Poland, Hungary's foreign worker curbs create headache for business

By Gergely Szakacs, Canan Sevgili and Alan Charlish

KISVARDA, Hungary/GDANSK, Poland, July 22 (Reuters) - Facing a choice between upsetting businesses and a public opinion backlash, the Polish and Hungarian ruling centrists are opting for curbs on foreign labour — something economists warn may hurt the two countries' growth prospects.

Both Hungarian Prime Minister Peter Magyar, who won in a landslide in April, and his Polish counterpart Donald Tusk, in power since 2023, have been painted by their nationalist rivals as soft on immigration.

Now, both are taking action to prove them wrong. Tusk's government slashed work permits for non-EU citizens by 22% last year, while Hungary's new government in June stopped issuing worker visas to employees from the Philippines, Georgia and Armenia, calling it a first step towards regulating guest workers.

Public opinion polls show broad support for such curbs. In Poland , around two-thirds of respondents in an IBRiS survey for Wirtualna Polska news website in January said Poland should accept fewer non-EU migrants. In Hungary, an analysis published by Republikon Institute earlier this month showed that almost half of Hungarians would not allow any migrants from poorer countries and another 40% only a smaller number.

That contrasts with what economists and business groups say both countries badly need. 

"Fewer workers mean slower growth and less tax coming in, while an older population costs more in pensions and health," said Marcin Tomaszewski, lead economist for the EU region at the European Bank for Reconstruction and Development (EBRD), who noted Poland and Hungary face steeper challenges than Western Europe.

"Both are ageing before they are rich, and both only recently became places people move to rather than leave," he said.

The Polish Economic Institute (PIE) forecast in 2024 that Poland, whose labour force already relies on over 1 million foreigners, around two-thirds of whom are Ukrainian, could have 2.1 million fewer workers by 2035, with declines in industry alone potentially knocking 6% to 8% off gross domestic product.

A 2026 report by Deloitte, Ipsos and the Institute of Public Affairs, showed non-EU workers contributing up to 10.7% of Poland's economic output last year amid birth rates which are at their lowest since World War Two.

Warsaw says, however, that reconciling employers' needs and transitioning from being a source of migration to hosting non-European migration is a fine balancing act.

"If we changed our status from typical emigration country to migration one, we have to also adjust our whole system of functioning of the society," Polish Deputy Interior Minister Maciej Duszczyk told Reuters, adding that Poland did not want an economy based largely on cheap labour.

In June, the ministry said it had issued eight times fewer work visas in the first quarter of 2026 compared to the same period in 2022, though that comparison was affected by a change in rules for Ukrainians.

POLITICAL STORM

In Hungary, Magyar, whose pro-European course and promise to break with Viktor Orban's crony capitalism were welcomed by investors, found himself embroiled in a public spat with one Hungarian business, which said it might halt a factory expansion because of the new migration policies.

Magyar accused the Master Good poultry producer, which had received state support, of trying to "threaten the government and the Hungarian people," and said it could hire locally if it paid more.

Owner Laszlo Barany, however, argued his 580 Filipino staff was essential given an ageing population.

"People get old, they retire and there is no demographic supply, while those entering the workforce are not looking for this type of job," he said.

In Poland, businesses complain about long processing times, with work permits taking over six months and residence permit applications taking nearly a year to process, said Nadia Winiarska, deputy director of the labour department at Polish business federation Lewiatan.

While Duszczyk said the visa system was being updated, business owners warn skilled workers could be heading elsewhere.

Rahul Jha, a 35-year-old restaurant owner, said he lost a chef at his South Indian restaurant who got tired after waiting for over a year for a temporary residence permit. "Denmark gave him a five-year visa ... like immediately, a skilled visa. So he just moved out from here." 

(Reporting by Canan Sevgili, Ayya Lmahamad, Anna Lubowicka, Thomas Holdstock in Gdansk, Gergely Szakacs, Krisztina Fenyo and Marton Monus in Kisvarda, Alan Charlish and Kuba Stezycki in WarsawEditing by Tomasz Janowski)