Anna Wynn | Nov 3, 2018 | 3
Hungarian minimum wage soon to be below Romanian
It is not unlikely that starting from November, the Romanian minimum wage could surpass the Hungarian minimum wage. This has already been predicted two years ago, and now, the situation is really close to changing. Our eastern neighbours might start getting a higher salary, and become wealthier than Hungarians.
According to mfor.hu, last week, the Romanian unions and representatives of the labour market agreed on raising the minimum wage, which could happen surprisingly soon, before January 2019. Romanian finance minister Eugen Teodorovici reported that negotiations about the date of raising the minimum wage would start this week.
According to the agreement, the 1900 RON (375 Euros) minimum wage earned in a full-time job would be increased to 2080 RON (410 Euros), which equals a 9.4% raise. In relation to the Hungarian financial situation, this means that Romanian people would earn approximately 145.000 Hungarian forints (433 Euros) instead of the current 138.000 HUF (412 Euros).
Of course, raising the Hungarian minimum wage is also in question. In some EU countries, it is four times higher than in Hungary. If the raise does not reach 9.4%, the switch with Romanians on the imaginary ranking list remains permanent. Employee representations would stick to the raise started in the last two years; however, at the same time, employers do not support the idea of a double-digit raise, especially since social security taxes are expected to decrease next July instead of January, by 2 percentage points.
According to the current situation, employers would support 5-9% raises while employees advocate for raises over 10%. Mihály Varga, Hungary’s finance minister, stated that a raise just below 10% would be acceptable for both sides. This means that regardless of the date when the Romanian minimum wage will be raised, there is a possibility that it will surpass the Hungarian minimum wage by next year.
As for its value, the switch has already happened. Even though the Romanian minimum wage is lower than the Hungarian minimum wage, its value is stronger on the purchasing power parity, which means Romanian residents can earn a living easier, with less money.
According to last week’s decision made by Romanian employers and employees, a minimum wage will be established for employees with higher education and with 15 years of experience. This means a gross amount of 2350 RON (464 Euros). In Hungary, the situation is better. The minimum wage for trained employees is approximately 180.000 HUF (538 Euros), which could be increased to 200.000 HUF (598 Euros) by next year’s raise.