Economy 23 February 2022, 10:00am

Whaaat?! Gross average wage in Hungary is half a million forints?

Portfolio

The latest data of Hungary's Central Statistical Office (KSH) show that the average gross wage was 492,800 forints in December 2021, while in the corporate sector it was above HUF 500,000. This is an extremely high figure, but December is a special month because of bonuses, and the average person does not earn that much money. Moreover, even though earnings are growing fast, almost all of the growth is being wiped out by inflation, which has risen to a decade high.

ipar termelés worker dolgozó gyártósor bérek keresetek

KSH data show that earnings turned out favourably in the last month of the year. At companies with at least five employees and in the public sector, average gross earnings were HUF 492 800, 9.7% higher than in the last month of 2020. Average net earnings were HUF 328,000.

However, the average person does not take home the average earnings, which are distorted by a number of factors, most notably the wages of high earners, which pull the average upwards significantly. The average person takes home the median wage. If we rank the salaries from lowest to highest, the median worker's gross salary was HUF 380,000, while the median net salary was HUF 252,000 in December, according to Portfolio's calculations.

However, it is worth looking not only at firms with five or more employees and the public sector, but also at the whole national economy, including the smallest companies. According to KSH data, the average gross salary was HUF 478,000, which gives us a net figure of HUF 318,000. The latter is HUF 10,000 lower than if only firms with more than five employees were taken into account. In the national economy as a whole, the median gross salary was HUF 362,000, while the median net salary was HUF 240,000, according to Portfolio's calculations. This is the salary the average person received in December.

The high earnings figure for December is also due to bonuses and one-off benefits. The average gross regular salary (excluding premia, bonuses, one-month special allowances) is estimated at HUF 419,000. Here too, the increase is substantial, with regular earnings 9.7% higher than a year earlier.

In the business sector, average gross earnings reached HUF 512,000 in December, which marks an increase of 8.4% in annual terms. This indicates that the rapid wage dynamics in companies continued into the end of the year, which was also reflected in bonuses.

But people are not feeling much of the rapid growth. Inflation has risen to a decade high of 7.4% in December (and further to 7.9% in January, which was not even the peak yet). Therefore, by the end of the year, real wages in both the household and corporate sectors had risen by less than 1%, compared to the 3-5% growth seen in the first half of the year.

In the whole of 2021:

Full-time employees’ average gross earnings (as defined by the Hungarian Central Statistical Office) – at enterprises employing at least 5 persons, at budgetary institutions and at non-profit organisations that are significant in terms of employment – amounted to HUF 438,800 and excluding fostered workers to HUF 449,600.
Average net earnings reached HUF 291,800 excluding tax benefits and HUF 300,500 including them.
Both average gross earnings and average net earnings without tax benefits went up by 8.7%, average net earnings including tax benefits grew by 8.4% compared to the corresponding period of the previous year.
Average gross earnings reached HUF 450,800 in the corporate sector, HUF 409,900 in the public sector, HUF 419,100 in the non-profit sector, representing growths of 7.8%, 9.5% and 15.4%, compared to the previous year. Due to planned wage raises in certain government branches – including the pay raise of doctors, judges and prosecutors, and employees of nurseries – the growth of average wages in the public sector exceeded that of the national economy. Several educational institutions have been reclassified from the budgetary into the non-profit sector, following a change in their controlling authority, leading to a significant increase in average earnings in the non-profit sector.
The highest average gross earnings were recorded in the financial and insurance activities section (HUF 758,700) and the lowest ones for accommodation and food service activities (HUF 267,500).
Average gross earnings amounted to HUF 479,200 for male full-time employees and to HUF 401,700 for female full-time employees, representing increases of 8.9% for males and 8.6% for females over a year.
Regular average gross earnings (without premiums and one-month bonuses) are estimated at HUF 404,000, being 8.9% higher than a year earlier.
Real earnings rose by 3.4%, along with a 5.1% year-on-year increase in consumer prices.
Gross median earnings were HUF 350,000, surpassing by 9.2% the previous year’s value.

What can be expected this year?

Rapid wage increases are expected this year due to the worsening labour shortages and the 20% increase in the minimum wage and guaranteed wage minimum. The significant increase in minimum wages will drive other wage categories higher, especially those close to these wages. Thus, average wages could rise substantially by over 10% this year, with some forecasts suggesting increases of up to 15%. However, inflation will also be high in 2022. A few months ago, price rises of 3 to 4% were expected; today, inflation forecasts are as high as 6-7%. In other words, inflation will flatten this year's wage increase quite substantially.

Cover photo: Getty Images