Orbán's plan of EUR 1,000 minimum wage, HUF 1 million average wage draws first reaction

We want to reach the minimum wage of 1,000 euros and raise the current average wage of around HUF 600,000 (cc. EUR 1,500) to HUF 1 million (cc. EUR 2,500). This is possible within two to three years,"

Prime Minister Viktor Orbán said in an interview with public radio MR1 on Friday morning.

He later also posted the HUF 1 million wage goal on his Facebook page.

We agree with the minimum wage of 1,000 euros and that the current average wage of around HUF 600,000 should be raised to HUF 1 million, and that this could be possible within 2-3 years,

the National Federation of Workers' Councils reacted to the Prime Minister's announcement this morning.

To this end, the trade union federation offers all the professional assistance it has gained from more than three decades of experience in reconciling interests, they added.

This is followed by a cautious critical remark. "At the same time, it is important to stress that this should be achieved through a detailed and more active consultation with the social partners (employers' representatives and trade union federations), which could eventually lead to a substantial reform of the regulations of the lowest wages."

Viktor Orbán has a completely new approach compared to the one outlined at the meetings of the Permanent Consultation Forum of the Business Sector and the Government (VKF) and by his Economy Minister, as the PM wants the minimum wage to reach EUR 1,000 (HUF 400,000 at current exchange rates) by 2026-2027 instead of 2028, which implies a much faster pace of wage increases.

This means that the minimum wage should not increase by 12% per year, but by 15-23%. This is therefore substantially higher than the agreement outlined at the VKF meeting.

The impact of the rapid hike to the minimum wage is also reflected in the average wage. For the time being, only the wage data for the first half of this year are available (with an average gross wage of HUF 635,000), which implies an increase of 16% or 25%, depending on whether the HUF 1 million is to be reached in two or three years.

And if we take the average wage of HUF 600,000 mentioned by the Prime Minister, we would need an increase of 19-29% to reach HUF 1 million.

Cover photo (for illustration purposes only): Getty Images