Economy 16 October 2024, 8:46am

Entrepreneurs and employers' association reacts to the government's wage increase plans

Portfolio

Wage catch-up, especially raising the minimum wage to €1,000 and the average wage to HUF 1 million, would only be realistic if businesses received appropriate compensation, burden reduction or support, the National Association of Entrepreneurs and Employers (VOSZ) said in a press release. Without this, they say, wage increases cannot be financed, especially as in many cases wage increases are not in line with productivity, economic growth or inflation.

Tíz százalékos béremelésre készülnek a magyar cégek

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VOSZ stresses that in the past decades, Hungary has been pursuing a high-pressure economic policy, in which wages have grown faster than productivity. As a result, minimum wage increases have in many cases been disconnected from the real performance of enterprises. "Although taxes and contributions on labour have been reduced during the wage-setting cycle from 2017, the crises of the 2020s - Covid, rising energy prices, inflation and the war situation - have severely set back economic growth and businesses," they say in their statement.

According to the VOSZ Barometer survey, businesses are in an increasingly difficult situation:

nearly 50% of firms have low resilience and the share of firms refusing to raise wages has reached 81%.

At the same time, companies' reserves have also hit rock bottom. In such circumstances, rapid wage increases would further undermine the competitiveness of businesses, leading to mass closures and job losses.

VOSZ therefore calls for a carefully considered wage agreement that takes into account economic growth, inflation and productivity developments.

The VOSZ believes that the pace of wage increases should be more closely linked to economic performance and that it is necessary to reduce the burden on employers, for example by further reducing taxes on live-work.

In addition, VOSZ supports the introduction of a sectoral "wage tariff" system, which would better take into account the specificities of each sector and adjust to different skill requirements and productivity levels.

At the end of the press release, VOSZ urges the continuation of tripartite negotiations to review in detail the impact of the planned wage increases and to agree on the milestones and conditions of the wage catch-up process.