The Hungarian government is planning to increase the minimum wage by 26 percent in 2017, according to reports.
The move is set to be enforced a year before the parliamentary elections, online news portal mfor.hu reported, citing an explanation attached to an amendment proposal for next year’s budget bill.
In the justification for increased funding to the National Council of Mountain Municipalities, ruling Fidesz lawmaker Sándor Font wrote that additional funds are needed to cover the costs of “the planned 26 percent hike in the minimum wage”, according to the website.
With a 26 percent minimum wage increase, Hungary would move from fourth lowest to halfway up the list of minimum wage rates globally.
The government would also be heeding opposition calls to bring the minimum wage in line with subsistence levels, the portal added.
The move would hurt the country’s competitiveness, however, with companies looking to invest in Hungary having to take into consideration significantly higher labor costs, the portal noted.
Another option, according to mfor.hu, is for the government to offer employers the option to reward employees with cash in the place of the voucher system which is in the process of being scrapped. This rise in benefits may form part of the planned 26 percent hike, the report added.