Earnings in real terms increased by 9 percent in the period January-August 2018, fuelling household income growth, which in turn has improved the finances of Hungarian families. The positive trend in real earnings growth has been unbroken for the 68th consecutive month, thanks to the six-year wage agreement, public sector career models and private sector wage hikes.

The wage agreement concluded in 2016, which had stipulated significant wage hikes and tax cuts, has caused dynamic earnings growth in recent years and this in turn has had a major impact on consumption growth. The robust increase in retail sales has also added to Hungary’s economic expansion. These factors as a whole have resulted in GDP growth of almost 5 percent in the second quarter of this year.

The wage gap has continued to narrow in the country: the largest wage increases were registered in the most economically deprived counties. The rate of earnings growth, along with job growth, was larger than the country-wide average in Borsod-Abaúj-Zemplén, Szabolcs-Szatmár-Bereg and Baranya Counties. Gross and net earnings were both up by 11.8 percent in the national economy. Within that, earnings rose by 10.8 percent in the private sector and by 10.9 percent in the public sector. Gross monthly earnings averaged HUF 324 thousand in the period January-August 2018. The Ministry of Finance is expecting this trend to continue and in the long term narrow the gap between Hungarian and Western European wages.

(Ministry of Finance)