Wage talks in Hungary: one-off benefit of HUF 100,000 suggested for the lowest earners

László Perlusz, secretary general of the National Association of Entrepreneurs and Employers (VOSZ), told state newswire MTI that together with trade unions they have initiated that employers should be able to give the lowest earners a one-off tax-free allowance, where possible, given that this year's annual inflation will be around 17.5%, while the minimum wage has risen by 16% and the guaranteed wage minimum by 14%.

The VOSZ secretary general said that employers believe that more precise figures on next year's wage growth could be given once this year's third quarter GDP data are available. The majority of employers said that with economic growth close to zero this year, an average wage increase of 10-15% could be expected.

A four-year concept to reform the two-tier minimum wage system - i.e. the minimum wage and the guaranteed wage minimum – was discussed at the meeting. While retaining the minimum wage category, a sectoral wage scale would be established in which sectors in different competitive situations could set a sectoral guaranteed wage minimum. This would give flexibility to the system and employers could support higher guaranteed wage minimums in more competitive sectors. "This would also serve to increase the role of collective agreements, as set out in the EU directive, and help minimum wages catch up," said László Perlusz.

Imre Palkovics, president of the National Association of Workers' Councils, told MTI that the one-off 100,000 HUF tax and contribution-free allowance would also bring additional VAT revenue to the budget through increased consumption. It is likely that employers would give this one-off allowance to lower-paid workers, who would use the amount for consumption.

THE UNION LEADER SAID THAT THE WORKERS' SIDE HAD PUT FORWARD A PROPOSAL TO INCREASE THE MINIMUM WAGE BY 15% NEXT YEAR AND THE GUARANTEED WAGE MINIMUM BY 10%.

Trade unions say that in order for the economy to expand, internal consumption needs to grow, and this would be helped by rising wages,

the president of the Labour Councils said.

Imre Palkovics said the structure of two minimum wage schemes should be abolished. The minimum wage could be merged with the guaranteed wage minimum, increasing it to around HUF 350,000-370,000 by 2027. This could be followed by sectoral collective agreements on occupational minimums, leading to a wage tariff. The forum for this would be the sectoral parity committees, which were set up in Hungary under the Phare programme. This would give back the sectoral parity committees their former function, collective agreements would be extended, and social dialogue would also be strengthened, the President of the Workers' Councils added.

Cover photo: Shutterstock