A June study by McKinsey & Company, titled "Prompt Hungary – The Impact of Artificial Intelligence on Economic Competitiveness," warns that wage convergence in Hungary has outpaced productivity growth, making a growth model based on expanding employment unsustainable.
According to the report, real wages in Hungary have risen by more than 50 percent since 2008, while the employment rate now exceeds 80 percent. At the same time, unit labour costs at Hungarian firms have grown markedly faster than productivity over the past decade, creating a constraint on further wage convergence.
AI’s potential and the barriers to capture it
The McKinsey Global Institute estimates that the value of tasks in the Hungarian economy that could theoretically be substituted by AI is approximately €15 billion, equivalent to about 6–7 percent of Hungary’s GDP. That figure is comparable to the total amount of EU funds becoming available following recent government negotiations.
However, the study stresses that realising this potential requires a change in mindset across both private and public sectors. AI alone will not deliver gains if treated merely as another technology tool rather than as a driver for redesigning operations. Success depends on three core enablers: workforce skills, operating model redesign, and data and technology foundations.
The report highlights limiting factors such as structural inequalities in the economy, a frequently changing regulatory environment, and fragmented development funding. At the same time, it notes existing advantages—relatively advanced digital infrastructure and e‑government services—that can serve as a foundation for an AI‑driven productivity shift.
Five strategic areas for impact
McKinsey identifies five areas where AI can produce tangible productivity improvements relatively quickly:
- upgrading small and medium‑sized enterprises (SMEs),
- education and reskilling,
- building sectoral AI champions,
- public administration,
- healthcare.
The study points to particular pressure on SMEs: rising labour costs relative to productivity leave these firms exposed competitively, and AI could unlock latent innovation potential that helps drive future economic growth.
Perspectives from McKinsey partners
Havas András, a partner at McKinsey, said Hungary could gain a competitive edge by seizing AI opportunities early. He argued that there is now a chance to acquire capabilities that were previously accessible mainly to large, advanced economies due to capital or infrastructure requirements. He warned, however, that the decisive factor is not the technology itself but the thoughtfulness and sophistication of its application.
Matécsa Márta, also a McKinsey partner, noted that AI affects all segments of the economy and changes the nature of work, implying the need for a comprehensive model shift. She added that AI’s diverse uses, ease of access and cost‑efficiency could awaken innovation potential within SMEs, which could become an important engine of future growth.
Conclusion
McKinsey’s study identifies AI as a clear escape route for Hungary’s productivity challenge but underlines that technology alone is not a silver bullet. The report concludes that people, the state and firms must all use AI as a catalyst for broader organisational transformation if the country is to realise the projected productivity gains.
