Hungary backs off 13% minimum wage hike, eyes more modest increase
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The previously promised 13% minimum wage hike now seems unlikely to materialize. Minister of National Economy Márton Nagy told RTL News that given the current economic climate, a more realistic increase would be around 10% starting January 2026. The government believes even this should be considered a win, pointing out that neighboring countries have experienced negligible wage growth, making a double-digit increase a noteworthy achievement.
Three-Year agreement behind the scenes
The basis for current wage negotiations is a three-year deal signed in 2023, which outlined minimum wage hikes of 9% in 2025, 13% in 2026, and 14% in 2027. The projections at the time were based on 3.4% GDP growth, 3.2% inflation, and an 8.7% average wage increase. But the economic landscape has since shifted dramatically. According to Telex, GDP growth this year is expected to reach just 1%, while inflation could rise to 4.7%.
The agreement included a clause allowing for renegotiation if conditions changed significantly—which the government is now invoking. Officials cite the need to preserve companies’ profitability and survival. Excessive wage hikes without corresponding gains in productivity, especially in sectors burdened with extra taxes, could erode profit margins.
Unions and employers willing to compromise
Zlati Róbert, president of the Hungarian Trade Union Confederation, acknowledged that although workers would welcome the largest raise possible, economic realities can’t be ignored. The goal, he said, is not to impose unsustainable burdens that could force companies to shut down. To help facilitate an agreement, the government is also proposing to reduce the employer-paid social contribution tax from 13% to 12%.
Political and economic priorities collide
The issue of wage increases carries political weight as well. The government aims to boost real wages in the lead-up to elections. However, experts warn that wage growth must align with the economy’s long-term capabilities. Despite significant convergence over the past decade, Hungary still only outpaces Bulgaria in the EU’s minimum wage rankings, as noted in Eurostat statistics.
The situation is critical. If they dont act very soon, anyone with a decent to good level of English or German will head for the door.
This government 16 years later is gonna be ended. Their constant lies and aggressive attitude towards the Brussels crooks are the thorns for their downfall. It’s obvious that those wage increases will not be given in 2026 and 2027 respectively. The question is, will the country’s new prime minister send the current populist and pseudo-patriot Orban to the special court?