No brakes on the Hungarian wage boom: average gross salary at HUF 637,000

Average gross wages in Hungary rose by 13.9% in July, up from 13.3% in June, indicating that wage dynamics remain very strong.

In July, the average gross salary of full-time employees was HUF 636,700, while the average net salary after taking into account discounts was HUF 438,400.

Meanwhile, median gross wages (where half of workers earn less and half earn more) rose by 16.5%, also an acceleration on the previous month. The gross median wage was HUF 524,100, while the net was HUF 348,500, according to Portfolio's calculations.

The faster-than-average increase in median wages is also due to the fact that the minimum wage increased by 15% this year and the guaranteed minimum wage by 10%. The impact of this is felt right down to the median wage, as substantial increases are needed at higher income levels to avoid wage squeeze. On the other hand, the public sector has seen substantial central wage increases around the median wage, which has also had a large impact on wage developments this year.

The trend in regular earnings also points to a meaningful rate of wage growth. The average gross regular earnings (excluding bonuses, bonuses, one-month special allowances) are estimated at HUF 602,200, 14.3% higher than in the same period last year. In other words, it is slightly higher than the increase in average wages, which shows that regular wages have increased at a slightly higher rate than bonuses. Average regular gross wages amounted to 598,800 HUF in the business sector, 604,400 HUF in the budget sector and 629,600 HUF in the non-profit sector.

In the business sector, average gross wages rose to HUF 638,700 in July, an annual increase of 12.7%. Meanwhile, average net earnings in the corporate sector stood at HUF 424,700. In the previous month, wage growth in the corporate sector was 11.4%, so the current figure is certainly noteworthy.

Growth in the government sector was 17.5%, a slowdown of more than 1 percentage point. This brings the average gross wage in the public sector to HUF 625,000. This year, wages have increased significantly in several state-related sectors, with the education sector standing out, where we see a 28% increase.

With inflation remaining low amid rising wage dynamics, real wages rose by 9.5% in the country (an acceleration from 8.8% the previous month). Earnings purchasing power increased by 8.4% in the business sector and by nearly 13% in the public sector.

Finally, it is worth looking at how much gross wages have increased in real terms in recent years. Regular earnings have risen by more than 70% compared to 2020, but due to high inflation over the period, the purchasing power of earnings has increased by less than 20%.

The good news is that the rapid wage growth seen so far this year is likely to continue in the coming months, while inflation is expected to rise only slightly. This should allow real wages to rise substantially towards the end of the year.

Cover photo (for illustration purposes only): Getty Images