New EU standard to come into force: Will minimum wage increase in Hungary?

The EU principle set to come into force in November this year aims to set the minimum wage at 60% of the gross median wage. Based on the latest figures for November, the minimum wage in Hungary, which was increased in December, is merely 43% of average gross earnings. Thus, an increase in minimum wage will most likely be require in Hungary.

An increase in minimum wage in Hungary?

Under a new EU directive set to come into force on 15 November 2024, EU countries must set the minimum wage at 60% of average gross wages. The EU will from then require a regular review of the minimum wage in line with the OECD, Euronews reports.

As of 1 December 2023, both the minimum wage for skilled workers (garantált bérminimum) and the minimum wage (minimálbér) have been increased in Hungary. The former rose to HUF 326,000 (EUR 841), while the latter to HUF 266,800 (EUR 688). However, thanks to the new EU rule introduced from November, the minimum wage in Hungary is likely to be raised again, Economx writes.

Minimum wage in other EU countries

In two-thirds of the EU, the gross minimum wage is below EUR 1,000, with a wide range from EUR 477/month in Bulgaria to EUR 2,571/month in Luxembourg. The only countries where the minimum wage exceeds EUR 2000 are Luxembourg, Ireland, the Netherlands and Italy, while 14 EU countries have minimum wages below EUR 1000.

Even with the December increase, the minimum wage in Hungary is in the lower third of the EU stats.

Minimum wage in Hungary still low compared to average earnings

The EU sets the minimum wage at 60% of the median gross wage or 50% of the average wage. However, many European countries have lower rates, Economx writes.

According to data published by the OECD, in 2022, there were 10 EU countries, including Hungary, where the minimum wage was less than 50% of the median wage.

In total, only three EU countries (Portugal, Slovenia and France) exceeded 60%. In Hungary, the minimum wage adjusted for PPS was EUR 1007. PPS (purchasing power standard) is a Eurostat-defined “artificial currency unit” based on price level differences between countries. One unit of PPS can theoretically buy the same amount of goods and services in each country, Euronews writes.

In its 2022 report, the OECD called for a regular review of minimum wages. In line with this, the EU’s new directive, which sets the minimum wage at 60 percent of the median gross wage, aims to protect the lowest-paid workers, to continuously adjust the minimum wage and to promote wage negotiations.

This year’s figures are not yet public in Hungary. However, in November 2023, the average gross salary was HUF 621,200. The minimum wage of HUF 266,800 is merely 43% of this amount. Thus, Hungary will most likely be ordered to review minimum wages again.

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