Is Hungary at the top of the wage growth list?
As Origo.hu reports, based on the previous estimation of the British Trades Union Congress (TUC), in 2018, it is Hungary where wages are going to increase at the fastest pace among the Organisation for Economic Co-operation and Development (OECD) countries. The 4.9% increase in wages happening with a low inflation rate might also improve the efficiency of the Hungarian economy.
According to the TUC, there are hardly any Central European countries which can keep up with the Hungarian wage increase. Those who approach Hungary are Latvia, Poland, the Czech Republic and Slovenia.
Another important fact to add is that in Western Europe, wages do not really increase at all compared to Hungary. Moreover, in Spain, Italy and Great Britain, wages are going to fall indeed, while in other European countries, the anticipated pay rise is not going to reach even a 1% increase.
Here is a table about wage growth in the world!
Wage rise as medicine
László György, director of the Macroeconomic Business Sector of Századvég and honorary associate professor of the Neumann János University, reports to Origo that “it is not justified to talk about the decrease of competitiveness when it comes to the wage increase.”
“Hungarian employees are underpaid since they do not benefit as much from their earned income as the employees of the developed Western countries.”
He further points out that compared to Hungary, the foreign enterprises pay less than they can to their employees, therefore the wage rate is also lower.
Weak trade unions
The increase in minimum wages is one of the best tools to also increase the rate of wages, reports Dániel Oláh, an academic member of the Neumann János University. He says that the wage increase is especially important in Central Europe where trade unions are weak.
For this reason, it is the government who has to counterbalance the market power of equity holders.
The expert is convinced that the wage increase might help to improve the productivity of the Hungarian economy as well. Furthermore, the economists of the above-mentioned university all believe that the wage increase supported by the government is not a cure-all, but a kind of medicine that the Hungarian economy has not had for quite a long time. In fact, the increase can only be sustainable, if this is not a drastic change, but a gradual process.