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

By: Trademagazin Date: 2024. 10. 24. 11:59

It seems that the Government has decided to carry out a forced wage catch-up in the coming years. Within this framework, he expects the minimum wage to be 1,000 euros and the average gross salary to HUF 1 million by 2028. The reality of this is questionable, especially in view of the fact that real earnings have increased by 3.1% per year over the past 20 years, and because this would mean a similar increase in the wages of civil servants, civil servants and other state employees. So that this year’s teacher salary increase was also covered by the EU!

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.