Hungary may seek foreigners to beat labor shortage - but only some types of foreigner

September 15, 2016 6:03 AM EDT

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BUDAPEST (Reuters) - Hungary may let in more foreign workers to cope with a labor shortage, the country's economy minister said in a newspaper interview - but they should be the right kind of foreigners.

Economy Minister Mihaly Varga told Heti Valasz that only foreigners from similar "cultural and historical" backgrounds as Hungarians should be allowed in.

A country of less than 10 million people, Hungary has lost about half a million people who have left for better-paid jobs in western Europe. Consequently, employers can't fill as many as 50,000 private-sector jobs, Varga said.

Workers from elsewhere in the European Union are already allowed to move to and work in Hungary, under the EU's rule of free movement for its people. And Hungary has walled itself off from the masses of mostly Muslim refugees and migrants who came to Europe last year {nL8N1B70LK}.

"In the professions affected we temporarily need to enable employers to take in workers from the European Union -- where there is free movement of labor -- or neighboring third countries," Varga was quoted as saying on Thursday.

That would appear to leave only foreigners from other European countries that do not belong to the EU, such as Ukraine and some of the Balkan countries. Varga did not specify what counties he had in mind.

A 2015 survey by staffing company Manpower Group showed drivers, engineers, accountants, information technology experts and health care workers were in the shortest supply.

Government efforts to fill the shortages, such as vocational training reforms, need time to take effect, Varga said, and Hungary was under pressure to avoid losing potential investment.

Some major foreign investors, such as German premium car makers Audi and Mercedes have resorted to sponsoring local university faculties to ensure their employment needs are met.

Hungarian companies should also raise wages to dissuade workers from leaving in droves for better-paid jobs in richer EU neighbors, such as Austria, Varga said. He also said wages would grow "significantly" in the coming year.

Average gross wages rose by 5.7 percent year-on-year in June, according to official statistics. The unemployment rate was 5 percent in the three-month period ending in July.

Varga also said there was no room in the budget for a full-scale reduction in Hungary's 27 percent value-added tax rate, the highest in the European Union.

(Reporting by Gergely Szakacs, editing by Larry King)



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