Instead of fewer workers, lower costs is the way to go

CEOs are the most pessimistic in Hungary

PwC published the results of its 12th Hungarian CEO survey on 8 February 2023. The research was conducted with personal interviews between October and December 2022, with the participation of 267 Hungarian CEOs. In Hungary the majority of CEOs expect slower economic growth globally (76%) and in Hungary (85%) in 2023. This forecast is the most pessimistic in recent years. Last year 32% expected a slowdown domestically, and this proportion was 24% in 2021. Executives think the average GDP growth will be 0.5% in Hungary. CEOs are less pessimistic about the situation of their own firms: although their faith in the company’s profitability dropped from last year’s 75% to the 2013 level, 60% of CEOs are still hopeful about a profit growth in the next 12 months.

Price increase and cost cutting to avoid layoffs?!

CEOs say the biggest threats to economic growth are the energy crisis, inflation and macroeconomic volatility – in this order. Company heads calculate with a 15% inflation and a HUF 421 exchange rate for the euro in 2023. Even if they are pessimistic about this year, the majority of Hungarian executives don’t plan layoffs or salary cuts (78% and 97%), and these proportions are actually higher than the global average. Instead of these steps, they are trying to cope with the challenges by reducing operating costs and increasing their prices. So far 9% of companies have made workers redundant and 11% are getting ready to do so. 69% of CEOs are afraid of risks generated by the energy crisis and 61% are worried about the inflation.

Trust is the key to transformation

As a preparation for the future, 82% of companies are investing in improving the knowledge and skills of employees in 2023. 79% are spending money on the automation of processes and systems, 66% are investing in new technologies, and 56% are financing alternative energy projects.

Barbara Koncz
tax and legal advice partner
PwC Magyarország

Barbara Koncz, tax and legal advice partner at PwC Magyarország: “More than one third of Hungarian executives have realised that transformation is a prerequisite of future success: 43% say if their firm continues on its present path, it can stay on its feet for maximum 10 years. At a global level 39% of CEOs share this view.”

Tamás Lőcsei
CEO
PwC Magyarország

Tamás Lőcsei, CEO of PwC Magyarország: “This year’s survey results show that the basis of the transformation is building a corporate culture that gives the same weight to entrepreneurship and responsibility. Those firms can react swiftly and operate innovatively that have dedicated and responsible employees.” CEOs say the main goal of cooperation between firms and other actors in the market is value creation, and not the solving of social problems. One quarter of respondents don’t collaborate with anyone in managing social issues. //

This article is available for reading in Trade magazin 2023/4.