Economy 17 October 2007, 9:00am

Hungary real wages decline ticks up to 6.4% in Aug from 4.4% in July - Stats

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The decline of real wages in Hungary picked up to 6.3% year on year in the January-August period from 6.2% in Jan-July at a 8.5% increase of the consumer price index, the Central Statistics Office (KSH) has reported on Wednesday. Real wages dropped by 6.4% year on year in August, against a 4.4% fall in July. The prime reason for the faster decline should be sought for in private sector wages, but the index showed a decline in the public sector, as well.

Following a moderation of the real wage drop in July it could be expected that the decline will be unbroken in the remaining of the year, as well.

Thanks to the ebbing inflation (which dropped to 6.4% in September from 8.3% in August due to base effects) real wages should shrink at a slower rate in the months to come, but if the decrease of wage dynamics proves to be lasting, this decline may be smaller than previously expected. Annual average real wage decline could be around 5% this year (or somewhat larger), but this is still less severe than the 6.3% yr/yr fall in January-August.

With regards to inflation and interest rate policy it is worth noting that the rise of gross average monthly earnings in the private sector was the smallest in August in the past 11 months.

Gross average wage in the national economy rose by 7.8% yr/yr in August, against a 10.0% increase in July. The January-August increase came in at 8.1%.

The year-on-year growth of the net average wage came in at 1.4%, down from +3.1% in July. The January-August increase was 1.7%.

Gross average wage in the private sector rose by 8.0% yr/yr to HUF 174,000, down from +10.8% yr/yr in July.

Gross average wage in the public sector was HUF 188,000, up 8.0% yr/yr, vs. +9.3% in the previous month.

Net average wage in the private sector grew by 1.5% yr/yr to HUF 109,150, versus a 3.6% yr/yr rise in July. In the public sector the growth of net average wage eased to 1.6% yr/yr from +2.5% in July. Net average wage in the sector was nearly HUF 115,000 in Aug.

The number of employed in the whole economy dropped by 1.5% yr/yr to 2,757,700 in Aug, vs. -1.3% in July. There were 1,933,600 people employed in the private sector and 742,200 in the public sector in Aug, which marks a 0.6% yr/yr and a 5.3% yr/yr decline, respectively.