Hungarian economy: the wage growth and inflation in double digits – UPDATE

The average gross wage in Hungary climbed 14.9 percent year-on-year to 495,900 forints (EUR 1,250) in May, data released by the Central Statistical Office (KSH) on Monday show.

The data for full-timers at businesses with at least five people on payroll show the average net wage rose at the same pace to 329,700 forints. The gross median wage increased by 14.5 percent to 397,900 forints.

Hungary’s statutory minimum wage was raised over 19 percent from the start of the year, while the salaries of many people employed in the public sector were bumped up, putting wage growth in the double digits from January.

Real wage growth was 3.8 percent, calculating with May CPI of 10.7 percent.

Excluding the 76,200 Hungarians working full time in fostered work programmes – who earned on average a gross 100,200 forints (EUR 253) in May – the average gross monthly wage in Hungary was 506,600 forints.

The average gross wage in the business sector, which includes state-owned companies, rose by 14.0 percent to 506,800 forints, excluding fostered workers. The average gross wage in the public sector, excluding fostered workers, climbed 12.2 percent to 499,000 forints.

In the non-profit sector, the average gross wage, without fostered workers, increased by 32.9 percent to 530,000 forints, as a number of people working in education who were earlier counted in the public sector were reclassified.

A broader set of data covering all full-time employees, not only the ones at employers with a payroll of five or more, show the average gross wage was 481,600 forints and the average net wage 320,300 forints in May. The median gross wage reached 381,400 forints.

Excluding fostered workers, full-timers earned a gross monthly 491,300 forints (EUR 1,240) and a net 326,700 forints (EUR 826).

Hungarians employed in finance and insurance were the highest earners in May, getting an average gross paycheque of 848,700 forints (EUR 2,143). People working in commercial accommodations and catering earned the least: 314,000 forints.

In the period January-May, men earned, on average, 22.2 percent more than women.

Magyar Bankholding chief analyst András Horváth said full-year wage growth could climb a little over 16 percent. Higher payroll costs, along with dearer energy and base material prices, could further strengthen businesses’ intentions to raise prices, which could be easily realised amid the current strong demand, he added.

K+H Bank senior analyst Dávid Németh said wage growth could fall behind inflation if businesses don’t raise pay in the second half of the year.