Why employees have become more cautious about changing jobs

Last year's recession affected different industries differently, with turnover varying across sectors. In manufacturing, turnover fell significantly to 28 per cent last year, down from 36 per cent a year earlier. In contrast, it increased slightly in the services sector, from 31 to 33 percent, and in trade, from 23 to 26 percent.

Turnover in placement services and student staff has fallen dramatically, accounting for 9 per cent of the total. The turnover of agency workers has fallen from 192 to 129 per cent and that of students from 210 to 144 per cent, but is still at critical levels. The turnover of own staff has fallen from 26 to 23 percent.

The turnover of white-collar workers has fallen from a peak of 19 per cent a year ago to 16 per cent, and the outflow of blue-collar workers has gone from 40 per cent to 35 per cent.

Firms' demand for labour has fallen

"The economic difficulties of the past year have created significant challenges for companies, which has had a direct impact on worker mobility. Companies' demand for labour has decreased, 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 increases has dropped significantly: while 44 percent of firms raised wages at least twice in 2022, only 20 percent gave at least two raises last year.

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

Labour demand is compensated by the 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.

Guest 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.

The reasons given by companies for employing foreigners include the lack of sufficient quantity and quality of Hungarian labour, lower and more predictable turnover due to the prevalence of fixed-term contracts, and the better performance and productivity of guest workers.

"Of course, there are plenty of downsides to using guest workers. The main disadvantage is the language difficulties, as translations, multilingual information leaflets and interpreters are needed, which complicates the 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.

One might legitimately ask: if guest workers are expensive, why employ them? Many have reported higher reliability, lower absenteeism and greater flexibility of guest workers. In many cases, Hungarian employees of companies also prefer to work with motivated guest workers rather than with unskilled nationals who do not want to adapt or 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 staff with the right skills. And 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 paradigm shift is needed in this situation, according to the turnover management expert. It is not a question of looking for ready-made employees, but of retraining and developing candidates with good 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.

The changing world demands new rules and a different approach from employers. Workplace rules need to be reviewed and applied to be realistic. For example, it must be recognised that wifi is now one of the most important necessities that workers must have. A compromise must be found on how to allow its use within a controlled framework, because it cannot be banned.