How big will the wage increase be next year? Three factors that will determine the development of the Hungarian labor market

Although the “headline” of 2024 is still in full swing, company leaders have already turned their thoughts to planning for next year. Understandably, the first question employees ask is how much of a wage increase they can expect – but it is in this area that Prohuman Zrt., which as Hungary’s leading HR service provider helps hundreds of businesses meet their labor needs, experiences the greatest uncertainty.

“Employers typically adjust their decisions on wage increases to the rate of inflation. This year, they expected a higher price level increase than what actually happened, and higher wage increases were planned, which resulted in real wages growing more than expected

– explains Dr. Ágnes Tóth, CEO of Prohuman.

We see that in 2024, real wages in the private sector are expected to increase by an average of 7.9%, which is a welcome development for employees and good news for the economy – however, it will still not be easier for companies to retain and acquire employees, as this is influenced by factors other than wages. According to our forecast, we can expect further nominal wage growth in 2025, but we are already seeing signs of more cautious planning: on the one hand, most companies are trying to postpone the decision as much as possible and are thinking of an average wage increase of around 7% from January, but perhaps a 5% wage correction might be a more realistic expectation.”

However, significant differences in the extent of wage increases may also develop between the public and private sectors, and between individual industries and regions.