Most Hungarian CEOs not planning pay cuts, layoffs


CEOs report raising prices and reducing operating costs to mitigate the effects of the crisis, according to PwC’s survey

Most Hungarian CEOs predict a slowdown in both global and Hungarian economic growth in 2023, but perceive the Hungarian economy to be more vulnerable than the global economy. According to PwC’s latest Hungarian CEO Survey, 85% of CEOs expect a slower rate of GDP growth in Hungary. They rank the energy crisis as the top threat to economic growth, followed by inflation and macroeconomic volatility. In line with these fears, they predict a 15% inflation rate and an exchange rate of 421 forints to the euro for this year. Despite the pessimistic outlook, chief executives are not planning to lay off staff or cut pay; instead, they see cutting operating costs and raising prices as possible solutions to the present challenges.

This is the twelfth time that PwC Hungary has surveyed the opinions of Hungarian CEOs in personal interviews about the economic environment, their own business prospects, the difficulties and threats they are facing, and the strategic and organisational responses they propose. The survey was conducted with the participation of 267 Hungarian CEOs between October and December 2022.

Hungarian CEOs brace for an economic downturn more severe locally than globally

According to PwC’s survey, the majority of Hungarian CEOs expect a decline in the rate of global (76%) and Hungarian (85%) economic growth in 2023, which is their gloomiest prediction yet. Compared to expectations last year and the year before (32% and 24%, respectively, expected a slowdown in Hungary), the decline is not surprising in a highly volatile economic and geopolitical environment. However, unlike in previous years, Hungarian CEOs are among those – along with their peers from the UK, France and Germany – who see their country’s situation as more vulnerable than that of the global economy. Looking ahead to 2023, they forecast an average GDP growth of 0.5% in Hungary compared to the previous year.

Hungarian CEOs are less pessimistic about their own companies’ financial performance: although confidence in their company’s profitability has fallen from 75% last year to 2013 levels, the majority (60%) are still confident about their company’s prospects for revenue growth over the next 12 months, and 78% are confident for the next three years.

In response to concerns about a recession, most Hungarian CEOs see reducing operating costs and raising the price of products and services as the solution. The overwhelming majority are not planning to reduce workforce or compensation (78% and 97%, respectively); a higher percentage than for CEOs globally. Only a fifth of the companies surveyed are considering redundancies – 9% have already done so and a further 11% are preparing to do so. Meanwhile, CEOs expect the Great Resignation to continue, with 20% anticipating a further increase.

Energy crisis and inflation: top concerns for CEOs

According to the responses of Hungarian CEOs, compared to last year’s survey, companies’ exposure to health and cyber risks has eased, while new risks have emerged: in Hungary, 69% of CEOs are concerned about the risks of the energy crisis in the short term, and 61% are worried about inflation. These are followed in the list of top threats by macroeconomic volatility (54%) and geopolitical conflict (53%). Cyber risks (39%) are also among the top threats over a five-year horizon. Considering the above, Hungarian CEOs expect 15% inflation and an exchange rate of 421 forints to the euro this year.

The war in Ukraine, which 86% of respondents think could end in 2024, and growing concern about geopolitical conflicts in other parts of the world, have forced CEOs to rethink certain aspects of their business models. In order to mitigate the impact of geopolitical risks, chief executives are primarily focusing on expanding into new markets, investing in cybersecurity and/or data protection, and adjusting supply chains.

Technology disruption and skills shortages are the main factors affecting profitability

“More than a third of Hungarian CEOs recognise that transformation will be necessary for future success: 43% think their organizations will not be economically viable in ten years’ time if they continue on their current course. The proportion is similar globally, with 39% of CEOs worldwide saying the same. In Hungary, new technologies and skills shortages are the main factors CEOs think will affect their profitability in the coming years; these are followed by regulatory change and changing customer preferences. Globally, changing customer preferences are at the top of the list of factors potentially disrupting the market position of companies,”

said Barbara Koncz, partner at PwC Hungary’s Tax and Legal Services.

The results of the survey also show that more than a third of CEOs have already recognised the crucial role of adopting alternative energy sources. When asked about the forces most likely to impact their company’s profitability over the next ten years, more of the surveyed CEOs cited the adoption of renewable energy sources than the potential for new entrants to their industry. At the same time, most CEOs (80%) expect Hungary to switch to green energy only by 2048.

Trust is the key to transformation

In 2023, to prepare for the future, 82% of companies will invest in upskilling their workforce; 79% in automating processes and systems; 66% in deploying technology; and 56% in alternative energy sources. The majority of CEOs believe that almost all of these investments will help make their company future-proof.

According to Tamás Lőcsei, CEO of PwC Hungary, the results of this year’s survey also show that transformation is based on creating a corporate culture that puts equal emphasis on entrepreneurship and responsibility. Those companies are able to innovate and react quickly that are made up of committed and empowered people. The key to all this is trust, which is already evident in the fact that most of the surveyed CEOs think that their employees almost always act in accordance with the company’s values. Moreover, three quarters of CEOs feel their company’s management encourages divergent opinions and healthy debate.

Collaboration is not driven by social responsibility

According to CEOs, in the ecosystem where companies and other market players collaborate, collaboration is aimed, primarily, at creating business value (e.g. developing new products) rather than solving societal issues. A quarter of respondents do not collaborate with anyone to address societal challenges.

Business-oriented partnerships are most often forged with governments (at national or local level), academic institutions, and other companies, while collaboration towards societal ends is most common with NGOs. In fact, collaboration to address societal issues is also a way to ensure companies’ future viability, with education as the main area of focus (72%), followed well behind by sustainable development (50%).

Notes to editors:

Survey methodology: We conducted our twelfth Hungarian CEO Survey based on PwC’s Annual Global CEO Survey. The aim of the research we conducted in parallel with the global survey was to gain a more comprehensive picture of what Hungarian senior executives think, how they see the market, and what expectations and growth opportunities they have.

In the Hungarian survey, PwC’s experts conducted in-person or online interviews with the CEOs of 267 Hungarian companies between October and December 2022. During the interviews, we collected quantitative data by means of questionnaires. We contacted companies that PwC industry groups selected from the pharmaceutical and health, energy and utilities, retail and consumer industries, financial services, the technology, information, communications and entertainment sectors, the public sector, tourism, real estate, agribusiness and food, the automotive industry, and manufacturing.

The results are presented in detail on PwC’s Hungarian CEO Survey website.

You can find earlier press materials on our website.

Our most recent Sustainability Report is available on our Corporate Responsibility website.

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© 2023 PwC. All rights reserved. In this document, “PwC” refers to the PwC network and/or one or more of its member firms in Hungary, each of which is a separate legal entity. For more information, please visit the website.

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Cecília Szőke

Cecília Szőke

PR Senior Manager, PwC Hungary

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