Domestic Wages Are Catching up with Czech Salaries

By: hungarytoday.hu

Aug 16 2024
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Domestic Wages Are Catching up

The Hungarian wage situation is not as tragic as it is regularly portrayed in the Hungarian press, at least not in terms of gross average wages in neighboring countries. Based on the latest data from the statistical offices of the region’s countries, despite the economic challenges and the weak European economy, the region is experiencing a stunning wage boom, with some benefiting and others less so, Világgazdaság reports.

The Czech Republic and Slovakia are among the latter, after both countries have seen wage dynamics below 10 percent for years. This has led to a shift in the region’s pay rankings. While the Czechs had the highest average gross wages among the Visegrád countries (Poland, the Czech Republic, Slovakia, Hungary) until 2022,

Poland, now having the most dynamic economy in the Central European region, has taken the lead.

In the first quarter of this year, the average wage for Poles was 8,147 zloty (1,904 euros).

Among the V4, the Czech economy has suffered most from the war crisis. In the case of the Czechs, economic output has only just reached the level of the last year before the pandemic, while real earnings have fallen by more than 10 percent in two years. Not surprisingly, high inflation has been coupled with very low wage dynamics, averaging between 6 and 8 percent. The average gross wage in the first quarter was 43,941 koruna (1,739 euros), 7 percent higher than a year earlier.

This is less than half the growth rate of Hungarian earnings. In Hungary, the average gross salary during the same period was 623,000 forints (1,573 euros), according to the Central Statistical Office (KSH), which means that what was previously unthinkable is increasingly being achieved:

domestic wages are beginning to catch up, albeit slowly, with Czech salaries.

Of course, this does not mean that net wages are catching up with the Czechs, nor that the Hungarian standard of living is approaching the Czech level, but it is an indication that the difference between the average wages of the two countries, which used to be between 100-120,000 forints (253-303 euros), has narrowed to 60,000 forints (152 euros).

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Meanwhile, the Romanians have also come a long way up. In Romania, average gross earnings in the first quarter were 8,157 leu (1,640 euros). At the same time, Romanian wages are also higher because since a new reform introduced in 2017, the contributions are passed on to workers, meaning that Romanian employees’ earnings are taxed much more than anywhere else in the region. This is reflected in the net wages:

in the first quarter, the average net salary in Romania was equal to 968 euros; about 100 euros lower than the average net salary in Hungary.

Slovakia remains at the bottom of the list. Hungary’s northern neighbor had an average gross salary of 1,447 euros in the first three months of the year. Wage growth in Slovakia was also lower than in Hungary, where wages rose by 9 percent in the first quarter.

It is also important to stress that wages are not measured in the same way. In Poland, for instance, companies with more than 9 employees are included in the sample, excluding small businesses and lower-paid workers, thus pushing up wage dynamics. In Hungary, salaries were also measured in this way for a long time, but for several years now the Hungarian Central Statistical Office (KSH) has been taking the whole range of employers into account, meaning that average wages in Hungary are 20-30,000 forints (51-76 euros) lower than before.

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