Tamás Farkas, Division Manager at Grafton.
Today, a novice engineer can earn as much as an engineer with several years of experience. The gap between skilled workers and new carpentry engineers has also narrowed; often the two do almost the same thing.
Despite what seemed likely a year ago, the coronavirus pandemic has not changed the dynamics of the labor market in recent years. After a temporary halt in recruitments and layoffs (or in some cases, holidays) in 2020, most companies have returned to the path of hiring in 2021.
And not just one or two positions, but employing in large numbers, where they could. Indeed, they had not only to assume the figures planned for this year but also to catch up with the hirings they had not made in 2020.
Given the severe labor shortage that is returning, this has been a challenge, to say the least. This is especially the case in industries such as IT and engineering, where the market was candidate driven long before the COVID outbreak and where, due to digitization, the demand for professionals has declined. increased only during the pandemic.
“In IT, the market needs around 8,000-9,000 professionals,” Tamás Farkas, division manager at Grafton, told the Budapest Business Journal. “Here, the competition for the right candidates is enormous. Experience measured in years becomes less important. The emphasis is much more on technological knowledge and project experience, ”he adds.
Impact on wages
This growing demand for professionals has had an impact on salaries. Since applicants with little or no experience know they are needed, they demand much higher salaries and companies have no choice but to pay. It does mean, however, that the salary of a junior engineer is not much less than one with three or four years of experience.
And not just in IT. In the case of engineers and logistics professionals, the salary difference between those with zero years of experience and those with three, say, is around 50%, while between three and three years of experience five to seven years, it’s 10 to 15 percent, Farkas said.
The increase in wage demand among juniors is linked to the strong demand for less skilled labor. The wages of skilled workers (eg technicians) have caught up with those of junior engineers. Young graduates are of course aware of this.
“In addition, the significant increase in the cost of living and even the announcement of a potential increase in the minimum wage and the skilled minimum wage were enough to skyrocket the salary demand of graduates,” adds Farkas.
The tension between senior managers and the less experienced can only be eased if employers increase the wages of more experienced workers. It remains to be seen whether they will be able to keep up with rising wages or for how long.
Key trends for 2021
The year of counter-offers
There are too many jobs and not enough candidates, which has led companies to fight for the best talent offering potential candidates a higher salary. This phenomenon existed before, but it has become widespread this year and Hungary is no exception. Professionals in accounting, engineering, IT, logistics and any shortage of skilled worker positions have received offers from companies. It eroded the “attraction” of loyalty and many chose to leave. Even those who stay do so often because their current employer will offer them a raise.
Benefits and prerequisites
The uncertainty of 2020 has led employees to value aspects of their work other than their monthly salary. Even more so for Generation Z, since 29% said that their salary was crucial for their commitment against 49% for those over 55, according to a study by the IBM Institute for Business Value. Companies are examining how they can not only attract but also retain employees to positively influence a potential candidate’s decision to join or stay with the company. Among the perks that job seekers appreciate are home office opportunities, although this has become more of a prerequisite than a perk for most. The same is true of subsidizing travel when workers go to a central office. The coronavirus has also highlighted the importance of health; many companies now offer private health plans to their employees. Personal and professional development is also at the center of concerns; In addition to vocational training, a growing number of companies claim to be concerned about the mental health of their employees.
While this has its drawbacks, many companies have decided not to part with online interviewing. It is faster and, combined with other digital tools, can lighten some of the burden on the HR department. The online interview shortens the screening process and devotes more time and human resources to the shortlisted candidates. This option may not work as well, for example, in manufacturing, where it is essential to visit the site or check the skills of a machine operator.
More and more companies have to rely on training their own workforce, be they pilots or salespeople. What is common is the number of outreach trainings these days. Rather than in-person training, the instruction is online and also provides employees with tools (eg a tablet). Classes are short, interactive, and exams are also often taken online.
This article first appeared in the print issue of the Budapest Business Journal on December 17, 2021.