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Nearshoring to Hungary

Hungary is home to a young and talented labor force that is well-versed in foreign languages. With an IT talent pool of more than 150,000 individuals who offer their services for relatively low salaries, Hungary is one of the most favored nearshoring destinations in Europe.

The nearshoring services we offer at FMC Group give companies a competitive edge through the reduction of labor costs and the delegation of the administrative management of employees. Our services allow businesses to build a local team in Hungary and hire from the large Hungarian talent pool without setting up a subsidiary.

Content:

  • Advantages of Nearshoring to Hungary
  • FMC Group’s Nearshoring Approach
  • Advantages of Nearshoring with FMC Group
  • Labor Laws in Hungary
    • Working Hours
    • Annual Paid Leave
    • Other Types of Paid Leave
    • Minimum Wage
    • Social Contributions and Taxes
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Stephan Dorn FMC Group

Advantages of Nearshoring to Hungary

  • The Hungarian labor force is highly qualified thanks to the quality of higher education offered at local universities. The country hosts more than 65 different universities, including five universities among the top 1,000 institutions worldwide, according to the 2022 Times Higher Education World University Rankings.
  • Hungarian universities provide education and training for more than 250,000 students, including over 43,000 business administration students, 37,000 engineering students, and 24,000 mathematics and computing students.
  • The teaching of foreign languages is highly-promoted in Hungary, with young students learning English or German since primary school. Other languages that are taught in Hungarian universities and specialized institutions include French, Italian, Spanish, Russian, and Chinese. This makes the Hungarian talent pool well-versed in foreign languages and allows it to easily integrate into international professional settings. In the 2021 EF English Proficiency Index, Hungary ranked 17th
  • Hungary offers a large talent pool of more than 150,000 young professionals working in the IT sector and more than 6,000 new IT graduates every year. The average monthly salary of IT engineers in Hungary is around HUF 500,000 (EUR 1,312), which is significantly lower than the wages paid in Western European countries.

FMC Group’s Nearshoring Approach

Selection

  • We select candidates that match your criteria and requirements the best;
  • We establish detailed reports about the best candidates;
  • We conduct job interviews;
  • We organize personality tests if requested.

Recruitment

  • We provide you with recorded interviews in a video format (or other formats if requested) and let you make the final hiring decision;
  • We host your employees at our local office.

Operation

  • We manage all the administrative procedures related to your employees;
  • We allow you to take full control of the functions of your employees;
  • We give your employees everything they need for their job.
Approach for Nearshoring

Advantages of Nearshoring with FMC Group

  • We make a tailored search for candidates based on your needs;
  • We publish job advertisements on various platforms;
  • We search for fitting candidates in our growing talent database;
  • We help you benefit from the local talent pool without the need to set up a subsidiary;
  • We offer great flexibility that helps you reduce financial and time costs;
  • We give you full control over the local team while we handle administrative procedures.

Labor Laws in Hungary

Working Hours

  • Employees in Hungary can work up to 40 hours per week and eight hours per day.
  • Overtime work cannot exceed eight hours per week for regular employees and 32 hours per week for stand-by jobs.
  • Overtime work has to be remunerated at a rate of 150% of the regular salary on normal days and 200% on weekends and holidays.

Annual Paid Leave

  • Employees in Hungary are entitled to 20 days of paid vacation per year. The maximum duration increases gradually with age and it is capped at 30 days from the age of 45.
  • Employees are entitled to two extra days of annual paid leave if they have one child, four extra days if they have two children, and seven extra days if they have three children or more. Two additional days are also given if the employees have a child with special needs.
  • Hungarians celebrate 12 public holidays:
    • January 1st: New Year’s Day;
    • March 15th: Revolution Day;
    • Between late March and late April: Good Friday and Easter Monday (moveable);
    • May 1st: Labor Day and Mother’s Day;
    • Between late May and late June: Pentecost Monday (moveable);
    • Third Sunday of June: Father’s Day;
    • August 20th: Saint Stephen’s Day;
    • October 23rd: Republic Day;
    • November 1st: All Saints’ Day;
    • December 24th to December 26th: Christmas Holiday

Other Types of Paid Leave

  • Maternity Leave: New mothers have to take 24 weeks of maternity leave and they can extend it to three years. The entire duration of maternity leave is covered by Hungarian social security. Mothers receive 70% of their regular pay on the first six months of leave. Afterward and until their child is two years old, they receive up to 70% of their salary, but the monthly payment is capped at double the minimum wage. In the third year, they receive a monthly payment equal to the country’s minimum pension – HUF 28,500 (EUR 75).
  • Paternity Leave: New fathers can take up to five days of paternity leave, or seven days in the case of complicated or multiple births. Paternity leave is available during the first two months after the child is born.
  • Sick Leave: Employees can take up to one year of paid sick leave. Employers have to pay their employees at a rate of 70% of the regular salary on the first 15 days of leave. Afterward, social security covers two-thirds of the pay while the employer covers one-third.

Minimum Wage

  • The national minimum wage in Hungary is HUF 200,000 (EUR 523) for unskilled workers and HUF 260,000 (EUR 679) for skilled workers.
  • The payroll in Hungary is managed on a monthly basis.
  • Yearly performance-based bonuses are common in Hungarian companies.

Social Contributions and Taxes

  • Employers in Hungary have to pay 13.0% of their employees’ gross salaries as a Social Contribution Tax.
  • Employees have to pay contributions that add up to 18.5% and include 10.0% for the Pension Fund, 7.0% for the Health Care Contribution, and 1.5% for the Unemployment Fund.
  • The income tax in Hungary is calculated at a flat rate of 15.0% and it only concerns employees who are more than 25 years old. Younger employees are exempt from income tax.