We use different textiles, clothing and leather products in our everyday lives, but most of the time we don’t know whether the garment was made in Hungary or abroad. The textile industry was first established in Hungary in the 13th century, but today it is not nearly as important to the Hungarian economy as it was in the last century. Hungarian products are of exceptionally high quality, and the number of textile enterprises has been gradually increasing in recent years, while sales figures have also been rising visibly. Despite all this, Hungarian products have not managed to make it to the top. In our analysis we provide information on the past and present, as well as the prospects of the Hungarian textile industry.
The manufacturing of textiles, clothing, leather, fur and footwear are all part of light industry, along with other sectors. The products produced in this sector are mainly consumer goods and their raw materials.
Textile production and garment making were already practised by our 13th century ancestors in the Carpathian Basin. However, the first silk spinning and weaving mill was not founded in Hungary until 1680, and the first textile manufactories were not established until the early 18th century. In addition to local workers, the Hungarian manufactories also employed predominantly Saxon, Silesian, Czech, Bavarian and Austrian workers, and not by chance. In the German, Austrian and Czech industries, textile production was an important part of the economy, and considerable sums were spent on its development. While by the beginning of the 19th century the mechanisation of processes had become commonplace in Western European countries, in Hungary this change only began to take hold at the end of the 19th and the beginning of the 20th century. Understandably, Hungarian manufacturers were at a competitive disadvantage compared to their Western European competitors, since they could not compete with these plants in terms of either quality or quantity.
The second half of the 18th century, and especially the last two decades, was a period of factory foundations in Hungary. In 1780, the five-storey filature was built in Óbuda, which housed a silk spinning and threading mill, and five years later a silk winding factory was established also in Óbuda. In 1784, the blue-dyeing factory of Ferenc Goldberger was also founded here, which became famous a century and a half later as Goldberger Textilművek. In the countryside, the blue-dyeing factory established by Ferenc Kluge of Pápa in 1786 became famous and survived until 1956. Lace-making, a branch of the textile industry, developed to a high standard during the same period. The laces of Halas, Csetnek and Sóvár became famous in Europe, and rightly so. In the 19th century, the development of the textile industry slowed down, even though several laws specifically aimed at supporting the industry were passed. In the last law to support industry in the Monarchy, which came into force in 1907, the decision-makers acknowledged that their efforts to develop the textile industry had failed.
The second half of the 20th century brought the desired boom for the sector. The sector grew significantly between the two world wars, and was reorganised after World War II, following nationalisation. In 1963, the 187 textile factories were merged into 42 national companies, and the industry also included council companies and cooperatives. In the 1970s, a programme of reconstruction was launched to increase production, including modernisation, but this was not fully implemented. During the period of regime change, this sector of the industry also faced the disappearance of its former export markets, and new potential destinations did not have a demand for Hungarian textile products. As a result of market liberalisation, state-owned enterprises disappeared and no new ones were set up, and the machinery and technology of the remaining plants became obsolete over time. In line with the trends of the 2000s, foreign owners also entered the industry, setting up plants and factories in Hungary where quality, state-of-the-art products are made.
There are a few enterprises in historical memory that were able to produce quality products during socialism, even with the difficulties of sourcing raw materials. One need only think of Clara, the fashion house founded by Klára Rothschild, which represented a dominant style trend from the 1930s until the mid-1970s. A similar mark was made in the shoe industry by László Vass, who set up his company in 1978 to produce handmade leather shoes. The period of regime change had not even ended when the J.T. Ruhaipari Kft. was established in 1991, supplying Orthodox Jews living in the US with traditional clothing from Somogy County. All this shows the great potential that the textile industry had and still has.
The sector’s production value, with the exception of the shock caused by the coronavirus pandemic in 2020, showed a gradual increase between 2010 and 2023. Although it ranks second to last among the manufacturing sub-sectors in terms of its performance, the steadily rising figures are a cause for optimism. Together with the increase in domestic sales, export sales are also showing a dynamic upward trend, indicating that the sector is mainly producing for export. This is mainly due to foreign-owned subsidiaries operating in Hungary, which manufacture here and sell abroad. In 2023, domestic sales amounted to HUF 75,835 million and exports to HUF 411,681 million.
This year has not been good for the sector so far, with Q1 2024 data showing an 11.8% year-on-year decline in the volume of production in the textile and leather sector. The decline may be mainly due to changes in consumption patterns. The previous high inflationary impact has led to a fall in consumption in clothing, which has also curbed production volumes. Although consumption data have started to improve, production and sales of clothing, textiles and other light industry products are expected to recover only slowly. Production has also been negatively affected by the increase in energy prices, as this part of the light industry is a highly energy-intensive sector. The increase in overheads was mainly reflected in selling prices, which could also put a damper on the level of consumption.
The composition of business forms in the sector has also changed significantly in recent years. While until 2015 the industry players mainly worked in partnerships, since 2016 they have preferred the form of self-employment. There has also been an increase in the number of sole proprietors, with almost 15% more people opting for this business form in 2023 compared to 2010. According to aggregate data, in 2023 there were 7,420 enterprises manufacturing textiles, clothing, leather and leather products in Hungary. The creation of manufactory units is enjoying a renaissance, where products are made by a single person, using handicraft methods throughout. The resulting products are sold on the internet or at fairs.
In 2023, the number of people employed in the textile industry was 7,700 and in clothing 17,178. One of the serious problems facing the sector is the shortage of labour, which is still being addressed by foreign guest workers, as was the case in the 18th and 19th centuries. The low number of workers is mainly due to low wages, with gross monthly wages in most sub-sectors below HUF 400,000 and only a few workers above the HUF 300,000 mark.
According to the 2021 wage data, the highest gross monthly wages are earned by leather finishing and processing machine operators and line workers aged 30-39. They, under 30 years of age, earn an average gross monthly wage of HUF 330,262, while those aged 30-39 earn an average gross monthly wage of HUF 332,273. Those in the age group above can expect much lower gross wages in this sector: those aged 40-49 earn HUF 303,382 gross per month, while those aged 50 and over earn HUF 294,253 gross per month. We’ll find further interesting figures for textile workers, embroiderers and lace-makers. Here, only workers aged 50 and over were recorded by KSH in the survey, and their gross monthly salary was HUF 157,877. The age group distribution of the sub-sector also suggests that lace-making, textile weaving and embroidery are gradually disappearing.
Another reason for the shortage of labour in a predominantly female profession is the lack of qualified employees. In recent decades, the proportion of people who have completed training has fallen sharply compared with other occupations, and the number of people who are qualified but have left the profession has increased. Similarly, few people in higher education choose a specialisation in textiles or textiles-related occupations. In the 2024 admission procedure, a total of 62 students applied to the Moholy-Nagy University of Art and Design for fashion and textile design and 247 for textile design. 65 students applied to METU (Budapest Metropolitan University) for textile design and 41 for fashion and textile design. This shows that the perception of the profession is already reflected in the training fields, due to difficult working conditions and low wages.
At the beginning of the analysis, we pointed out that most of the textile companies operating in Hungary today are foreign-owned. For this reason, it is also worth taking a look at the amount of FDI flowing into and being held in the country. According to the data, the value of FDI stock in the sector in 2023 was HUF 151,756 million, which corresponds to 8% of the total FDI stock in the manufacturing sector. In terms of flows, the year 2021 can be considered as highly unfavourable, as the level of capital outflows exceeded HUF 12 billion. The year 2022 saw positive results in terms of foreign investment, but the value of turnover still did not reach the level of capital outflow one year earlier. Foreign companies are setting up production subsidiaries in Hungary mainly from Italy, Spain and France, and selling a significant part of the products manufactured here on Western European markets. In the export sales data, it was shown earlier that the sector produces primarily for export. The sector’s export structure is dominated by knitted clothing, workwear, and leather and textile footwear.
Over the past decades, the textile and clothing industry has been under increased scrutiny because of its polluting nature. Many major global companies have stressed that in the future they will try to produce and process their remaining garments and textiles using greener technologies and more environmentally friendly methods. However, some of these plans were announced as part of the so-called green washing marketing method, with no actual action following previous statements. The European Union announced its comprehensive textiles strategy in 2021, which set out an action plan for the sustainability and circularity, traceability and transparency of the EU textiles and clothing sector. This includes ensuring that manufacturers produce products that are more durable, contain less plastic and include parts made from recycled materials. The plan also addresses the issue of textile waste, as millions of tonnes of used and new light industrial products are being thrown away at present. EURATEX, established for this purpose, is setting up textile recycling centres in five countries (Belgium, Finland, Germany, Italy and Spain) to recycle materials that have become surplus. The EU has therefore set out some solutions to the problems concerning light industry sub-sectors for the coming years, but the action plan also poses a number of difficulties for manufacturers. Most of the factories and plants will have to be modernised in order to be able to use the technologies mentioned above. The resources needed to do this will have to be found by the producers themselves, so production prices are likely to rise and wages are likely to fall in the light industry sector. The strategy to be implemented by 2030 calls for changes in the European fashion industry as a whole, in addition to the factories, trade and marketing. However, this raises the question of how realistic the target date is in terms of the prospects for implementation, with so many players involved and sometimes drastic innovations.
The Hungarian textile industry has started to grow again in recent decades, but the figures are still below those of the golden age. The biggest problems in the sector are labour shortages, low wages and a lack of domestically-owned enterprises. There has been a positive trend regarding Hungarian firms for a few years, but most of them remain small and do not expand on a larger scale. Hungarian entrepreneurs are also significantly affected by large fashion companies producing Asian fast-fashion products that expand vigorously and often aggressively. It is not possible to compete with products offered at low prices, so domestically produced garments are often overshadowed by them. Despite all the difficulties, the quality of the Hungarian textile products produced today is still good, with domestic factories producing goods in demand on export markets.
