“In view of the fact that nowadays, an extremely large number of companies follow a wage cycle from spring to spring (that is, wage increases, unlike before, do not take place in January, but in March-April), so the February data still reflect the high wage increases intended to compensate for the extreme inflationary environment of 2023 they largely contain,” he believes Péter Virovácz, ING Bank chief economist.
Meanwhile, the continuous slowdown in wage dynamics indicates that where salary adjustments have already taken place this year, they may have been significantly smaller than last year
– he highlighted. In the coming months, the general rate of wage growth may decline more markedly, and real wage growth may also slow down, he added.
- Based on the detailed data, it can also be seen that the dynamics of wage growth in the public sector was higher than average in February (17.2 percent), which is primarily the effect of increasing wage outflows in the field of education.
- In the corporate sector, the pace of wage growth has slowed down in many areas, and overall growth is now only 12.8 percent.
- At the same time, wage dynamics in some sectors were particularly surprising. This is true for the construction industry, where growth prospects are still somewhat gloomy, but the rate of wage growth accelerated above average.
- In the case of the service sector, although the wage increase is below average in many areas, some acceleration could be experienced from January to February.
It is also worth noting that the wage gap between the average wage and the median wage narrowed even further, which presumably reflects the effect of the minimum wage increase and presumably the process of wage growth being below average in already higher-earning sectors. Here, the companies are trying to catch up on the evolution of wage costs – he added.
Gábor Regős, Gránit Fund Manager according to the leading economist, the labor shortage that is still present in many places plays a role in the increase in wages, as a result of which workers in many places are able to compensate for the decrease in the value of their wages last year, the beginning of wage catch-up for those working in education, and the increase of the minimum wage and the guaranteed minimum wage in December.
- Earnings of those working in education increased the most, by 27.4 percent (this may have pushed up the wage increase in the public sector as well),
- while wages in the energy industry rose the least, by 5.6 percent.
- In the other sectors, the rate of wage increase was between 10.3 and 16.4 percent.
“From the point of view of earnings, the data of the next months will be interesting, as this period is still relevant for the wage increases at the beginning of the year. This may slightly worsen the dynamics so far, which were more favorable than expected, but according to the signs, the employees expect compensation for last year’s real wage decrease, so the a nominal wage increase of 13-14 percent is expected for the whole year,” he opined.
Péter Virovácz however, based on the latest earnings statistics of the KSH, the pace of annual wage growth in Hungary slowed further in February. A is still quite high, but it still reflects the economic processes of 2023 more than the events of this year. Looking at the rest of the year, the increase in the purchasing power of wages may erode further. On the one hand, the outflow of wages will slow down, and on the other hand, inflation may increase. The MNB drew attention to this during the April interest rate meeting: the central bank expects a real wage increase of around 6 percent for the whole of 2024, with an average wage increase of around 10 percent and inflation of 4.5 percent.
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