Economy 27 September 2024, 3:15pm

Here's the Hungarian government's plan on the minimum wage

Portfolio

The draft legislation on the minimum wage and the guaranteed wage minimum has been published on Friday. It stipulates that the minimum wage must reach 50% of regular earnings by 2027. Interestingly, the clause applies not only to the minimum wage, but also to the wage minimum for skilled workers, indicating that the guaranteed wage minimum is not expected to be higher than the minimum wage.

munka worker dolgozó hegesz fizetés bérek

Portfolio reported in mid-September that at a meeting of the Permanent Consultation Forum of the Business Sector and the Government (VKF), an agreement was reached that the minimum wage should reach 50% of the average regular gross wage within three years.

In line with previous reports, this means that the minimum wage will not be half of the total gross average wage. Given this, it is not surprising that the draft government decree on the "Detailed rules for consultation on the guaranteed wage minimum" has been published, which sets this 50% target.

Under the draft, the government will give a mandate to the VKF on wage issues. In the past, this forum has discussed the minimum wage and the guaranteed wage minimum every year, with the participation of the government, companies and workers' representatives.

According to the draft law, the indicative benchmark they should aim for when setting the statutory minimum wage and the guaranteed wage minimum is 50% of the average regular gross earnings calculated by the Central Statistical Office (KSH) on the basis of the available data for the previous year.

Although for a long time it seemed that the minimum wage would have to reach 50% of the average wage in a given year, the draft - in line with information obtained by Portfolio earlier - makes it sufficient to reach 50% of the average regular wage in the previous year.

The latter is some 10% lower than the average gross wage, as it does not include bonuses, premiums and one-off benefits. Also, the benchmark will be the average regular wage in the previous year, not the average regular wage in the current year. Based on past years, this represents a further 10% relief to the target, as it does not include a year's worth of national wage increases.

As we wrote earlier, according to government calculations, this 50% ratio can be achieved by increasing the minimum wage by 12% each year. According to the forecast of the Ministry of National Economy, which was obtained by Portfolio, the minimum wage would be

HUF 298,800 gross in 2025,
HUF 334,600 gross in 2026 and
HUF 374,700 gross in 2027.

The picture has therefore become clearer recently on the minimum wage, but there has been much uncertainty on the guaranteed wage minimum. Earlier plans were for the minimum wage and the minimum wage for skilled workers to converge by 2027.

The draft says that "in determining the amount of the compulsory minimum wage and the guaranteed minimum wage, the aim shall be to achieve 50 per cent of the average regular gross earnings calculated by the Central Statistical Office on the basis of the data available for the previous year."

This wording does not set any kind of premium for the wage minimum over the minimum wage, reaffirming the view that the wage minimum for skilled workers will grow much slower than the minimum wage in the coming years.

"In the VKF, a decision or agreement requires a majority of the representatives of the employers' and employees' unions on each side and a decision of the government representative," the draft stipulates.

This indicates that the agreement does not require full agreement, i.e. it does not need to be supported by individual trade unions or employer representatives.