The impacts of skilled immigration on

the Hungarian Hospitality Industry

Rebecca Gayer

Certificate in International Hotel and Tourism Operation

HTMi, Switzerland
Introduction

“You can find people to work for you, but the question is whether you can find the

right people to support your initiatives and properties at the highest levels. It’s one

of the hardest things to accomplish” (Conran, 2014 cited in Watkins, 2014). This

underlying statement is revealing the current problem of the lack of skilled workers

in several countries industries. The complex phenomenon also occurred in

Hungarian industry in the 1890s, and was caused by skilled worker emigration,

which has been accelerating since the last eight years, therefore causing significant

problems in each field of hospitality organisations (VIMOSZ, 2015 cited in

munkajog.hu, 2015). According to researchers, it is becoming more and more

popular searching for a job in foreign country, and it has even became a part of

modern popular thinking. This process can be identified as a „brain-drain”, due to

the extraction of the most skilled workers. As a result, freshmen and unskilled

workers will be an alternative solution for Hungarian establishments, which could

lead into troublesome operations. The aim of this study is to analyse the skilled

worker emigration from the Hungarian hospitality industry.

Hungarian skilled migration

Labour migration has become a popular feature worldwide (ICMHD, 2013). The

number of international migrants is estimated at around 232 million, however, this

rate is still growing due to different factors such as; globalization, climate changes

and the income inequalities. The process is spontaneous, therefore causing

diversified problems to industries (ILO, 2015) (Albert and Hárs, 2012). Based on a
study of Enz (2014), the skilled immigrants are significant contributors to foreign

countries business and population, by providing relative cheap manpower while

obtaining valuable knowledge. Besides this, they ensure economic growth, colour

the cultural diversity and also bring innovation to host countries (Embrace, 2014).

Migration is mainly happening from developing countries towards developed ones,

therefore immigrants are willing to fill workplaces, which are undesirable for local

people (Rasic, 2010). Currently labour emigration is a commonly highlighted issue

in the Hungarian hospitality industry, as it is a welfare migration, containing various

and complex background reasons. Due to the gradually disintegration of workplace

obstacles, exodus has been increased remarkably since 2004 (Móricz, 2013)

because of the Hungarian European Union Membership. This allowed citizens to

travel to all European member states (Bodnár, K. and Szabó, L. T., 2014). The next

pitch was 2007 onwards, when economic indicators and conditions of labour

market started to worsen, involving the country more than the surrounding

developed ones. Lastly, the opening world market brought a rapid acceleration,

causing continually growing numbers (KSH, 2011) even despite the return

migration (Gödri, 2014).

Scientists estimate that around 600.000 Hungarian people are working outside the

borders, however there is no accurate number because of the commuters. Domestic

labour started considering abroad as a “new solution”, regarding salary, living

standards, environmental- and other circumstances. Hungarian skilled workers are

mainly drained from the construction and the hospitality industry (Eidenpenz,

2013) and after the exodus they think whether to stay in these industries or change
to completely different fields. Immigrants are mainly professional chefs, pastry

chefs, service members, receptionists, bartenders, even dishwashers and

housekeepers. Investigating the age, it is acknowledged that a quarter of them are

under 30 years and 63% of them have not reached 40 yet, only 5% can be

categorised being older than 60 (SEEMING, 2014) reflecting the high concentration

of young people, and the fact that they will become younger. Data about leaving

Hungarians are identifying inverse ratio between overeducated emigrants and

under educated non-emigrants (Lukács, 2014), which is absolutely natural, because

only the educated and skilled people can be the targets of labour migration,

especially in the hospitality business, and only these workers are needed in the

world labour markets (Choi, Woods and Murmann, 2000). This labour brings such

quality and quantity of education that the foreign countries do not have outgoings

on education for them (MIT, 2015). The destination countries will receive organised,

highly valuable, flexible, culture, religion and familiar labour, which ensure high

quality work, even for lower expenses. The main destination where the exodus

moves is first of all to Germany, this is followed by the United Kingdom and lastly

Austria. These three countries are attracting the most of skilled people, because

their economic stability, development, work market and high revenues compared to

the domestic wages.

Issues caused in the hospitality industry

Although Hungary is not the leader in skilled labour shortage, the Manpower survey

emphasizes that 45% of the organisations have serious problems when searching
for the right employees. With this enlarging process Hungary is on the way towards

being a country which consists of mainly unskilled, under paid employees, who

cannot provide the required quality level of services (Varga and Torontali, 2015).

The impacts can all be concluded back as a consequence of the “brain-drain” process

and the lack of the most talented people (Darvas, 2013). Skilled workers emigration

can cause various negative and even positive short and long-term impacts on

Hungarian hospitality industry. As negative effect there can be a shrinking labour

pool, crossed with greater wages and increasing expenses. The biggest consequence

is that „small businessmen are unable to hire qualified workers” (Hungarian

Spectrum, 2015) as well as, labour shortage and turnover, food service- and

preparation quality decadence, and further internal structural and social issues. The

most determinant issue is the educated labour shortage, which does not allow

entrepreneurs to find competent employees, therefore maintaining required

standards can be a hard manageable task for organisations. Even though there are

people who are reachable for positions, they may not obtain proper, professional

skills which provide the needed level. These workers are mainly unmotivated,

accept positions because of needs, and the majority of them consider hospitality as a

salary compensation. Mostly sectors such as catering, food preparation, services,

management and the products are negatively influenced, and causing reducing

quality. (Meier, 1991) Professionals also dispute organisation’s sustainable

successful performance, because inexperienced freshmen can cause higher wastage

percentages. To avoid it, employers have to sacrifice higher wages to make workers

more concentrated, leading to bigger expenses. Employee lack also causes the
prohibition of innovation, meaning that the organisation cannot hold step with

modern technologies and therefore with the market. Another determinant issue is

the employee turnover (Silva, 2014), because of this, organisations do not have a

stable workforce, which makes even small operations hard to handle. Furthermore,

it leads to cost increment due to recruitments, selections, trainings and onboardings.

Besides these impacts, the exodus also influences the competitiveness and the

productivity of the institutes (even though this is mainly referred on goods-

producing industries), it is also as important in service sectors. Unmotivated

employee productions can cause bad reputation or negative impression of a

hospitality organisation, or giving bad experiences for guests, contributing to

dissatisfaction. Poor service delivery has serious effects on costumers behaviour as

well. As a consequence for businesses, profit can decrease, even followed by heavy

financial problems or bankruptcy. Socially, negative impression of the overall

hospitality industry can occur, being an undesirable long term work option (Enz,

2004). The best example of this complex issue is the area of the Lake Balaton, where

last summer the shortage has risen to a threatening level (Trademagazin.hu). Hotels

and restaurants have had very serious difficulties when finding staff (XpatLoop.com,

2015), and even if, these workers were mainly unskilled students, who reduced the

quality of service, moreover, some organisation could not even open because of the

lack. On the other hand, immigration can also have positive impacts, for instance

shorter salary increment, valuable knowledge and techniques which can be used in

domestic workplaces, gained by Hungarian emigrants during their time abroad

(brain gain). Unfortunately there is no evidence, and until now, not even prediction
of exceeding employee reversion, which could contribute to further improvements

in the industry.

Conclusion

Summarising the whole process it can by stated, that the growing migration likely

causes further issues to the industry. Unexpected impacts can occur, which can be

either positive or negative, making solution harder and deepening the complexity.

According to the Man Power survey, Hungarian employers have to deal with further

rising work market competition for talented and skilled employees. How the process

will continue is still a consequence of many contributors, however it is sure, that

Hungarian businesses have to do everything in order to find competent people and

to retain them. It is worrisome, that while in globalism only 22% of the asked

organisations do not have any recommendation or solution, this number is at

around 98% in Hungary. Whether Hungarian Industry can cope with the problem

remains a highly doubted topic.

Recommendation

Preventing labour migration from Hungarian Industry is highly problematic because

of its complexity. Major retaining factor could be done by Government, given

financial solution, however this paper mainly concentrates on internal and

structural solutions. Researcher claims, that interior changes and improvements

could be done in order to make employees satisfied and keep them at their work

places. Basic and important changes could be done on the level of education, by

creating a system which “strains off” freshmen, who are able and willing to provide
required quality for the Industry, and support or remove people who do not. This

could raise the overall quality of services, therefore making operations easier and

contribute to further business developments. Other steps could be made by

motivating these people with better working hours, creating friendly work

environment and atmosphere, providing trainings while ensuring them a career

path to achieve major goals based on their performances. It would be essential to

handle these people as a long term investment, and giving a strong example for

hospitality career starters. This all could improve the image of the Hotel Industry

and attract talented people, while making it more desirable even for the longer

terms.
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