Hungary to hike minimum wage by 15% as govt seeks economy boost
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BUDAPEST, Nov 16 (Reuters) – Hungary’s employers and trade unions have reached a deal on minimum wages on Thursday with a 15% hike in the minimum wage to take effect from December 2023, Minister for Economic Development Marton Nagy said.
Nagy said in a statement the so-called guaranteed wage minimum would increase by 10% under the agreement, and the government wanted to see real wages increase by 4-5% next year as inflation slows.
Prime Minister Viktor Orban’s government pledged to revive the economy next year largely by boosting consumption that has plunged this year as households faced inflation that peaked above an annual 25% in the first quarter, Europe’s highest rate.
Inflation is expected to slow to about 7% by the end of the year, but retail sales data so far have not shown a pickup in consumption. The economy could shrink this year or stagnate at best, based on the latest government indications.
However, as elsewhere in the region, the labour market has remained resilient to the slowdown as a chronic shortage of skilled workers has bolstered the bargaining power of employees amid high turnover.
“A pickup in demand could contribute to economic growth in the future as real wages were probably in positive territory in September,” Nagy said in the statement, adding that the government aimed to maintain a “dynamic growth in wages”.
Big hikes in the minimum wage planned in central Europe for next year raise the risk of more persistent inflation or job losses amid relatively weak productivity growth across the region, the International Monetary Fund (IMF) has warned earlier this month.
