Hungarians' average earnings improve in December

After growing by around 14% in recent months, the rate of wage growth jumped to over 16% in December, according to the latest figures from the Hungarian Central Statistical Office (KSH). The average gross earnings of full-time employees rose to HUF 655,600.

The office pointed out that

the increase in wages compared to the same period last year was mainly due to the increase in the minimum wage and guaranteed wage minimum in December.

It is worth noting that the growth in regular earnings was even faster. The average gross regular earnings (excluding premiums, bonuses, one-month special allowances) are estimated at HUF 565,400, 17.3% higher than in the same period last year.

It is very likely that employers not only increased the wages of minimum wage workers, but also had to make substantial wage adjustments in higher wage brackets, partly to avoid wage compression. This is also indicated by the fact that the rate of increase in the median wage has also jumped: that is, the wage of the imaginary worker, compared to whom half of the workers earn more and half earn less, has also increased substantially.

Median gross earnings were HUF 496,000, 16.0% higher than a year earlier. Median net earnings after benefits reached HUF 342,800.

With inflation having fallen to a low level (3.9%) compared to the price hikes of the previous period, real wages have again increased significantly.

However, the positive December figure was only a small band-aid on a weak performance for the year as a whole. Last year, the 14% wage increase was accompanied by inflation of 17.6%, resulting in a substantial year-on-year fall in employees' pay.

The last time real wages fell was more than a decade ago, in 2012.

This year could see a turnaround, with inflation expected to be 4-5% and wages rising by double digits. Several surveys show that most companies are reluctant to give wage increases of 10% or more, but macroeconomists still expect wages to grow rapidly again this year. On the one hand, the minimum wage and the guaranteed wage minimum have both risen significantly, which have a wage-increasing effect in other categories, and on the other hand, the significant labour shortages could lead to a substantial increase in fluctuation where employees do not feel they can advance this year after last year's real wage decline.

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