Gross wages rise 5.8pc in January – UPDATE

Budapest, March 18 (MTI) – The average gross wage in Hungary rose by 5.8 percent in January from the same month a year earlier, after growing by 5.7 percent in December, the Central Statistical Office (KSH) said on Friday.

January’s gross wage came to 249,395 forints, the KSH said.

The average net wage rose faster than gross wages, at 7.4 percent, due to a one percentage point cut in the personal income tax rate 165,849 forints in January.

Excluding the 197,000 Hungarians in fostered work programmes, the average gross wage rose by 6.3 percent to 262,948, while net wages increased 8 by percent to 174,861.

Full-time fostered workers earned a gross 79,261 forints on average during the month, 1 percent less than in the same period a year earlier.

Including fostered workers, about 2,947,200 people were employed in Hungary in January, 3.4 percent more than a year earlier. Excluding fostered workers, the number rose by 2.9 percent.

Analysts told MTI that net wages were likely to grow in excess of 5 percent in the full year 2016, and economic growth would be driven by household consumption in the coming years.

Gergely Suppán of Takarékbank projected full-year gross wage growth of 4.3-4.5 percent for this year, which could translate into net wage growth of 5.8-6 percent due to the tax changes. He put real wage growth at 4.6-4.8 percent, assuming average annual inflation of 1.1 percent.

He counted labour shortages in some sectors of the economy and the minimum wage rise among upside risks to wage growth. Lower inflation because of a sustained drop in oil prices could bring real wage growth over 5 percent, he added.

Dávid Németh of K and H Bank said real wages could grow more than 6 percent this year, boosting household consumption and impacting economic growth.

Economy Minister Mihály Varga said higher wages were linked to a stronger economy. The government has introduced several measures to boost wages for teachers and for staff of the armed forces, and this trend will continue in the public sector, he told public news channel M1.

Personal income tax was reduced by 1 percentage point this year, resulting in a larger increase in net wages than in gross wages, he said. Efforts will be made to provide more support to SMEs which provide over 75 percent of Hungarian jobs. Other planned measures may include increasing the minimum wage, he added.

(HUF 100 = EUR 0.3218)

Source: http://mtva.hu/hu/hungary-matters