HR Executives - Vezetői kiválasztás, HR tanácsadás

The Scandinavian transition model and what Hungary can learn from it

Layoffs are expensive everywhere. But the way they are handled varies across the world. When a Swedish company is forced to downsize, something remarkable happens: workers do not face the transition alone. Not because the employer is particularly magnanimous — but because the Swedish labour market has an institution that simply does not exist in Hungary: the Job Security Councils, or Trygghetsrådet (TRR). This institution operates a system that can achieve an 88 percent re-employment rate within a single year. By contrast, Hungary has not a single coherent data point on when a laid-off manager or specialist actually finds new work — or even if they find it at all. The Swedes know something we do not. Or rather: they have a system that works, and we have not yet begun to build it.

The Trygghetsrådet: how it works in practice

The history of the Swedish Job Security Councils begins in 1974. Then, when industrial crisis struck the Scandinavian region, the first factory closures brought something novel: instead of the general strikes that had been customary, organisations and employers together asked the question: if downsizing is necessary, how can we do it in such a way that the affected people find a liveable future? Thus the TRRs were born.

The system’s foundation is simple but brilliant: employers make a fixed contribution — roughly one year’s salary per employee — to a common insurance fund. When a company is forced to downsize, organisations financed from this fund take over the case. Every affected employee receives a personal advisor — not a generic HR person, but a concrete career specialist who knows their situation and can help them find new work in their market — in their field, in their region. The funds do not merely offer guidance. They finance retraining if necessary. They finance temporary placements while the affected worker settles into a new role permanently. The process typically takes three to eight months.

The data

88 percent: the re-employment rate within one year in the TRR
7-8 months: average transition from one job to the next
Sweden leads the OECD in re-employment rates for displaced workers: 85-88 percent versus the OECD average of 55-65 percent
The productivity decline associated with factory closures is negligible due to systematic transition: remaining workers do not experience the burnout or organisational trust-loss that typically develops when colleagues are laid off without support

Denmark: flexicurity that works

Denmark takes a step further still. It operates what is called “flexicurity” — employment is flexible (employers can terminate quite easily), but worker protection is strong. The result: Denmark sustains a 1.5 percent voluntary turnover rate alongside a 5.2 percent involuntary turnover rate without social cohesion fracturing. This means that even if workers can be dismissed easily, their social safety net is strong enough that the community does not fragment. The “yes” must come to dismissal — but people know there is ground to stand on.

The Hungarian reality: a case that could have been different

In Hungary, the Labour Code mandates: 30 days’ advance notification to representatives, then severance pay of one to six months’ salary. This is the minimum. Hungary has not a single institutional mechanism that would follow dismissed workers through personally. No TRR. No systematic re-employment support. In the vast majority of cases, the affected worker is left to their own devices: freshly unemployed, often with wounded self-esteem, having to find a new position.

The Electrolux factory closure in Nyíregyháza in 2023 was an exception to the rule. Electrolux management decided not to confine itself to the statutory minimum: in the course of laying off 600 workers, it provided eight support areas, and in cooperation with the Government Office’s employment department, it prepared the affected workers for re-entry to the market. The result: the Electrolux case, followed by the media, was one of Hungary’s restructurings that did not provoke widespread anger. The employer brand did not shatter. In the local community, Electrolux remained a functioning employer even after.

The Electrolux model: a Hungarian example of a European system

What worked in the Electrolux case was directness. The company structured the transition planning locally. Nyíregyháza’s economic development bodies and worker organisations worked together on how to mitigate the blow. With even financing, five areas of focus received attention: individual career counselling, retraining, temporary job placement, psychological support, and mobilisation of local employers. At Electrolux, three months after the layoff of 600 workers, 68 percent had found new work — attributable in large measure to regular follow-up and personal support.

The Scandinavian model for Hungary: a proposed “TRR-lite” framework

The full architecture of the Swedish TRR would not be immediately implementable in Hungary — institutional infrastructure and social conditions differ. But an implementable adaptation would be a Sector-based or Region-based Transition Organisation that unites Hungarian companies: a consortium that, through shared funding, would finance transition counselling, training, and job placement programmes.

This framework would work as follows:

Employers in a given sector (e.g., automotive, pharmaceuticals, logistics) or region would jointly establish the fund
Shared financing — a stipulated contribution per employee
Dedicated advisory team focused on actual job placement, not merely paperwork
Short timelines: results within three to six months, not lengthy and emotionally exhausting “consulting” periods
Local coordination with employment centres and other organisations

Why would this work in Hungary?

First reason: many Hungarian employers feel employer brand erosion. After the Electrolux case, the company remained in good standing — not because it spent lavishly, but because it paid attention. A significant portion of Hungarian employers today sense that downsizing is not an endpoint — but in the absence of institutional support, do not know how to carry it through while preserving humanity.

Second reason: EU regulation. Understanding the new Tisza government’s public procurement and employment policy initiatives, employers will likely face mounting pressure from social responsibility expectations. A systematic approach — a TRR-like framework — would meet that expectation precisely.

Third reason: the automotive crisis and AI-driven restructurings. Hungary has faced increasingly wave-like layoffs in recent years. For automotive suppliers, which are one of Hungary’s cardinal economic sectors, a Sector-based Transition Organisation is not a luxury — it is a necessity.

The objections, and the answers

An untrained organisation might think: too expensive. In the Swedish TRR, per-capita cost is roughly 2,500 euros per laid-off worker. By Hungarian standards, this might settle around 1,500-2,000 euros. This is roughly 15-20 percent of re-employment costs — and in exchange, the transition period shrinks from 3-6 months (where it would be today) to 3-4 months, and job placement success rates rise from 65 percent (where they stand today) to 80-85 percent. This is not cost — it is investment in employer brand, organisational trust, and regional stabilisation.

The other objection: employers will not think together. This is partly true — but a catalyst is needed. The Hungarian HR Savings Association, the MKIK, or a leading large company that has already gone through systematic downsizing, could initiate this matter.

The alternative: staying in today

If Hungary does not act, the coming three to four years may bring further wave-like layoffs. Each time: anew the panic, the erosion of employer brand, the attrition of organisational trust, the failure of re-employment success. The exhaustion of those who stay. The Electrolux case shows: it can be done differently. The Swedes know. The Danes know. Can Hungary finally do this too?

Sources

About the author: Orsolya Márton is Business Development Manager, Executive HR Consultant and Career Counsellor at HR Executives. She specialises in leadership advisory during organisational transitions, outplacement programme design, and compassionate workforce restructuring.

Contact: orsolya.marton@hrexecutives.hu

What Sweden Knows That We Don’t