On the way to “economic neutrality”: wage catch-up

The previous economic policy visions and comprehensive plans for earnings did not bring resounding success. From the point of view of annual net average earnings, since 2008, Hungary has cut 8-10 percentage points off the advantage of Poland and the Czech Republic, while we have reached the same level as Slovakia. At the same time, while Bulgarians accounted for less than half of Hungary’s average net earnings in 2008, by 2023 this figure had changed to 75%. The phenomenon is similar for Romanians, where this rate improved from 69% to 89%. It is a fact that it is easier to develop quickly from a lower level.

The recently announced government program calculates an exchange rate of HUF 420/EUR by the end of the period, which would roughly mean an annual exchange rate deterioration of 1.5%. Based on the government’s intentions, wages in euros would nominally increase by 9% per year, which means a cost increase of 0.5% per year for the domestic assembly plants of foreign companies (0.7% per year for other foreign companies), which means that the profit (the leads to the disappearance of approximately 2.5%) of sales revenue. In order not to deviate too much from the regional average (not to be too expensive for foreigners), an exchange rate of at least HUF 500 would be ideal for 2028.