The great Hungarian wage boom appears to be unstoppable!

For weeks now, it has been clear that the Hungarian economy is on a very different path to that anticipated by the government, companies and workers' representatives at the end of last year. The three-year deal on rapid wage growth was based on the assumption that GDP would grow by more than 3% this year. However, economic output is now more likely to grow by around 1%. Representatives of companies and workers have told Portfolio that this will likely lead to the minimum wage part of the wage deal being renegotiated in the autumn.

The government is already aware of this challenge. On Monday, Economy Minister Márton Nagy mentioned the possibility of renegotiating the minimum wage, even though the cabinet still expects GDP growth of 2.5%. Based on this forecast, there is no need to renegotiate the wage agreement, as it is barely different from last year's.

According to a statement by the Economy Ministry, the parties also took into account the possibility that the development of the above indicators could be significantly influenced by the economic and global economic events in Europe in the coming years. To address this situation, the Parties have agreed that:

If the arithmetic sum of the deviations of the individual indicators exceeds one percentage point in either direction based on the average actual data for the first to third quarters of the year under review, the VKF members will renegotiate the minimum wage increases for 2026 and 2027.

According to the ministry, the arithmetic sum of the differences between the revised inflation and GDP growth forecasts for 2025 and the figures in the wage agreement amounts to 0.3 percentage points.

The term 'arithmetic sum of deviations' refers to taking into account deviations with a sign. This shows a deviation of 0.3 percentage points, which is less than the one-percentage-point difference indicated in the agreement, according to the ministry.

The problem is not the government's current inflation and GDP forecasts. The problem is that all economists and banking analysts outside of the government are forecasting growth of less than 2% in 2025, with most projections being around 1%.

If such sluggish growth is achieved in the first three quarters of this year, the deviation will exceed the one percentage point set out in the agreement with the Permanent Consultation Forum of the Government and the Competitive Sector (VKF) by a considerable margin, triggering the obligation to renegotiate. Based on first-quarter GDP data showing a contraction and analysts' expectations, a significant rebound would be required to avoid a difference of one percentage point.

The government reviews its macroeconomic forecasts every quarter. As the next forecast is due in about a month, it is highly likely that it will align more closely with market consensus. This greatly increases the likelihood that the Economy Ministry's new forecast will also necessitate renegotiating the minimum wage.

It was not by chance that Márton Nagy made it clear on Monday that that

if the average wage does not rise by 10% next year, the minimum wage cannot rise by 13% either, but by a smaller amount instead.

The minister apparently deduces this from the fact that wage growth slowed significantly in the first quarter of this year: from 9.2% between January and March, it fell to just 8.5% in March alone.

Of course, this is notwithstanding the quarter-on-quarter contraction in GDP and the first signs of a weakening labour market. As shown in the above table, the government is forecasting wage growth of over 10% in 2026. However, the minister has suggested that this target may not be met.

However, Gergely Gulyás, the Minister of the Prime Minister's Office, does not want to see the wage agreement put at risk. At Wednesday's cabinet briefing, he said:

I spoke to him [Márton Nagy] about this today. The government and the Ministry of National Economy do not intend to change the rate of the minimum wage increase.

"This may still need to be negotiated with employers and workers," Gergely Gulyás said in response to a question, "but the government is committed to a radical and rapid minimum wage increase. This includes the 13% increase included in next year's wage agreement."

As the macroeconomic developments show, it will certainly be necessary to negotiate, and, as Gulyás suggested, the government is aware of this. Employers will obviously argue for a lower rate of increase to the minimum wage, while workers' representatives can insist on the agreed 13% hike, which is also the government's position.

However, employers would probably only agree to the previously negotiated rapid increase in exchange for a reduction in the burden on companies. There seems to be little room for manoeuvre in the budget.

When negotiations reopen in the autumn, business representatives can rely on the fact that the VKF agreement includes a sentence stating that

if an agreement is not reached durnig the negotiations, the minimum wage for 2026 and 2027 will be adjusted in accordance with the deviation.

This relates to the discrepancy between the forecast and the actual data, as set out in the VKF agreement. While the projected GDP growth of 3.4% will not be achieved, inflation is expected to exceed the forecast. Thus, in the absence of an agreement, the 13% will have to be reduced by the amount by which GDP growth is lower, while higher-than-expected inflation has the opposite effect. If current market forecasts for the first three quarters materialise, the above 'clause' would automatically result in a reduction of up to two percentage points, meaning the minimum wage could rise by 11–12% in 2026.

Although the issue has focused on the minimum wage recently, negotiations on wages will definitely take place in autumn.

The question is whether only the guaranteed minimum wage or both the minimum wage and the wage minimum (for skilled workers) will be negotiated. Notably, nothing relating to the latter is included in the wage deal for 2026, despite the fact that it affects the wages of more workers than the minimum wage.

This year, the wage minimum increased by 7%, while the minimum wage was raised by 9 %, so the guaranteed wage minimum is expected to increase at a lower rate next year. Ideas about the latter are very fluid. The VKF agreement stipulates that

members will determine the rate at which the guaranteed wage minimum will increase in 2026 and 2027, taking inflation and productivity data into account.

A key question will be how much the wage minimum will increase, as it determines the growth rate of the median and average wage much more than the minimum wage. Previously, there have been suggestions that the minimum wage would merge with the wage minimum (if it grows more slowly than the minimum wage on a sustained basis, this will happen), but two opposing views will be at odds in the negotiations due to take place this autumn:

• Due to weak economic performance, companies will want to raise the wage minimum at a very low rate,
• whereas the government will be interested in raising it as much as possible in an election year.

In the long term, it is likely that the guaranteed wage minimum will be replaced by sectoral wage agreements. In other words, the guaranteed wage minimum would differ from sector to sector. However, we are still a long way from that point.

How much is the minimum wage and the wage minimum?
As of 2025, the minimum wage is HUF 290,800 gross per month, a 9% increase compared to HUF 266,800 in 2024. This amount is paid to those working in non-skilled jobs. The net minimum wage is HUF 193 382.

For those in skilled jobs, the guaranteed wage minimum increased to HUF 348,800 gross per month in 2025, which is 7% higher than HUF 326,040 in 2024. The net wage in this case is HUF 231,952.

Cover image (for illustration purposes only): Getty Images