Hungary October gross wages up 5.4 pc – UPDATE

Budapest (MTI) – The average gross wage in Hungary rose by an annual 5.4 percent to 262,200 forints (EUR 835) in September, the Central Statistical Office (KSH) said on Tuesday.

Net wage growth outpaced the increase, climbing 7 percent to 174,393 forints due to a one percentage point cut in the personal income tax rate from January.

KSH noted that wages have been boosted this year by a higher minimum wage as well as pay increases for the armed forces and wage top-ups for social services and healthcare workers.

Excluding the 203,000 Hungarians in fostered work programmes, the average gross wage increased by 5.2 percent to 277,298 forints, while net wages rose by 6.8 percent to 184,404 forints.

Full-time fostered workers earned a gross 76,745 forints on average during the month, 0.6 percent more than in the same period a year earlier.

UPDATE

Analysts said they expected the rapid increase of wages to continue over the next year, citing a labour shortage and a steep rise in the minimum wage.

There is near full employment and this is likely to remain the case in 2017, Erste Bank analyst Gergely Urmossy told MTI. As a result household consumption could be again the main engine behind GDP growth, which could rise to 3.4 percent from 2.1 percent this year, he said.

Real wages are expected to rise by 7 percent for the full year of 2016, and the pace of growth could be similar next year even with inflation rising to 2 percent, Takarekbank analyst András Oszlay said. Net wages are projected to rise by 9-10 percent in 2017, he said, citing the rise in minimum wages and upward wage corrections in some professions.

Employment will expand at a lower rate in the business sector, which could increase the upward pressure on wages, Oszlay said, but he did not forecast a jump in inflation. Inflation risks are on the upside, however, and rate-setters are expected to note this in their announcement after their rate-setting meeting in the early afternoon, he added.

State secretary for the labour market at the economy ministry, Péter Cseresnyés, commenting on today’s data release, said that real wages had been rising continuously for the past four years. The rise in real wages was mainly down to tax cuts, low inflation and government measures, especially those to protect jobs, he said, adding that the wage agreements struck in November would add further upward pressure to real wages.

Source: MTI