Economy 22 September 2025, 10:55am

The great battle over Hungarian wages has begun – could this be a farewell to the wage boom?

Portfolio

Despite the recent meeting of the body responsible for agreeing on the minimum wage and the wage minimum for skilled workers, negotiations are yet to reach a resolution. At the Permanent Consultation Forum between the Competitive Sector and the Government (VKF), employers and employees assessed each other's positions, but it is already clear that there is significant discord between them.

The economic situation has changed considerably, and the previous wage agreement is no longer viable,

according to Ferenc Rolek, Vice President of the National Association of Employers and Industrialists (MGyOSz). This response was given in response to an inquiry from Portfolio regarding the possibility of the previously agreed 13% minimum wage increase taking place in 2026.

"Wage increases were determined based on expectations of significant economic growth, but instead we have stagnation. The unions are adhering to the terms of the previous agreement, but this is not a viable option. The higher average wage increase was also planned based on previous economic expectations," Rolek added.

"Wages should not be increased when the standard of living of employees is deteriorating, but when we want to retain them. If average wages increase by 9-10 percent, this level of wage increase is affordable even for minimum wages," Imre Palkovics, President of the National Association of Workers' Councils, told Portfolio.

Economy Minister Márton Nagy recently revealed that Hungarian companies rank third from the bottom in terms of wage costs within the EU, while their profitability ranks in the middle. We understand that this is due to the attraction of foreign investment, but a balance must be maintained, because if wages are too low, skilled workers may eventually emigrate, and then foreign investors will not come, explained Imre Palkovics.

In the first six months of this year, gross average earnings rose by 0.5% more than we had expected for 2025. This shows that wages can be generated from corporate profits,

said Melinda Mészáros, President of the LIGA Trade Unions. She also noted that, in comparison to previous expectations, GDP and inflation, as measured against actual data, already differ by around 1.0-1.4%.

"We are currently awaiting the third quarter economic data, which is scheduled for release in October, before we can initiate formal wage negotiations. However, it is evident that renegotiation will be necessary in light of the wage agreement that was previously established. We are advocating for a minimum wage increase of 13% next year, however, the feasibility of this proposal hinges on the government's decision to reduce the social contribution tax for companies by one percentage point," Melinda Mészáros summarised.

"Should there be a deviation of between 1 and 1.3% from the expected GDP and inflation, then the minimum wage could rise by 11.7 to 12% next year. I believe we can all agree on that. The guaranteed wage minimum has not yet been discussed at this stage of the negotiations, and much tougher negotiations are expected there," Imre Palkovics said of his expectations.

"We consider a wage increase in the single digits, but close to 10%, to be justified, which is well below the guaranteed minimum wage. The guaranteed minimum wage has not yet been discussed in the negotiations. The government has not requested an 11% increase in this category. [...] A possible 1% reduction in social contribution tax could result in a 1% wage increase," said Ferenc Rolek.

"With regard to the guaranteed wage minimum, we certainly consider an increase close to the 13% minimum wage increase to be acceptable. In summary, it should also be in double digits. Unfortunately, its percentage value has been lagging behind the minimum wage for a considerable number of years. Given the current circumstances, this is also anticipated to occur next year. In this case, it is imperative that the difference does not exceed 2%," said Róbert Zlati, president of the Hungarian Trade Union Confederation. Employers have a different perspective on the matter.

In the context of a previously tight labour market, employers are demonstrating a strong commitment to employee retention, making significant sacrifices and going above and beyond. But reserves are running low,

commented László Perlusz, Secretary General of the National Association of Entrepreneurs and Employers (VOSZ).

" In 2024, the minimum wage increased by 15%, while the guaranteed wage minimum rose by 10%, and the average wage went up by 13.2%. Meanwhile, economic growth was recorded at 0.5%, with very moderate inflation, resulting in a real wage increase of nearly 10%. This year, GDP growth is forecast to be below 1%, or in the worst case, the same as last year's 0.5%. This indicates an approximate growth of 1% over a two-year period. Inflation could be around 8% over two years. Could you please clarify whether this would be accompanied by a total wage increase of around 25% over two years?" Perlusz inquired.

Based on this, I think the unsustainability of this is palpable.

It is essential that minimum wage rates are paid by all employers, including those in the most disadvantaged areas with the lowest productivity. Even employers in small regions far from industrial expansion are obliged to do so. It is imperative that we reach a balanced and rational agreement on mandatory wage increases to maintain our favourable employment results and avoid job losses, he stressed.

"We are in continuous negotiations with each other, including on wages and other issues. However, according to the wage agreement, we can only agree on specific figures based on macroeconomic data for the first three quarters, which will not be available until the end of October," said László Perlusz, describing the current situation. At the same time, he emphasised that reaching a new wage agreement will not be easy because

the Hungarian economy is not undergoing a minor correction but is currently on a different growth path.

In our opinion, renegotiation of the 2026 minimum wage increase is inevitable, because the agreement was based on dynamic GDP growth of 3.4% in 2025, which may ultimately be less than 1%. The government has not ruled out reducing social contribution tax (szocho), which could help wage growth.

It is imperative that wage increases are aligned with financial constraints and economic realities to avoid potential problems. The secretary general of VOSZ summarised that a more moderate minimum wage increase would be difficult to justify and accept.

But what we must avoid at all costs is job losses,

Perlusz concluded.