The Audi strike in Győr ended with the trade union’s almost complete victory. Audi’s management finally accepted a significant, 18 percent increase of the wages on average. Moreover, it seems that further Hungarian companies are joining the strike. At last, Hungarian wages can start heading north. Full victory, we could say. But really?
It is an ancient economic principle that wages can only be raised in a healthy way (without exploding inflation) by increasing productivity. Behind this 18 percent wage increase, however, there is no performance growth at all. Unfortunately, Hungarian productivity is notoriously low, not only in Europe but also in Central Europe. (Productivity shows how much value the workforce produces, ie how much an employee contributes to the country’s economic performance.)
Let’s see the numbers
Taking the average of the EU-28 Member States as 100 units, the efficiency of the Hungarian labor force is only 67.9. The same value for Poland is 75.6, 80.3 for the Czech Republic and 80.8 for Slovakia. The Croatians are ahead of us with 71.6, but the 65.1 value of the Romanians is also just beaten.
The government tried to improve this less rosy situation with the overtime law: if we work poorly, at least we should work a lot. Yeah, however the workers are also not foolish, and as we can see from the example of Audi, such attempts can easily backfire.
Now, the leaders of the Porsche Group are going to sit together and think about their future strategy. Because no one should nurture any illusions; they will sit together. The downtime also affected production in Germany, thousands of vehicles could not be produced in time due to the lack of engines coming from Győr. Unfortunately, people over there are not less clever than we are, they won’t wait for next year’s wage negotiations twiddling their thumbs. We also need to be aware that German culture has an ancient tradition of strong trade unions, so they will have ideas on how to deal with the situation. This slap came unexpectedly, the next one wouldn’t.
We are cheap
It is more than welcome that Hungarian salaries have finally begun to grow (although we are still lagging far behind Europe’s average in comparison). At the same time, we must be aware that western parent companies did not bring us the work from charitable love, but simply because we were cheap. If we become more and more expensive they will sooner or later take their investments to somewhere else. I know, I know, this is “unfair”, but let’s be honest, Hungarian companies also do not production abroad to get it for the same price. We would then also bring back production; simpler, easier to manage and feels better at home. And then I have not even mentioned automation yet, which is still somewhat hindered by a competitive, inexpensive workforce. However, if there are no more cheap workers the robots are welcome. And, of course, everyone will build them at home.
The image of a cheap labor-based Hungarian society is a dead end. It is evident that the only way to survive the 21st century is having distinctive competencies. We need to ensure that foreign companies do not come to us only because we are cheap but because we can add something to their value chain that others cannot. Or we can be “cheap” in a way that we create tremendous value in exchange for a higher price. We need to dramatically increase our efficiency. But how is this possible?
Our answer is Agility!
We need to change our ways of working, how we organize our activities, how we motivate our employees, how we communicate and cooperate with each other. We need to develop our methods and competencies. How we pay attention to the needs of our customers and partners. To produce better products. To be faster on the market. To have the best ideas and to bring them to life. So that our employees feel better at work and prefer to work with us. We have to break our current practices! Sounds simple? It won’t be. It’s a long, steep and winding road as we get there. However, there is no other way…
It’s time to get going!