Hungary: Magyar suspends issuance of new residence permits for non-EU workers

The measure's background is a central campaign pledge by Peter Magyar. His conservative TISZA party won the parliamentary election on 12 April by a clear margin; Magyar has governed the country since 9 May. During the campaign he had already sharply criticised the practice of recruiting workers through agencies that, in his view, were controlled by business figures close to Orbán. "Nach seiner Darstellung erfolgte die Rekrutierung solcher Arbeitskräfte über Agenturen, die von Orban-nahen Geschäftsleuten kontrolliert werden".

Magyar delivers on campaign promise

According to the government, the decree pursues two goals: bringing more Hungarian unemployed people into employment and preventing companies from using foreign workers to drive down wage levels. Magyar justifies the restriction by saying the domestic population should benefit more strongly from the labour market. Critics, by contrast, accuse the government of losing urgently needed skilled workers in sectors suffering from acute staff shortages.

Industry and employer associations have voiced criticism of the decision. They point to a pronounced labour shortage in those sectors in which non-EU employees have so far been primarily active: construction, the automotive industry, seasonal work, and delivery services. The Hungarian employers' association noted that many companies had aligned their workforce planning in recent years with simplified third-country immigration and are now facing vacancies at short notice.

Open questions and criticism from business

At the same time, the decree leaves several legal questions unanswered. Residence permits already issued do not retroactively lose their validity, but remain in force until the expiry of their respective time limits. Whether expiring permits can be extended in future is, however, not conclusively regulated in the wording of the decree. The long-term outlook for the roughly 90,000 non-EU workers already living in Hungary – around two percent of the Hungarian workforce – therefore remains uncertain for the time being.

During the campaign Magyar repeatedly announced his intention to fundamentally reshape the previous government's "guest worker system". With the decree now published, he is translating this promise into concrete policy within just a few weeks of taking office. At the same time, the government emphasises that the decree in no way marks the end of all issuance of residence permits for third-country nationals; it is directed solely against the specific simplified procedure created by the previous government. In the coming weeks the government will present further details on possible successor arrangements.

Significance for the affected sectors

It also remains unclear how the measure will affect bilateral relations with the main countries of origin. The Philippines, Ukraine, China, Vietnam and India have been among the most important source countries for Hungarian guest workers in recent years. Labour market experts expect affected sectors to increasingly rely on domestic mobilisation and training, but anticipate that short-term bottlenecks in the construction industry and in the automotive supply sector are now inevitable.