Economy 17 June 2025, 12:10pm

ANALYST VIEW - Finally some good news in Hungary

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Average gross earnings in Hungary rose by 9.8% in April 2025 compared with the same period a year earlier — a significant increase from the 8.5% recorded the previous month. Analysts say that the acceleration in the growth rate will also have a positive impact on the economy.

ipar termelés worker dolgozó gyártósor bérek keresetek

After several months of a declining trend, earnings increased in April. Despite the difficult economic conditions and signs of a slackening labour market, companies that had held wage negotiations in the spring appear to have sought to implement significant increases. Average gross earnings increased by 9.8% year-on-year in April, up from 8.5% the previous month.

The April earnings data came as a pleasant surprise,

commented Gábor Regős, senior analyst at Gránit Fund Management. It was expected that the growth rate would be broadly in line with the previous month, with some forecasts even suggesting that earnings growth would slow further.

The acceleration in average earnings growth is linked to the business sector, where the growth rate increased to 9.9% from 8.5%.
Meanwhile, in the public sector, the growth rate remained at 8.4%.
There was also a significant acceleration in the growth rate in the non-profit sector, rising to 12.5% from 8.6%.

This also means that wage growth in businesses has been the fastest this month, showing that the labour market cannot be such a big problem, as businesses would be in less need of wage increases, Regős wrote.

With average median earnings 10.2% higher than a year earlier, and overall earnings growth also at 10.2%, it is unlikely that there was a significant difference in average earnings growth across different wage levels.

In April, real earnings growth was more favourable than in the previous month, rising to 5.2% in April from 3.5% in March. This reflects both lower inflation and stronger wage dynamics. According to Regős,

the current rate of above 5% is more likely to stimulate a significant increase in consumption and thus underpin GDP growth this year.

Hopefully, this pace will be maintained. The key questions are whether inflation can be contained in the longer term and whether it can be brought closer to the central bank's target (3% +/- 1ppt). Of course, there is also the question of whether businesses can generate the resources needed to gradually increase wages through efficiency gains, which is necessary to survive if the labour market is tight.

The largest increases in average earnings were recorded among the individual sectors in energy (26.4%), water management (20.0%) and education (18.7%), while the smallest increases were in health and social care (2.1%, with a slight decrease in healthcare) and mining (5.5%).

After the April data, hopefully there will be no big surprise in the wage statistics this year. And even if not at the current rate of 9.8% (because there may have been individual items in a few sectors), but according to my earlier forecast, average wages could increase by around 9% this year, which would mean an average wage increase of 4%, taking into account inflation of around 4.5%, the economist predicts.

As the year comes to a close, the focus will shift towards the potential impact of new factories on wage growth. The pace at which these factories begin operations and their capacity utilisation will be the key determinants of their effect on labour demand, which will subsequently impact wage levels.

If the minimum wage increase next year is higher than this year's, an average wage increase of around 10% is not inconceivable — even higher if the effect of the 'firearms money' is taken into account — but the main issue here is not the size of the minimum wage increase, but the guaranteed wage minimum, which affects many more workers. Of course, this also requires economic growth to kick in, thus providing the necessary cover for wage increases.