Three-Year Deal: Minimum Wage Increases Outlined by 2027

A three-year wage agreement has been reached between the government and the forum representing employers. The agreement reflects the government’s expectations. The cabinet has outlined the gradual wage increases it wants to see so that the mini

By: hungarytoday.hu

Nov 22 2024
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Three-Year Deal: Minimum Wage

The wage agreement for next year has been reached, Sándor Czomba told Index. The State Secretary for Employment Policy said that the government had achieved what it wanted, as a three-year wage agreement had been reached. The dynamics of wage increases should follow the growth of economic and company efficiency indicators – therefore wage increases should be based on productivity improvements. Thus, in 2027, the minimum wage must reach 50% of the average gross earnings expected for that year.

Hence, the minimum wage will rise by 9% to HUF 290,800 (EUR 707.8) in 2025, by 13% to HUF 328,600 (EUR 799.8) in 2026 and by 14% to HUF 374,600 (EUR 911.7) in 2027, thus finally reaching 50% of the regular average gross wage.

It is important to highlight that the guaranteed minimum wage will be maintained and will increase by 7% to HUF 348,800 (EUR 848.9) by 2025. At the same time, it has been suggested that wage floors should be set at sectoral level in the medium term.

Average Salaries in Hungary since 2005. Graph: MTI/KSH

Index also noted that employers wanted a 10% increase, while workers wanted a 12-14% growth.

Negotiations have begun in several rounds, with employers asking for government help, but the government cannot now cut social contribution tax, for example. However, the cabinet is exploring the possibility of reducing labor costs and has committed to do so in writing. An important criterion is that employers will pay the 2024 social contribution tax in 2025 for employees whose wages were up to HUF 290,800 (EUR 707.8) in that period. The government’s rebate will be valid for three years, so that in 2026 and 2027 employers will pay the same amount of social contribution tax as in the previous year.

This represents a contribution of over HUF 10 billion (EUR 24 million) over three years from the government.

Finally, in relation to the agreement, it is worth pointing out that the government has prepared a forecast including their projections for economic growth and inflation in the coming years. If the aggregate of the individual indicators differs by 1 percentage point from the forecast, the members of the permanent consultation forum between social partners and the government will return to the negotiating table on the level of the minimum wage increases in 2026 and 2027. If negotiations are unsuccessful, the minimum wage will be adjusted in proportion to the overall difference.

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Earlier, Márton Nagy told Index that the minimum wage averages HUF 482,000 (EUR 1,173.2) in the European Union, and the effective Hungarian minimum wage of HUF 306,000 (EUR 744.81) is 17th in the EU, among the top in the region, ahead of the Czech Republic, Slovakia, Romania and Bulgaria.

“However, despite the fact that we are doing well with the effective minimum wage, the government sees the need to close the gap between the minimum wage and the average wage. Although the government remains an observer in the wage negotiations, it is important to raise the minimum wage to 50% of the average wage, in several steps of course, but by 2027 at the latest. Lower income earners should be brought closer to the average wage,” the politician concluded.

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