. Global trends and key drivers 2. FDI-trends in Hungary 3. Competitiveness of the Hungarian labour market 4. New package to promote employment and improve the situation of employers 5. About ITD Hungary

24 Investment and Trade Development Hungary: an agency of the Hungarian Government Key competences of the agency: FDI promotion Exploring new channels to investors (lead generation) One shop stop for investors Implementation Aftercare Promoting Hungarian businesses internationally Supporting export capabilities of Hungarian SMEs Supporting foreign investments of Hungarian SMEs Supporting Hungarian SMEs to become suppliers of large multinationals Other major tasks Maintenance of representative network abroad Channelling the business related experiences of ITD Hungary through policy making initiatives to the government for boosting competitiveness Image creation

25 Investment promotion I. Lead generation Contact with 10,000 companies/year 118 events in 2008 III. Implementation Administrative onestop shop for investors implementation projects II. One stop shop 290 projects/year 30 realized investment in 2008 Euro 1.54 billion investment in ,094 new jobs in 2008 IV. Aftercare 20 reinvestments in 2008 Interview with 135 investors/year Generating new investments (R&D, service centres) Advocacy

26 Project management services for investors Decision Detailed tailor-made information package about economy, politics, financial incentives, business environment, tax system, sectors incl. electronics, etc. Site visits, meeting with local, regional and government bodies, experts, service providers, consultants, potential suppliers, etc. Tailor-made incentive solutions Implementation Accelerating permitting procedures, evaluation of potential investments. Assistance in incentive application VIP treatment for expatriates (visa, working permits etc.) Aftercare Special follow-up contact services Assistance in further investments, expansions

27 Thank you for your kind attention! György Rétfalvi CEO Hungarian Investment and Trade Development Agency (ITD Hungary) H-1061 Budapest Andrassy ut 12. Hungary Phone: Fax: info@itd.hu Internet: