Do Hungarian salaries compare to the EU average?
Salaries have increased in Hungary in the past few years, but has that put us in a better position compared to the rest of the European Union?
G7.hu has analysed the relationship between the Hungarian salary percentiles and those of the European Union for every year from 2010 to 2019. It is not a surprise that Hungarians are among the lowest-paid citizens of the EU. As Telex reported some months ago, the net salaries of both unmarried individuals and two-parent families are the 4th lowest in Europe, according to the most recent Eurostat survey. But the difference is staggering: even with the so-called purchasing power standard taken into consideration, that is, the difference in cost of living between certain countries, the amount of money Hungarians make is minuscule. In 2019, the income of the median Hungarian household ranked at the 18th percentile in Europe, which means that while the members of that household made more money than exactly half of Hungarians (working full-time), 82% of Europeans earned more than them.
For a Hungarian household to reach the European median, they need to be among the most well-paid workers of the country, making more than 92-94% of their compatriots.
If we take a look at the crude numbers, disregarding the PPS and simply comparing how many euros members of different nations can take home on average, the enormity of the gap becomes even more evident. In that case, the Hungarian median salary is only enough for the 13th percentile in the EU, and only the top 1 per cent of Hungarians reach the European median salary. This is important because many products, such as iPhones, are sold on the international market without their prices being significantly adjusted to different salary levels.
Looking at the tendencies of the 10 years examined by g7.hu, there is not much change to speak of.
Comparing the PPS-based figures of 2010 and 2019, the situation of those in the lowest segment of the Hungarian labour market has, in fact, worsened over the years. For example, those who were at the 8th percentile in Hungary in 2010 reached the EU percentile of 5.41 that year, compared with the 3.35 of 2019. However, the top 30% of Hungarians seem to be catching up to the rest of the EU, slowly but surely. In 2010, being at the 85th percentile of the Hungarian salary scale was equivalent to a position of 33.27 on the EU one, which grew to 41.39 in 2019.
G7.hu points out that these changes are at least partially due to the government’s actions: by restructuring their tax policy and the family allowance system to aid those who make more money, by promoting the civil work program and supporting international companies who offer work opportunities with a low added value, and by worsening the state of the education system, they have most certainly contributed to the growing social inequality.
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Source: g7.hu, telex.hu