Average gross wage in Hungary reaches HUF 658,000

In March, the average salary of full-time workers was HUF 658,000, 13.9% higher than a year earlier. Average net earnings were HUF 438,000. This indicates that the rapid pace of wage growth seen at the beginning of the year is continuing, meaning that for the time being, even those companies that did not raise wages substantially during the minimum wage increase last December or the general wage adjustment period in January this year are still raising wages.

In the first quarter, the average gross earnings of employed persons were HUF 623,000, while the average net earnings reached HUF 414,000. Both gross and net average earnings increased by 14.2%.

An important factor in the dynamic growth of earnings is that the minimum wage has increased by 15% and the guaranteed wage minimum by 10%. As a result, companies have had to raise wages substantially, even around the median wage, to avoid wage erosion. Median gross earnings reached HUF 510,000 and net earnings HUF 354,500, an increase of almost 16%. This suggests that earnings at lower wage levels have increased more, while those at higher wage levels have increased less, but the effect of the significant increases in the minimum wage and the wage floor has persisted all the way to the median wage.

Wages in the public sector are rising faster than in the corporate sector this year, largely due to a significant wage adjustment in education. In the corporate sector, gross wages rose to HUF 675,000 in March, an increase of 12.7% over a year.

In the public sector, average gross wages rose to HUF 606,000 in March, an increase of 17.4%. A big factor in this is that earnings in education rose by 27% as a result of the long-delayed pay adjustment.

The high earnings data for the month of March, in addition to the rapid rise, can also be explained by the significant impact of bonuses. The average gross regular earnings (excluding bonuses, benefits and one-month special allowances) were estimated at HUF 598,000, 14.9% higher than in the same period last year. Regular average gross earnings amounted to HUF 599,000 in the business sector, HUF 589,000 in the budget sector and HUF 620,000 thousand in the non-profit sector.

As inflation fell to a low level amid high wage dynamics, real wages rose strongly, with pay growth of 9.9% in March. As shown in the graph below, real wage growth of around 10% has held steady for months.

The growth in purchasing power of earnings has also led to an increase in consumption. True, the pace of real earnings growth would also allow for faster retail sales growth, meaning that some of the population is still spending their surplus income only cautiously.

Real wages may continue to rise substantially in the coming months, but we could well see lower figures as we approach the middle of the year. This is linked to the fact that most forecasts suggest that the trough of inflation is already behind us - and the April inflation figures suggest as much - meaning that the coming months could bring higher rates of price increases. However, we should not expect much faster price increases, so the pace of real wage growth should remain high for the rest of the year.

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