Dynamic wage growth expected in coming years in Hungary, Orbán cabinet believes

The minimum wage will grow by 9 percent, 13 percent and 14 percent in the next three years, and the minimum wage for skilled workers will increase by 7 percent next year, so wage growth will be dynamic alongside the projected 3-4 percent inflation, Sándor Czomba, the state secretary for employment policy, said on public Kossuth Rádió on Sunday morning.

Real wage growth also expected increasing consumption

Real wages are also expected to increase, he added, and that will be reflected in consumption and households. The fact that the three-year wage agreement was concluded in the current uncertain global economic conditions “has a very important message” for the market, the economic, employees and households, he added.

Czomba said employers initially offered an average ten percent increase of the minimum wage, while employees wanted a twelve percent raise on average. With both paths, it would have been possible for the minimum wage to reach 50 percent of the regular gross average wage by 2027, but the wage dynamics can only be maintained and increased with the higher figure, he said.

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Minimum wage can be around EUR 1,000 by 2028

The aim of achieving a minimum wage of “around 400,000 forints [EUR 970]” by 2028 “seems completely rational” with the second path, Czomba said, as this amount will be achievable from 2027 to 2028 with an eight percent minimum wage increase. For this to be feasible, employees wanted some kind of guarantee and assistance from the government.

Therefore, employers with employees on a minimum wage will have to pay the increased social contribution tax “on a sliding scale”, that is to say they will have to pay the tax based on the previous year’s minimum wage, not on the rate applicable for that year, the state secretary said.

There are currently around 211,000 people earning the minimum wage in Hungary, and about 330,000-340,000 workers are paid the minimum wage for skilled labourers, Czomba said. Overall, the minimum wage increase directly affects around one million people from the labour market of 4.7 million employees, he said.

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