BREAKING! Three-year minimum wage agreement set to impact everyoneโs pay in Hungary ๐
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Representatives of employers, unions and the government signed an agreement on minimum wage increases over the next three years on Monday.
Under the agreement, the minimum wage will rise by an annual average 12pc over the next three years, increasing 9pc toย (EUR 706) HUF 290,800 in 2025, 13pc to 328,600 (EUR 798) in 2026 and 14pc to 909 in 2027.
The minimum wage for skilled laborers will rise by 7pc to 348,800 in 2025.
The sides aim to boost the minimum wage to 50pc of the average wage by the start of 2027. They commit to boosting employee remuneration based on economic growth and business efficiency and productivity improvements.
After the signing, Prime Minister Viktor Orbรกn said the agreement was based on the assumption that peace would be achieved in 2025 and economic development would advance accordingly. He added that GDP growth over 3pc was โrealisticโ in 2025.
Acknowledging that the agreement was based on an optimistic scenario, he said that an override clause had been included allowing modifications in case of contingencies. He added that the government trusted that activating the clause would not be necessary.
Orbรกn said implementing the agreement would not be easy, adding that repeating the economic performance of 2024 and 2023 would be insufficient to justify the wage increases. Management and workers โneed to do more for economic growth than in the preceding years.โ
He said that the minimum wage, adjusted for inflation, was expected to climb by 29pc.
It feels like they’re pricing in the anticipated erosion in the value of the Forint in order to keep wages at parity with today. Nobody can predict the market with any guarantees but a downward erosion in the value of the currency is likely, in which event these wages will be worth the same expressed in Euros as they are today. Meanwhile, inflation will continue elsewhere ensuring that the cost of imported goods will continue to rise, the net result will be a continuing decline in living standards. The great thing about the currency markets is that they can point the blame at nebulous market actors and disclaim all responsibility: “we’ve increased wages as we said we would, we’re not responsible for currency market movements.” The truth of course is that in a small country like Hungary with an illiquid currency, the central bank is the biggest market actor bar none, the exchange rate is a direct product of their monetary policy (or passivity).