Hungary's minimum wage to increase by at least 8 percent in 2020
Both the minimum wage and the guaranteed minimum wage will increase by eight percent next year, under the 2019 and 2020 agreement signed at the end of last year.
Both the minimum wage and the guaranteed minimum wage will increase by eight percent next year, under the 2019 and 2020 agreement signed at the end of last year. This percentage rate increase may be even greater when linked to specific economic indicators, which will only become apparent next year.
Finance Minister Mihály Varga announced last week that the government would support an even faster than agreed minimum wage increase by next year. Today the gross minimum wage is HUF 149,000 HUF (EUR 445) – next year this would rise to HUF 161,000, taking into account the eight percent increase.
According to Hungarian Insider, the December 2018 agreement stipulates that if at least one percentage point differs from the 2.7 percent inflation forecast, 3.9 percent GDP growth and 2.9 percent productivity growth, or the three macroeconomic data differ by a total of two percentage points, the parties will open up new negotiations.
The Hungarian Trade Union Confederation has already indicated that it would renegotiate the agreement, but since the union has not yet signed, its initiative raises questions. At the same time, employers’ representatives consider the proposed increase in the minimum wage to be sufficient, arguing that the labor market is demand-driven, so employers are already implementing higher wages.
For public companies, the previous three-year wage agreement has expired, so they can agree to a new, even multi-year, settlement. Employees of state-owned companies received an average 30 percent pay rise between 2017 and 2019.
Employers’ social contributions are expected to fall by another two percentage points from July next year, if real wages rise by more than six percent. In retail, the voluntary shortening of Sunday opening hours may again be on the agenda of the private sector and the government’s permanent consultation forum.
Photo credit: Mandiner