Thanks partly to the six-year wage agreement concluded last November, the positive real wage growth trend in place for more than four-and-a-half years has remained unbroken in Hungary. In the initial eight months of 2017, gross wages were up by some 44 percent compared to the same period of 2010, which figure shows the beneficial effect of, among other factors, Government measures.

In the period January-August 2017, both gross and net wages grew by 12.7 percent year-on-year, which led to real wage growth of above 10 percent, due to benign inflation. This will significantly improve the financial situation of Hungarian families, boost domestic consumption and, in turn, fuel economic growth.

The real wage growth figure of 10.1 percent means that an average Hungarian employee has gained the equivalent of more than one month of extra income this year. Gross wages averaged HUF 290 000 in the period January-August 2017, while the average net wage – including family tax allowances -- was HUF 201 000 in the observed period.

Gross and net wages in the private sector rose equally, by 11.3 percent year-on-year. Within that, the wage growth of manual workers was even higher, 14.6 percent. As a result of Government-initiated, multiple wage hikes in the public sector, wages on average – excluding public work wages -- increased by 13.8 percent year-on-year, which signals that the wage gap between private and public sector jobs has narrowed.

Also as a consequence of the six-year wage agreement, in addition to the payroll tax cut of 2 percentage points introduced as of this year, payroll taxes are set to be reduced by another 0.5 percentage points next year. The tax burden of enterprises will accordingly be HUF 200bn lower. The Government is expecting wages to rise further, driven partly by substantial wage increases in the case of low-paid jobs and the reduction of employer taxes.

(Ministry for National Economy)