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Feb 27, 2018 - Zoltán Kovács

Real wages up, unemployment down: Ever wonder what a workfare society looks like?

“[W]e can now say that not only do we have jobs,” Prime Minister Viktor Orbán said, “but it is financially worth our while to do our jobs.”

In 2010, when the Orbán Government took power, the prime minister promised to transform Hungary into a workfare society. Pledging to create 1 million new jobs over the next 10 years, the government set a goal to reduce the welfare rolls and ensure that everyone who wants to work can make a decent living doing so.

Today, we’re seeing the results of that effort.

Wages have increased markedly over the last five years, leaving Hungarian families with more disposable income. Real wage growth since 2016 is in the double digits, and average wages grew by 12.9 percent in 2017 alone, the largest increase since 2002.

Here’s more:

For the first time in Hungary’s history, average gross monthly wages topped 1,000 euros following an annual 13.5 percent growth in December, and real wages have grown by 36 percent since 2010. That’s twice the pace of real wage growth under the Socialist-Liberal coalition that governed between 2002 and 2010. The economy boasts 736,000 new jobs, and more than half of Hungarians now report that they are able to put money aside each month.

Although average salary increases tell an important tale, also important is narrowing the wage gap within our society – providing more to health care professionals, teachers, public sector employees and minimum wage earners.

Compared to 2010, minimum monthly wages for unskilled workers are up by almost 90 percent (from 73,500 to 138,000 HUF) and more than doubled (from 89,500 to 180,500 HUF) for skilled laborers. Meanwhile, the health care and education sectors have also seen significant salary hikes, leading to a solid 15 percent drop in the number of doctors leaving for jobs abroad.

Over the last year, regional wage differences in Hungary have also diminished. The greatest wage growth was recorded in the Hungarian countryside – counties like Jász-Nagykun-Szolnok, Heves, Szabolcs-Szatmár-Bereg and Nógrád.

The record-high salary expansion comes with Hungary’s lowest-ever 3.8 percent unemployment rate and annual GDP growth that hit 4.0 percent in 2017.

As a result of the six-year wage deal brokered in November 2016, net wages are up by 54 percent since 2010 and now exceed 205,000 HUF.

Prime Minister Orbán made it one of his government’s top priorities in 2010 to give every Hungarian that wants to work a chance to work and, what’s more, to make it worthwhile to go back to work. This is what it looks like to move from welfare to workfare.