So far, economic growth has been largely based on the expansion of the workforce, but this must be replaced by an increase in productivity. Magyar Nemzet highlights that the SME sector plays an important role in this, as it currently has a much lower average productivity than large companies.
In recent years, the Hungarian economy has grown remarkably at a European level, driven by growth in investment and employment. Not only did this allow for steep GDP growth and significantly higher wage growth, it also minimized unemployment and created full employment in the economic sense. It follows that, based on the expansion of the workforce, it is no longer possible to grow significantly, and the main direction can now be to improve efficiency and productivity.
There is also room for improvement, as average productivity levels are significantly lower than in developed European countries. However, this is not uniform in the economy: while the productivity of the largest companies is relatively high, sometimes slightly below Western European levels, the productivity and efficiency of SMEs is only about one third of that of large companies.
Thus, it is logical that further growth can only be achieved by improving the productivity of the SME sector. This aim couldn’t be in focus until 2017, which is understandable as wage pressures and workforce expansion were not yet strong, but the situation has changed since then.
The depletion of labor reserves and at the same time the brain drain caused by the still low wage level in comparison to the developed EU countries are already forcing companies to increase their productivity, and this is already reflected in recent data.
Since the lag is in the SME sector, productivity growth will largely be realized here. The MNB expects the rate to be around 3.2-3.4 percent over the next three years, and the slightly slower but still relatively strong wage dynamics may maintain this pace for a longer period of time. If this can be maintained over the next ten years, and it is assumed that this will be almost entirely in the SME sector, the productivity of the sector will increase to 45-46 percent of the size of large companies by 2030.