Economy 21 November 2024, 9:03am

Agreement on minimum wage increase in Hungary may be reached soon

Portfolio

After yesterday's round of negotiations, only a narrow margin separates the Permanent Consultation Forum of the Private Sector and the Government (VKF) from reaching a 3-year wage agreement. The minimum wage will rise by 9% or 10% next year, with even higher increases in the next two years, Portfolio has learned. The minimum wage will rise by 12% on average annually over the next 3 years.

The minimum wage in Hungary could rise by 9% or 10% next year, Portfolio has learned. The rate of increase in 2025 will determine how fast the increase will be for 2026.

If the minimum wage rises by "only" 9% next year, there will be a 13% increase thereafter,
but if employers accept a 10% increase by 2025, the minimum wage will rise by 12% in 2026.

At today's meeting of the VKF, the parties came very close to an agreement. The plan is that, with a rapid increase in the minimum wage, the statutory minimum wage will reach 50% of regular average gross earnings by 2027. This can be achieved, according to the members of the VKF, by increasing the minimum wage by an average of 12% over the next three years.

This requires a 14% increase in the minimum wage in 2027.

So basically, the rate of increase will either follow the 9%-13%-14% pattern, or 10%-12%-14% for the next 3 years. The members of the VKF are still discussing whether the wage increase should be an automatic one or whether the agreement should be renegotiated every year. It seems that in the event that macroeconomic data (basically GDP and inflation) are in line with expectations, then wages will automatically increase. But if the economic trajectory is different, there will be another round of negotiations every year.

Cover photo (for illustgration purposes only): Getty Images