http://www.businessweek.com/news/2013-07-15/hungarian-exodus-revealed-in-london-with-immigrant-surge-jobs

Bloomberg News

Hungarian Exodus Revealed in London With Immigrant Surge: Jobs

July 15, 2013

Crepe Fun-Tastic Owner Istvan Boz

Crepe Fun-Tastic owner Istvan Boz who moved to London from Hungary to work, and now employs six people seslling between 70 and 100 pancakes per day at his restaurant near London's Victoria station. Source: Istvan Boz via Bloomberg

When Istvan Bozo first moved to London in 2010, he craved the flavorful pancakes he’d loved as a child in the northern Hungarian village of Zabar. After trying about 20 places and finding only disappointment, he realized he needed to start his own restaurant.

It took him just two weeks to get the permits and financing for Crepe Fun-Tastic. Today the pink-and-green-fronted shop near Victoria station has six employees, all Hungarian, and sells between 70 and 100 pancakes each day.

That ease of setting up wouldn’t have been possible in Hungary, he said, where just registering a company takes 15 days and hiring a lawyer is mandatory. In London, Bozo said he had a loan of 17,500 pounds ($26,400) set in two days, on top of 3,500 pounds of his own capital -- all the money he had, he said.

“It’s much easier to work here,” said Bozo, 35. “If you’re hard-working you will succeed. At home, even if you’re very, very good at what you’re doing, if you don’t have friends to help you along you’re never going to get ahead.”

London, with its Chinatown, Indian curry houses on Bricklane and Turkish kebab shops, has traditionally been a magnet for entrepreneurs and job-seekers from all over the world. Now add Hungarians, whose arrivals have multiplied as Hungary suffered two recessions in the last four years. Aiding them is the fact that they can work without a visa following their country’s 2004 entry into the European Union.

And they have a better chance of finding work: Hungary’s jobless rate was 10.5 percent in May, compared with 7.8 percent in the U.K. in April.

More Hungarians

In 2012 the number of Hungarian immigrants in the U.K. was 47,000, up from 5,000 in 2001, according to SEEMIG, an EU-sponsored program for managing migration and its effects in southeast Europe. The estimates were based on the U.K.’s Annual Population Survey.

The situation in Hungary encourages migration. Weighed down by seven years of austerity that began under the previous government, the economy is only now showing vital signs. Gross domestic product had its first quarterly increase since 2011 in the January-March period.

When adjusted for inflation, Hungary’s average monthly net income has fallen in three of the past six years, including a 3.5 percent drop in 2012, making it difficult for new businesses to find traction. The GKI research institute’s consumer confidence index, while on the rise in the past year, has been negative for 11 years.

The Hungarian economy will stagnate this year and grow 1.19 percent next year, the International Monetary Fund said in its World Economic Outlook last week. The forecast for the U.K. is 0.9 percent and 1.5 percent this year and next, respectively.

Vegetarian Paperwork

Zsoka Bekefi, 32, can testify to how hard it is to start a business in Hungary. Her vegetarian bistro, NemSuti, opened in downtown Budapest last December, about three months after she began the process. Just to get the logo and the name on the front of the building, she had to have an architect draw a plan of the premises, then call a meeting of all building residents to get their consent -- before she could even request a permit from the local authority. The permit process took 45 days.

All that for a retail space that employs three people and previously housed a cafe and an antique shop.

Setting up a company is “overregulated” and the rules don’t always make sense, Bekefi said after placing an order on the phone for plastic bowls. “To start a business requires quite a bit of capital and the fact that we have to pay a very wide variety of administrative fees makes opening a place like ours a very expensive enterprise,” she said.

Business Ease

In Hungary, the process needs to be done by a lawyer. The costs can be as much as 100,000 forint ($447). On top of that, a registration fee of 50,000 forint and a publication fee of 3,000 forint are due.

In the U.K., registering a private limited company online costs 15 pounds and takes 48 hours and no solicitor needs to be involved, according to the U.K. government’s website.

Britain is the No. 2 European Union country for ease of doing business, after Denmark, according to World Bank. Hungary ranks 18th among the 28 members of the trading bloc.

The U.K.’s popularity with Hungarian emigrants has increased in recent years, joining Germany and Austria, where most Hungarians traditionally used to go for work, said Attila Melegh, a project manager for SEEMIG.

An estimated 230,000 Hungarian citizens were living in EU countries in 2012, one-third of them in Germany, one-fifth in the U.K. and 13 percent in Austria, SEEMIG said in a May 22 press release.

Freer Movement

With joining the EU, “a space for the free movement of workers has opened up and more and more Hungarians are seeking to benefit from it,” Melegh said. “This is not all that surprising.”

Rita Cegledi, 37, arrived in London in 2004. In 2007, she opened a beauty salon in the neighborhood of Islington, targeted mainly at Hungarians who are used to a one-stop shop for their hairdresser, beautician and nail technician. Now she runs two salons in the British capital, where seven Hungarians work. She says opening a business in the U.K. was a breeze.

“We were able to set up the company online and register it everywhere from the Companies House to Inland Revenue,” she said. “Our costs weren’t too high and the tax authority gave us a grace period of nine months after being in business for a year. This is great help.” In Hungary, taxes are due in full from the beginning.

Simple State

Hungary’s government is trying to reduce administrative burdens on business in several ways, the press office of the Ministry of Public Affairs and Justice in Budapest said in e-mailed answers to questions. A program called “Simple State” has identified several hundred simplification targets and the new civil code that comes into effect next year will allow companies and cooperatives more variance in setting up a founding charter.

The Cabinet is also in the process of drawing up plans for further cutting administration, and regulations already allow for lower costs in some cases, the ministry said.

In London, Hungarians can not only eat Hungarian-style pancakes, which are usually served rolled up with a sweet or savory filling, they can watch visiting bands such as Tankcsapda or shop for such grocery products as Turo Rudi, a chocolate-covered cheese-curd dessert. The community has its own magazine, founded in 2010. It’s named 6:3, after the score of a 1953 match in which Hungary’s national soccer team became the first non-British Isles team to beat England at home.

Closed Salon

Many of the new businesses only employ Hungarians. At Cegledi’s salon, for instance, Dori Bozso, 25, has been doing manicures since she moved to London five months ago. Before that, she had worked in a salon she set up with a hairdresser friend in Szekesfehervar, western Hungary. It closed in January because of the recession.

“Things got a lot worse from a work point of view,” she said as she soaked her own feet during a work break. “People preferred to do their own nails at home in the last two years and came to the salon very rarely. Here in London a manicure costs five times more and people can still afford it.”

Yet some of the Hungarians, including Bozo, aren’t planning to settle down in the U.K. Bozo says he can’t stand London’s weather, its crowds or its exorbitant cost of living. Between runs for cheese supplies and experimenting with new pancake fillings, he’s dreaming of running a global franchise of Crepe Fun-Tastic shops from a house with an ocean view.

A car mechanic by training, he first worked as a bartender when he arrived in the U.K. His plans: find a more lucrative location for the London restaurant and open a branch in Dubai. He’s headed there soon on a scouting expedition.

“I’d love to turn this thing into a franchise,” he said. “I have already started working on that. There’d be Crepe Fun-Tastic shops opening all over the world. The Americans especially love our pancakes. Then I’m going to move away from here. I’d like to live by the sea, anywhere where it’s warm.”

To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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