Economy 25 November 2024, 2:03pm

Hungarian PM Orbán promises public investment boom when signing wage agreement

MTI

A boom in public investment can be expected in Hungary next year, and because of this, and also counting on peace [in Ukraine], it is realistic to expect economic growth in Hungary to be above 3% next year. If this is not the case, the 3-year wage agreement will have to be amended along the lines of the revision clause, Prime Minister Viktor Orbán said at the signing ceremony of the agreement on Monday. He pointed out that only one country in Europe has agreed on a minimum wage increase of such a degree, 40%, in the last 30 years. He acknowledged that the government's target of HUF 1 million average gross earnings was also surrounded by doubts as to whether the economy could deliver it, just as the government's target of one million new jobs in Hungary was met with many doubts.

Economic growth of more than 3% in 2025 in Hungary is realistic, based on the optimistic scenario that next year will be a year of peace. If this is not the case, and if things turn out worse, a revision clause has been included in the three-year wage agreement, and through this the agreements will have to be amended accordingly, state newswire MTI cited Orbán as saying..

He acknowledged that implementing the agreement will not be easy. "If the Hungarian economy performs at the same speed as last year and the year before, you cannot achieve the [wage] increase from that. This will require company management, the interest groups, the workers themselves to contribute more to economic growth than in previous years," he explained.

He called the agreement a historic one, which he said "puts the minimum wage where it deserves to be in a European context", and later mentioned the top of the mid-range. Orbán pointed out that there would be an unprecedented wage increase in Hungary, totalling 40% by 2027. He recalled that in the European Union, only once in the last 30 years has a country agreed to such a minimum wage increase.

He indicated that the real value of the minimum wage will rise by 29% and the plan is to reach half the average wage. If 2025 is a peace year, this will happen, "or at least we will be very close to it," he said.

He said that economic growth in 2025 would be accompanied by a "public investment boom". This means, he said, that 300 new investment projects will be launched in Hungary next year, with a total value of HUF 8,100 billion, of which HUF 450 billion will enter the economy in 2025.

He also said that by 2025, the biggest and most important investments of recent years will reach the end of the construction phase: the Budapest-Belgrade railway line will be completed, and huge factories will be handed over in Győr, Szeged and Debrecen.

He noted that the government wants to raise the average wage in Hungary to HUF 1 million in the foreseeable future, which is surrounded by similar doubts as the plan to create one million new jobs in 2010.

"Today, this statement is surrounded by the same doubts and controversies. There are uncertainties behind the commitment, but I am pleased that we have partners who do not rule it out," said Orbán. He called it a big question whether the Hungarian economy can generate this income.

At the event, he also thanked Economy Minister Márton Nagy and Finance Minister Mihály Varga, who were involved in the wage negotiations. He noted that the new economic policy is accompanied by changes in economic governance, which also affects the two ministers.

For one of them [it's] a swan song, for the other [it's] a nice overture,

he said.

Cover photo: MTI Photo/Zoltán Máthé