Minimum wage negotiations are usually drawn out, often taking weeks or months before an agreement is reached by the parties. In Hungary, although at the beginning of this year the minimum wage and the guaranteed salary minimum were both raised to 200,000 and 260,000 HUF respectively, Hungarian media reports say that talks between the government and the representatives of employees and employers regarding another raise have already started. According to business news website Pénzcentrum, it will not be easy to reach a compromise, since both parties are in a difficult position due to the economic crisis. The key factors, however, to most likely determine the extent of the minimum wage hike will be the rate of inflation and how much the cost of utilities will increase.
Trade Union Leaders Set Target at 15–20 Per Cent
Melinda Mészáros, president of the Democratic League of Independent Trade Unions, told Pénzcentrum that they would set a 16 per cent raise as the starting point for negotiations. ‘The minimum wage should at least preserve its real value, that is what we are after. The only direction the minimum wage can move in is upwards, considering the drastic rise in inflation. I think the government will concur with us on that during the negotiations’, she said, adding that her union has already asked the government to provide them with this year’s macroeconomic figures, so that they could base their position on the 2022 data.
Zoltán László, vice-president of the Vasas Trade Union Association, is of the same opinion. He emphasized that although the exact monetary amount of the increase cannot yet be determined, but the current inflation rate of 20.1 per cent must definitely be taken into account. ‘I believe that we need a minimum wage increase of at least 15–20 per cent in 2023 if we want it to follow the inflation and keep its purchasing power. For that to happen, we will need some flexibility on the part of the employers, which, luckily, is there, but there are still many points that need to be clarified at the negotiating table,’ the union leader stated.
Ferenc Rolek, vice-president of the Federation of Employers and Industrialists, spoke to Pénzcentrum on behalf of the employers and stated that, in his opinion, they are in an even more difficult situation than the workers. He added that he did not want to make any predictions about the amount of increase that can be anticipated in the coming year at this time. ‘We have requested the macroeconomic data from the government and their predictions for next year, since we want to base our negotiating position on facts. Nevertheless, it is important to see that with the inflation forecasts, we are in a seriously difficult situation. The forecasts predict inflation levels at the end of the year 2023, but we would need to pay higher wages from the start of the year, which means that as far as we are concerned, we will be losing out,’ Ferenc Rolek explained.
The Wage Situation in Hungary
In the past years, the government implemented a number of measures to keep the wage of Hungarians at a level that guarantees the preservation of their standard of living. The minimum wage has been raised almost yearly, and the 13th month pension has been reintroduced to assist the elderly. As far as young people are concerned, as of 1 January 2022, those under 25 are exempt from paying personal income tax, which means they receive a salary boost without burdening the employers. Furthermore, the income tax exemption of women who have raised four children is to be extended to those with three children in the next five years.
The Hungarian government has been consistent in placing families at the centre of its governance, and its wage and taxation policies reflect that commitment. More and more measures are implemented to help young people start a family, buy or build a house, and buy a car. With these measures in place, and with the continuation of the utility cost reduction programme introduced in 2013, the government has been able to keep the war-induced inflation under control while boosting economic growth, which will most likely allow for yet another raise of the minimum wage next year.