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Less and less people will have good jobs

2024-04-17 02:45:00

The role of work, artificial intelligence and immigrants will gain in importance, as it was expressed at an online conference on the state of capital and labour, where Corvinus researchers shared their thoughts about Hungary's prospects. They pointed out that trust is the basis of a well-functioning market economy.
Budapesti Corvinus Egyetem

The professional event was organised on 11 April by the Labour Section of the Hungarian Economic Association (HEA) with the participation of László Csaba, Academician, Professor at Corvinus University of Budapest and the Central European Universtiy (CEU), and Péter Mihályi, Professor at the Corvinus University of Budapest, Corresponding Member of the Hungarian Academy of Sciences. 

 

‘We had a similar event back in April 2017, when Iván Szelényi also participated in the debate, alongside László Csaba and Péter Mihályi,’ we learned at the conference from György Boda, Associate Professor at the Corvinus University of Budapest and Member of Board of the Labour Section of the HEA. In the previous debate, which focused more on international processes, it was said that the 21st century would be the century of capital and labour, and the question is where this process would lead in the future, to the revaluation of labour – or not. The natural instincts of capital will be limited by the market economy. According to Szelényi, the modern market economy is a fight between wages and profits. Already then, the different types of annuities were discussed and the so-called annuity hunting was criticised, which was considered a harmful phenomenon already at that time. Péter Mihályi’s key claim seven years ago was that wages are low because they do not cover the reproduction of the costs of labour.  

 

This year’s conference primarily focused on the Hungarian situation. In his speech, László Csaba said that he maintained what he said earlier: there are positive key elements in the functioning of capital, but there is a tendency towards monopoly. And the closer we get to Hungary, the more important this momentum becomes. According to the academician, it is important that the role of work is being revaluated, that many people will have a job, but fewer and fewer people will have a good job, and robotisation and artificial intelligence play major roles in this. In the last 15 years, supplementary and unskilled work has been dominant – in both physical and mental areas of labour -, which is already starting to depreciate, and this trend will continue. More and more people are working more and more, but this is not sustainable,’ the professor said. It is also important to be fulfilled at work. The concepts of capital and labour suppose each other, and in the opinion of Professor Csaba, the real question is what kind of capital and what kind of labour will characterise the 21st century. He added that it does matter in what form and in what proportion capital is used. He finds it unfortunate that the stock market has not become a dominant factor in the Hungarian economy, which is basically determined by four companies, the rest being ‘linear patterns’. This is why Hungarian savings are not utilised well on the stock exchange, and as he said, the stock exchange should not be taxed or restricted, but supported. 

 

Hungarian labour is plentiful, but not good enough 

In addition to financial capital, the Professor spoke about the importance of human capital, stressing that the work of Claudia Goldin (last year’s Nobel Prize winner in Economics at Harvard) was also very significant in this regard: she researched the role of genders in this area. Professor Csaba also emphasized that people should invest as much as possible in their own education and personal development. He also said that relational capital has become an important element of capital, especially in moderately developed countries such as Hungary. “Large companies and the people of financial capital are building relationships with each other; they are forming a family, a business, and a corporate unit. What Bálint Magyar calls the mafia state, others call political capitalism, and it is not such a unique phenomenon, as more and more countries are seeing the intertwining of political and economic power,’ he said. He mentioned the USA and the UK as examples. 

 

The professor talked about work, too. It is, of course, not simply the number of hours that workers spend earning an income, as everyone agrees that it is the innovative part of the job that is crucial. Unfortunately, there is less and less work that contributes to human fulfilment, and the spread of robotisation will bring enormous changes, and it would be good if education could respond to this. The role of social capital is also crucial, according to the professor, and that cannot be expressed in numbers, but trust is the basis of a well-functioning market economy. The aim is to ensure that capital can be utilised in a way that economic development is environmentally friendly, said Csaba László. 

At the beginning of his presentation, Péter Mihályi said that he fully agreed with László Csaba in most respects. He added that in his opinion, Hungary has a productivity problem. The public is fascinated by the 3-4% growth of the GDP, and average people think that if growth is that high, everything is fine. Meanwhile, the problem of poor productivity in dollar/euro terms is not new (it has been a problem since the 1980s). 

 

In the opinion of Mihályi, an even bigger problem is that there is a problem with the Hungarian workforce, ‘if I want to put it vulgarly, Hungarian workforce is simply not good enough. It is abundant in terms of numbers (the Hungarian labour market is 4.5 million) but the quality is not good enough. Not because they are not skilled enough, not specialised enough, but because they are not suitable for modern factory work. Filipino labour may be more expensive than domestic labour, but it is significantly better, it can be deployed on weekends and willing to work overtime, while Hungarians want to be with their families on weekends,’ the Corvinus professor stressed. He said the situation is similar in services and the public sector, where workers think they have to be at the bus stop at 4.30 am, and after 30 years of market economy, the service sector still doesn’t understand that the customer is always right. The situation is similar in healthcare and education. In his experience, Chinese and Vietnamese traders in the Lehel market do better than Hungarians, work more efficiently and therefore you can buy cheaper tomatoes from them. 

Mihályi also sees annuity hunting as an important problem, and the fact that more and more Hungarian entrepreneurs are withdrawing from the competitive market. According to him, China’s economic success over the past 30 years is partly based on the fact that the Chinese Communist Party encourages its own favourite companies to export and compete in the international market. In his opinion, there are very few companies in Hungary that get 90 percent of their revenues from abroad, and he mentioned Richter as an example. ‘Only 20 percent of Hungarian entrepreneurs are successful abroad, they simply do not want to participate in the export competition,’ Mihályi said. 

László Csaba responded that he also agreed with three quarters of what his colleague said. However, he has a slightly different view on the fact that the Hungarian workforce does not want to work weekends. He pointed out that in the world – for example in Germany, where he taught for a long time, and experienced this – leisure time is of great value, and employees spend it with whomever and with whatever they want. ‘The labour market has become segmented, there is a segment that works less and less efficiently, but many people, including in the private economy, work long hours, have interesting jobs and are well paid,’ he said. 

 

Hungary needs tens of thousands of immigrants a year 

Péter Mihályi asked the question: in people’s opinion, how dangerous it is not to go to work on weekends, even if the boss asks them? It is also important to note that high labour demand does not encourage workers to accept the boss’ request to work overtime. He also said that after the significant pay rise in the health sector – a timely and good move – Hungarian doctors have never worked so little as they do now. Statistics show that there have never been so few medical interventions as today. Professor Csaba responded by saying that if you regulate healthcare by bureaucratic means, that will obviously reduce performance. 

The two economists then responded to questions from the audience following the live online conference. The demographic issue was raised, and Mihályi responded that this is very important. ‘I have come to the conclusion that the demographic situation in Hungary is basically the same as in Europe, and it is difficult to stop the population decline. Thens of thousands of immigrants a year could solve the solution, immigration must outweigh emigration,’ he said.  

To another question – how much FDI (Foreign Direct Investment) comes to Hungary, and where does it come from – Professor Csaba responded that there is very little information about this, and the quality of capital and labour linked together is not known, either. According to the professor, companies are reluctant to talk about how much capital has been utilised and how. Those who are interested in this subject are either dismissed or simply given propaganda material, although this is a question worth exploring. György Boda also expressed his views on the issues concerned. ‘WHen the regime changed, we were made to select capitalism and we were forced to embrace a variant – the dependent market economy – that is not optimal in the capital-labour relation. 

In his closing remarks, Péter Mihályi said that there are 200 countries in the world, 180 of them have market economies and most of them are badly governed. Only a few countries are doing really well, the number of successful market economies may be around 10-15; there is no need to despair just because ours is not the best. He said the capitalist model we chose is not too bad. Finally, Professor Csaba said that he felt more optimistic. One of the reasons for his optimism is that real wages in Hungary have started to rise significantly, and the arrival of foreign firms also encourages this process. He feels that although the last three decades have been built on low wages, this is about to change. It will be a more civilised and more cultured capitalism, he added. 

 

The video about the conference is available on the website of the Hungarian Economic Association. 

 

Katalin Török 

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GEN.:2024.05.28. - 04:15:57