Only one EU member state ranks behind Hungary in terms of poverty

Eurostat, the statistical office of the European Union, has recently published its mean and median income data for 2024. Economists consider this to be an important indicator of income potential and inequality within a population. The statistics show the 'net' disposable income of households in European countries, i.e. income after taxes and contributions, adjusted for household size and composition.

Everything may seem alright at first glimpse

In nominal terms, the average income per capita in Hungary last year was HUF 3,668,582, representing a 12.7% increase on 2023. Aggregate income growth in the European Union was 5.9%. Only Croatia (23.1%), Bulgaria (21.6%), Romania (19.0%) and Latvia (14.0%) experienced higher growth than Hungary, meaning it ranks fifth.

A similar situation emerges when we look at the median values describing a typical member of the population: in Hungary, income calculated in this way was HUF 3,364,340 last year, representing a 15.8% increase compared to 2023. Only Croatia (25.0%), Bulgaria (19.7%), and Romania (19.7%) achieved greater progress in this category. The overall EU increase was 4.8%.

A regional comparison clearly shows nominal convergence in Central and Eastern Europe, led by countries that joined the European Union more recently, such as Romania and Bulgaria, as well as Croatia, which adopted the euro almost two years ago.

Hungary followed with double-digit growth in both categories, which far exceeded that experienced in the other Visegrad countries (Poland, Slovakia and the Czech Republic).

Despite rising incomes, Hungary ranks among the lowest in Europe

At first glance, the Hungarian income growth appears encouraging. However, if we consider the real purchasing power of income — that is, the total amount of goods and services that can be purchased with it — the overall picture deteriorates dramatically.

Eurostat calculates purchasing power by adjusting nominal values to the price levels in different countries and converting them into an artificial unit called a purchasing power standard (PPS). Income obtained in this way shows the value of money at the European Union's average price level, enabling better comparisons between countries than if only currency conversion had taken place.

The mean income of Hungarian households, measured in purchasing power parity, increased by just 3.2% compared to 2023, the lowest increase in the European Union. On average, EU households had an income that was 6.4% higher last year than in 2023. Croatia, Bulgaria and Romania saw the fastest growth in disposable income.

In terms of median values, Hungary's position is slightly better: six countries (including Germany, Austria, Belgium and Italy) recorded growth rates lower than the 6.1% calculated by Eurostat. Among the Visegrad countries, Poland and Slovakia recorded growth that was 1–3 percentage points faster than Hungary's last year, while the Czech Republic's growth was 1.35 percentage points slower. Thanks to the slow growth of the French and German economies in recent years, the change in Hungary was not significantly different from the European Union average of 6.5%.

Slow productivity growth and the rise in domestic price levels relative to the EU average (higher relative inflation) contributed to the low growth in purchasing power parity income.

Hungary's poor ranking is probably due to inflation consistently exceeding that of other EU countries over the past year, and the economy only being able to generate below-average wages due to structural problems and below-average productivity growth.

Last year's adverse developments meant that Hungary was unable to make significant progress in reducing its welfare gap with the European Union.

This is most clearly reflected in median purchasing power parity income, which is the most accurate indicator of a population's status. Last year, only Slovakia finished behind Hungary in the European rankings. However, in the case of Hungary's northern neighbour, it cannot be ruled out that changes to statistical methodology in recent years have distorted purchasing power parity indicators. Therefore, it is possible that the disposable income of the Slovak population is actually higher than that of the Hungarian population (in terms of median income, the difference between the two countries is less than €200).

This would mean that Hungary has slipped back to the bottom of the European rankings.

The bottom of the ranking looks very similar in terms of average income (the only difference being the swap between Romania and Greece), with Hungary in second-to-last place again, ahead of Slovakia.

Cover image (for illustration purposes only): Getty Images