In the period January-April 2018, earnings in real terms rose at an outstanding rate of 10.1 percent, and this shows an ongoing upward trend which started at the beginning of 2013, Minister of Finance Mihály Varga said earlier today.

The drop in the number of public sector employees has also contributed to this growth, as wages in the private sector, where more and more of former public sector employees have been switching to, have been higher than those in the public sector. “We can state that work is increasingly worth it in Hungary, as the earnings of Hungarian families have been on the rise, thanks also to the steady increase in family tax allowances,” the Minister noted.

Thanks to the rising minimum wage and the guaranteed minimum wage, stipulated by the six-year wage agreement, the higher amount of disposable income stemming from tax reductions, rising labour demand in the private sector and public sector wage hikes, the pace of real earnings growth has picked up, Mihály Varga said.

As a result of the wage agreement, the rate of social contribution tax was set to fall over the course of six years from 27 percent to 11.5 percent by 2022, and this may cut the tax expenditures of enterprises by hundreds of billions of forints.

Enterprises may spend the money saved through lower payroll taxes and the Job Protection Action on hiring more employees or hiking wages, the Minister pointed out.

In the private sector, the earnings of several hundreds of thousands of people have risen as a result of the Government’s career models implemented in recent years.

The wages of teachers, health sector and welfare sector employees as well as law enforcement professionals have risen markedly, and the Government is planning to hike the wages of local government officials and government officials working in public administration, the Minister of Finance stressed.

The six-year wage agreement and robust labour demand driven by favourable economic conditions have caused wages to rise more than average in counties with lower average earnings. This shows that the wage gap which has existed between Hungary’s regions is narrowing.

“We are expecting the pace of wage growth to remain next year; we may see double-digit increases in terms of both gross and net earnings,” he said.

(Ministry of Finance)