Economy 7 August 2024, 1:00pm

Is the minimum wage in Hungary low or high in EU comparison?

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The minimum wage has grown more slowly in Hungary over the past ten years than in Romania, Poland, Croatia, Slovenia, and the Czech Republic in Central and Eastern Europe. The Hungarian minimum wage is now only larger than in Bulgaria. At the same time, the effective minimum wage is higher and Hungary ranks much better in this respect.

dolgozó worker gyár gyári munkás ipar kereset fizetés

The average annual growth rate in the minimum wage between July 2014 and July 2024 was highest in Romania (+13.7%) followed by Lithuania (+12.3%), Bulgaria (+10.6%), Poland (+9.5%) and Czechia (+9.3%), data by Eurostat, the statistical office of the European Union, show. The growth rate in Hungary (less than 8%) was slightly below the regional average in that period, as a result of which only Bulgaria is behind in terms of the minimum wage.

The lowest average annual growth rates among EU countries were recorded in France (+2.0%), Malta (+2.6%) and Luxembourg (+3.0%).

According to a statement by Hungary's Ministry of National Economy, the actual situation is shown by the effective minimum wage, which is a weighted average of the guaranteed wage minimum and the minimum wage. In Hungary - uniquely in Europe - the minimum wage is a two-tier system. Moreover, more than twice as many people receive a guaranteed wage minimum (for skilled workers) than a minimum wage.

In Hungary, the minimum wage is HUF 266,800, the guaranteed wage minimum is HUF 326,000 and the effective minimum wage is HUF 306,000, the ministry said. The effective Hungarian minimum wage is the 17th highest in the EU, and among the top in the region, ahead of the Czech Republic, Slovakia, Romania and Bulgaria.

The graph below compares gross minimum wages applicable on 1 July 2024, after adjusting them to price differences across countries. This is done by using purchasing power parities (PPPs) for household final consumption expenditure. As might be expected, this adjustment reduces differences across countries. In PPS terms, EU countries with a national minimum wage may be classified into three groups, as was the case for the values expressed in euro, but with a different composition:

Group 1, with a national minimum wage above PPS 1 250.
Group 2, with a national minimum wage between PPS 1 000 and below PPS 1 250.
Group 3, with a national minimum wage below PPS 1 000. (Hungary (922 PPS) is in this one.)

Here's the evolution of monthly minimum wages in CEE since 2009. At the end of July this year, only Czechia and Slovakia are behind Hungary in this ranking, while ten years earlier Romania still had a lower figure.