Corporate reactions to the raise of the minimum wage/guaranteed minimum salary of qualified staff

Our brief analysis examines the nine potential measures that can be reactions to the affects of the January 20191 raise of the minimum wage/guaranteed minimum salary for qualified staff. CEOs were asked to fill in the form below.

The raise of the minimum wage to HUF 149,000 and the guaranteed minimum salary of qualified staff to HUF 195,000 have resulted/will result in the following measures at your company in 2019:

• wages of those earning above the minimum wage are also increased to avoid wage pressure
• planned staff recruitment is cancelled
• redundancies are made
• projected investments are postponed
• employees entitled for a raise are given new duties
• employees entitled for a raise are reorganised to do part-time jobs
• other benefits (e.g. perks) of employees involved are cut
• variable pay (e.g. bonus) is decreased
• prices are increased

Of the above measures, CEOs generally preferred to increase prices: More than one third (38%) of them have opted for that solution or responded to increase prices later this year. 32% of respondents reported the cancellation of planned staff recruitment. 30% of CEOs have given - or are planning to give - a raise this year to employees earning above the standard minimum wage in order to avoid a wage pressure. One quarter (25%) of the surveyed companies are planning to postpone projected investments. 15% and 13% of companies respectively chose to decrease fringe benefits and variable pay (e.g. bonuses). About one in ten businesses (12%) will redirect employees to part-time employment.or modify the duties of those eligible for a raise (11%). Redundancy was the least common reaction, performed by only 5% of surveyed companies.

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MBET 2019 July

Results of the July 2019 IEER Quarterly Business Climate Survey

The Quarterly Business Climate Survey of IEER is based on the survey of 400 CEO respondents about their business situation and expectations. According to the records taken in July 2019 the level of business confidence in Hungary decreased slightly compared to April 2019.

In July 2019 the Quarterly Business Climate Index dropped from 39 points to 33 (see Figure 1).

MBET August 2019

The Quarterly Business Climate Index was the highest for construction companies (+49 points), while for trading companies it was +43 points and for companies offering business services it was +35. Companies in the processing industry got the lowest score at +30 points. Trading companies experienced a 8 points increase quarter-on-quarter, while there was a 13 points decrease in case of companies in the processing industry compared to the previous quarter.

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MBET 2019 Aug

Opportunities of job automatisation in Hungary

Increased automatisation and digitalisation is regarded today as one of the most important phenomena of labour market change. Research concerning possible impacts usually start out from the presumption that for some existing tasks, human power will be replaced by machines as a result of technological development, so in those fields the demand for labour will decrease. In other fields – e.g. in the design and operation processes of new technologies – demand is expected to increase. According to estimates, the pace of automatisation will be above the European average in Central Eastern Europe, and its effects on the labour market will most probably appear in the region. HCIC IEER examined the automatability of jobs in Hungary and compared them with employment figures. The early findings of that research are presented in the following summary.

According to the results of the first research papers on the topic, automatisation primarily affects routine tasks that are made up of clearly describable and easily programmable sub-tasks. With tasks that are not repetitive, and thus can only be done by humans, robots and computers can only help in auxiliary roles. Routine tasks that are mostly manual, e.g. production, assembly of parts, conveying, sorting, etc. are the most easy to substitute, followed by more cognitive tasks like measuring, data registering, customer service etc. What is more, now even some complex tasks can be automated - made possible by the development of technologies such as machine learning and 3D printing.
However, in some fields automatisation has still not been solved, there are technical obstacles described that make it virtually impossible to automatise certain tasks. Such tasks are non-repetitive and/or abstract/complex, and they generally need skills which are non-mechanisable, such as dexterity, creative intelligence and social skills.

Employment categories in the FEOR register
As part of our research we defined the level of automatability for each job appearing in the Hungarian FEOR (Standard Classification of Occupations) register. To achieve this, we categorised the tasks listed in the FEOR job descriptions as automatable (-1) and not automatable (1). As the first step of such categorisation, we tagged automatable tasks and hindering factors with key words, and ran Zurvey, a text analysing programme, on the job descriptions to find matches for our key words. If a task contained a key word suggesting that automatisation may be hindered, we categorised it as not automatable. If there was a match for a key word describing automatability, the task was categorised as automatable. For uncategorised tasks, the keyword-based analysis was amended with manual coding.

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MBET 2019 Sept

Late payment and circular debt in Hungarian business life

This analysis by IEER concerns the experience of Hungarian businesses with late payment and circular debt. The results are based on IEER's July 2019 Quarterly Business Climate Survey, which involved 404 domestic respondents. Based on the answers, 68,6% of businesses had at least one partner that paid late in the first half of 2019, and 34% of respondents made late payments themselves to their suppliers in the examined period. The issue of late payment most often hits large companies (with more than 250 employees) and industrywise construction and providers of other business services are the most affected. All-in-all it can be inferred that the after the favourable period last year, the trends in having more business partner who pay late is starting to creep back to its prior 2018 level. By the same token, proportion of their income arriving late has become threefold, compared to the last period measured. However, the number of companies that failed to pay in time to their suppliers at least once due to the late payment of their customers basically remained unchanged since July 2018.

In the course of IEER's July 2019 Quarterly Business Climate Survey, 404 domestic respondents were surveyed about late payment and circular debt.
68,6% of the surveyed companies had at least one business partner that paid late multiple times in the first half of 2019. As it could be observed in Figure 1, the rate of the same companies was 55% in the second half of 2018 and 63% one and the half year before, in 2018 January meaning that the amelioration of the previous period was not here to stay and the ratio is resembling more to its levels prior 2018 July. The proportion of companies with more than half of their partners paying late also increased considerably. In July 2019, 10% of companies were such, whereas the same ratio was much lower before: 2% and 3% in July 2018, and January 2018, respectively.

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MBET 2019 Oct