Hungary’s economy in serious trouble?
According to a Hungarian economic news website, Hungary’s economy is in serious trouble because a wage-price spiral began in 2022 autumn and will not end quickly. Meanwhile, the Hungarian News Agency wrote average salaries in Hungary increased considerably last October.
Wage-price spiral
Based on portfolio.hu, wage increases are not enough to compensate for the skyrocketing prices. Therefore, the country entered an era of the so-called wage-price spiral and extreme inflation. The latest data suggest the situation will become even more cnsiderable this year because the rise in prices will increase wages, and it will be difficult to break that vicious circle.
The Hungarian economic news portal argues that the government’s significant minimum wage increase started the spiral last year, before the April general elections. Based on their calculations, the purchasing power of wages has been decreasing for at least two months in Hungary. Therefore, real wages are at a 2020 level currently.
Inflation may remain high this year, so companies plan wage increases. However, the real wages will decrease even in 2023 by 2-3 percent.
Gross wages climb 18.4 pc in October
The average gross wage in Hungary went up by an annual 18.4 percent to 510,500 forints (EUR 1,270) in October, the Central Statistical Office (KSH) said on Wednesday. The average net wage including tax benefits was 352,000 forints, 19.1 percent higher than in the same period a year prior. KSH attributed the wage growth mainly to last year’s increase in the minimum wages for skilled and unskilled workers as well as previously scheduled and additional wage hikes.
The average monthly gross wage of full-time employees, excluding Hungarians working full time in fostered work programmes, was 519,800 forints while the average monthly net wage bar the benefits was 339,500 forints in October. The average monthly gross wage of men working full-time went up by an annual 18.1 percent to 552,500 forints and of women by an annual 16.6 percent to 457,700 forints. Average monthly gross wages climbed at the highest rate of an annual 28.5 percent to 493,800 forints in the non-profit sector. They rose by 16.2 percent to 445,500 forints in the central-budget operation sector and by 14.3 percent in the business sector. KSH attributed the above-average wage growth in the non-profit sector to the transfer of several educational institutions to this sector from the central-budget sector.
During the period January-October, Hungarians employed in the financial and insurance sectors were the highest earners, receiving on average a monthly gross paycheque of 844,100 forints while people working in commercial accommodations and catering earned the least, 316,700 forints, KSH said. Commenting on the data, Márton Nagy, the minister of economic development, attributed the continued increase of wages in October to the strong performance of the Hungarian economy.
He noted that average wages had increased more than two-and-a-half-fold since 2010 when the government entered into power. Despite the inflationary effect of war-related sanctions on the economy, real wages in the first ten months of 2022 had gone up, by 4.3 percent, compared with the previous year, the minister said in a statement, adding that the “harmful sanctions” should be scrapped.
“The government will do everything in its power to offset the effects of the sanctions and help business survive and strengthen, as well as to ensure that wages continue to increase,” Nagy said. He noted that the government has set up a 2,000 billion forint central fund providing favourable loans and extended the cap on interest rates. The minister also noted the 16 percent minimum wage increase as of January this year. “Those measures have directly or indirectly contributed to increasing the wages of 1.5-2 million jobholders,” said Nagy.
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Source: portfolio.hu, MTI
