Hungary’s income decline: 8 in 10 citizens fall behind European peers

A recent analysis reveals that Hungary has seen a significant decline in its citizens’ relative income standings within the European Union over the past few years. Following the pandemic and the onset of the Russian-Ukrainian war, only a small segment of Hungary’s population—roughly 15%—has improved its position in EU income rankings. This is a sharp contrast to the situation in the late 2010s when Hungary experienced a period of economic growth, benefiting a broader portion of the population.

When ranking EU residents by income, Hungary’s citizens as a whole have slipped backwards between 2020 and 2023, G7 reports. Most notably, this trend is evident across both nominal income (in euros) and purchasing power parity, which adjusts for cost-of-living differences between countries. The government’s attempts to regulate prices have had little impact on reversing this decline.

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For instance, Hungarians earning at the median level in 2020 ranked in the 13th percentile across the EU, meaning they earned more than 13% of Europeans. By 2023, this had dropped to the 11th percentile. The top earners in Hungary, however, have seen some improvement, with those in the 90th income percentile advancing from ranking 28% of Europeans in 2020 to 29% in 2023.

While the wealthiest 3% of Hungarians have made notable gains, closing the income gap with their European peers,

the majority—around 85%—have fallen further behind.

In fact, the G7 article suggests that 8.5 out of 10 Hungarians are now in a worse relative income position compared to the EU average, contradicting the narrative of economic progress for all.

The gap between high earners and low earners has remained stark. The government’s policy of flat taxes and generalised subsidies, such as energy price reductions, disproportionately benefit the wealthier segments of society. While high-income individuals have seen substantial pay increases that helped them climb the EU income ladder, the poor have faced the brunt of skyrocketing inflation, exacerbating income inequality.

Ultimately, the data paints a picture of growing economic disparity in Hungary, where only the top earners are benefiting from EU-wide income improvements, while the rest of the population struggles to keep pace. This growing income divide underscores the lack of effective policies aimed at reducing inequality in Hungary.

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