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Sep 21, 2018

Hungary’s average salaries increased by 12.8 percent year-on-year

Experts point out that extraordinary government decisions are pushing wages higher

Hungary’s average salaries increased by 12.8 percent year-on-year in July, the second highest rate in 2018.

An analysis by ING states that in addition to the labor shortage, increase of minimum wage and wage settlements in the public sector, there was another contributing factor to the surprisingly strong wage growth - bonuses.

Wages increased by 17 percent year-on-year in the public sector, but as regular salaries were up by 13.8 percent on average, premiums and one-month bonuses jumped by 132 percent year on year.

In the business sector, gross earnings rose by 11.1 percent, in line with the average rate in the first seven months.

Experts point out that extraordinary government decisions are pushing wages higher, but the market-based increase is more moderate.

“Overall, the labor market could still produce positive surprises, but with a constant reduction in the potential pool of employment (inactive and fostered workers), it would be hard to maintain these trends into 2019,” ING states.

“For next year, we expect a significant redistribution between the public and private sector, as the government looks for opportunities to downsize. It will also have a technical (composition) effect upwards on average wages, which should remain close to double-digit territory.”