For the video recap of the event please click here.
The video is courtesy of the Hungarian Investment Promotion Agency.
Pölöskei was speaking in the plenary panel discussion, moderated by Ferenc Pongrácz, the leader of AmCham’s Investment Policy Task Force and a former president of the chamber. Other speakers were László György, State Secretary for Economic Development and Regulation; Balázs Rákossy, State Secretary for the Utilization of European Union Funding; and Ádám Szigeti, Deputy State Secretary for Innovation.
Pölöskei told delegates at the Hilton Budapest in the Castle District that education required “a systemic transformation from our [the government’s] side”, but added that education “cannot resist the need for transformation”. Importantly, there is a need to restructure from the current set up which tries to do too much, with vocational education attempting to prepare students for a staggering 750 professions.
“In Germany at present there are 320 professions, and they want to get that down to 150. Finland has 170 and wants to go down to 80,” Pölöskei said. She set the target for Hungary at 150, saying that would enable higher quality, and a more modern and versatile approach. Several speakers referenced McKinsey research that has many professions, including accounting, disappearing in a couple of decades.
“When Generation Z enters the labor market they will have professions that do not exist today. We have to give them skills and capacities, and not professions. We do not have to focus on future professions because we do not know what they will be,” the deputy state secretary pointed out.
Free up Reserves
On a similar theme, Szigeti said automation would free up labor reserves. “That is also why I do not envisage such a grim picture,” he said, in reference to a statistic that shows the working population falling by two million between now and 2060. The key issue will be making sure the workforce has skills that can be transferred as jobs change.
“We cannot really deal with the quantity issue with anything less than quality,” he said. Currently, some 1.4% of Hungarian GDP is being spent on research and development. The goal by 2020 is to have raised that to 1.8% he said, “but ideally it should be 3%”.
Rákossy made the point that, rather than teaching students two or more foreign languages, perhaps the system should concentrate on doing just one language, but to a very high level. “I apologize to French and German investors, but if someone does not speak English, they will not be able to make business,” Rákossy said. “It is very important everyone speaks English at a good level.”
On the issue of the brain drain, György said the government has been pursuing a number of policies aimed at simultaneously improving salaries in Hungary and also encouraging those who had left to country to return.
“We also see it is possible to attract people home from abroad; we see now a balance between those leaving and those returning.” But government cannot create the jobs, he said, only create the ecosystem that encourages businesses to make hires. “Blackrock, for example, has been able to create 500 high value jobs and has been able to attract many Hungarians back.”
Real World Challenges
In terms of research, he said the system needs to change so that, rather than university professors deciding what problems should be investigated by the students, businesses should give the universities real world challenges for their students to look into. Again, it requires partnership. “We can only make our universities more potent if we can rely on your input,” he told the business representatives present.
Pongrácz ended by asking the speakers for one measure of what success would mean for them. For György it was “how we create an ecosystem and a business environment” that enables more higher value jobs to be created. Pölöskei said it was hard to pick just one from “such a system with so many problems” but opted to see the number of children leaving education with no qualifications at zero. For Rákossy it was to “Maintain a stable macroeconomic environment with a growth rate of 4% that allows you [businesses] to invest more in Hungary.” Szigeti wants an increase “in the number of researchers: I would like it to reach 56,000”.
After the plenary session, the summit broke up into four breakout sessions, at the end of which the moderators – drawn from the Big Four consultancies – reported back. Botond Rencz, head of EY, said the Business Environment session had discussed the flexibility of employment law, the housing market (as a component of labor mobility) and “whether we have enough engineers for the municipalities”, all while wondering what the EU funding levels for Hungary will look like after 2020 (the draft plans show a 20-25% drop in money for the V4 countries). The need for more (and better) English speakers was underlined. Perhaps most interestingly, the idea of a holistic “agency-like approach” towards branding “living in Hungary” was suggested.
Róbert Bencze, the people and organizations director at PwC, moderated the Competitive workforce/competitive education session. “We confirmed from the companies’ side that we see system level changes and developments,” he said, but pointed out there were still “evergreen” issues they wanted to see progress on, such as more flexibility for company investments and incentives around employment and vocational training and the hiring of students. There was a call for “more focused and disciplined action from the authorities against the grey and black economies”, with Bencze joking that some delegates had suggested there were “50 shades of grey”. There was one “higher level topic”: “If we look at the workforce [issues], we have to understand more about the economic strategy, so companies can reflect on them with a more conscious approach.”
The Innovation and R&D session was led by Csaba Márkus, who said much time was spent talking about “university and company cooperation and the innovation ecosystem”, and issues such who owns the intellectual property that comes out of such cooperation, and the limits imposed by current public procurement rules. The remainder of the conversation had concentrated on ensuring innovation is as much a focus as R&D and investigating “how innovation could be financed from taxation rather than EU funds”.
KPMG’s director of healthcare and life sciences, Margit Kohanecz moderated the digitalization breakout, which discussed how best to get a digitally qualified workforce in Hungary, and career path planning for graduates, among other things. There was also promise of news to come in the next weeks of an announcement that would link the educational path from primary school right through to adult education, and an SME portal that would enable small companies to benchmark themselves against their peers for innovation. This is much needed, Kohanecz said as “90% of SME owners say they do not have to be innovative”.
Earlier, AmCham President Dr. Farkas Bársony had noted in his opening remarks that it is “clear that we need to talk in depth about moving Hungary up the global value chain, as it is now obvious that we no longer have infinite quantity of labor force, so we need to focus on quality.”
He added: “The ‘Business Meets Government Summit’ is a key milestone each year when, based on your input collected throughout the year and in the summit itself the formulation of the ‘Cooperation for More Competitive Hungary’ recommendation package starts. As in the past, we count on you, your ideas, your input to make our fourth recommendation pack a valuable contribution to the competitiveness of Hungary.”
President of co-organiser HIPA, Róbert Ésik stressed the following: "Due to continuous common reflection and cooperation by the government and the business sector, our country reaches better and better results in a very close international competition for investments. We keep on being committed to a regular direct dialogue between the business sector and the government in order to increase our competitiveness, facilitating that Hungary become a centre of innovation besides being the production centre of region, too."
AmCham would like to thank our co-organizer, HIPA for their dedicated support and partnership throughout the years. We would also like to express our sincere gratitude to our Professional Partners, Deloitte, EY, KPMG and PwC for sharing their invaluable expertise with us once again. We would like to thank our corporate partners, Arconic, BT, Cargill, IBM, Invitech and MOL Group for making the event possible.
The original article will appear in the upcoming issue of Budapest Business Journal