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Wage hikes risk triggering job cuts

April 1st, 2019

A left-wing analyst fears that while decreasing unemployment has resulted in substantial wage increases in the German automobile plants in Hungary, the looming lull in the world economy might squeeze thousands of jobs out of the industry.

In 168 óra, Ferenc Hajba describes how workers in the Mercedes and Audi plants in Hungary have been successful in their demands for substantial wage increases over the past few months, but worries that such a sudden loss of competitiveness might threaten their jobs. The Audi plant at Győr has by now become the largest car engine factory in the world, also producing sporting cars and hosting a research centre. Győr has thus become the only large Hungarian city with a growing population over the past years. Nevertheless, car sales worldwide are forecast at least not to grow at the usual speed in the forthcoming period and the production of electric engines will need substantially less manpower than the still dominant production of internal combustion engines. German car giants are planning significant cuts in their workforce, including Audi which wants to save €15 billion over the forthcoming four years. With the recent wage increases, Hungarian labour has lost some of its appeal but is still way cheaper than manpower in Germany. Nevertheless, the 61,000 German Audi workforce has negotiated a complete moratorium on dismissals until 2025. Therefore, if manpower cuts occur within the Audi group, the Hungarian workforce is a probable target. Hajba says there is no danger that Audi will dismantle its factory but it could easily reduce its commitment. He warns opposition parties that their demands for equal European wages are made in full disregard for the trends in the world economy.

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