According to data from the Central Statistical Office (KSH), the gross average earnings of full-time employees in February was HUF 605,400, 14 percent higher than a year earlier.
According to their information, the regular gross average earnings can be estimated at HUF 578,000, which is 14.4 percent higher than in the same period of the previous year.
- The regular gross average earnings for businesses is 577,000,
- 572,900 in the budget,
- in the non-profit sector it amounted to HUF 602,600.
The net average earnings without discounts reached HUF 402,600 and HUF 417,100 with discounts, which was 14 and 13.8 percent higher than in February of last year.
Real earnings increased by 9.9 percent in addition to the 3.7 percent increase in consumer prices compared to the same period of the previous year.
As is well known, in January real earnings increased by 10.4 percent, in addition to the 3.8 percent increase in consumer prices compared to the same period of the previous year. A very slight correction can be seen in the February data, but at the same time, since the September turnaround, the purchasing power of salaries has shown a continuous increase. Last December, real wages increased by 10.3 percent.
It is worth adding: on Monday, the vice-president of the central bank emphasized that it is an important element of macroeconomic processes that we can see a double-digit wage increase on the labor market. Double-digit nominal wage dynamics meet 4-5 percent average annual inflation, then it can cause a real wage increase of around 6 percent.
Furthermore, the gross median wage is also a very important metric: it was HUF 491,900 in February and was 16.2 percent higher than a year earlier. The median value of net earnings, calculated taking discounts into account, reached HUF 340,700, 15.3 percent higher than the same period of the previous year.
Sándor Czomba: Real wages have been rising for the sixth month already
Sándor Czomba, the state secretary responsible for employment policy, evaluated the data and highlighted that there are now one million more people working in Hungary compared to the Gyurcsány era, and the minimum wage has increased by three and a half times, and the average wage by three times. “In other words, not only are more people working in our country, but they are also earning significantly better,” he concluded in his statement.
Then the state secretary added: as a result of efficient and effective measures, the government suppressed inflation, which fell to 3.6 percent by March. Thanks to this, real wages have been rising since last September, i.e. for the sixth month, and the purchasing power of wages increased by 9.9 percent in February. “All this was substantially supported by the 15 percent increase in the minimum wage and the 10 percent increase in the guaranteed minimum wage. The income of families is worth more and more, which, through the recovery of consumption, will contribute to the restart of economic growth in 2024, and then to its further increase next year.”
Wage dynamics are slowing down
“Based on the latest earnings statistics of the KSH, the rate of annual wage growth in Hungary slowed further in February. At the same time, the still rather high 14 percent expansion (taking into account the entire range of employers) still reflects the economic processes of 2023 much more than the events of this year,” he summarized the data. Péter Virovácz, senior analyst at ING.
In his evaluation, he also stated that nowadays an extremely large number of companies already follow a wage cycle that lasts from spring to spring (that is, wage increases, unlike before, do not take place in January, but in March-April), so the February data are still the data for 2023, which wants to compensate for the extreme inflationary environment they mostly include high wage increases.
Meanwhile, the continuous braking of wage dynamics indicates that where salary adjustments have already taken place this year, they may have been substantially smaller than last year. This was partly predicted by the 10 percent increase in the guaranteed minimum wage covering a larger range of employees.
At the same time, according to his expectations, the general pace of wage increases may drop more markedly in the coming months and real wage growth may also slow down, so there is no real need to fear the possible development of a price-wage spiral.
Although inflation continued to slow down in February, the growth rate of the average wage slowed to a greater extent, so the growth of real wages on an annual basis slipped below 10 percent.
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 also drew attention to this during the April interest rate meeting. The central bank expects a real wage increase of around 6 percent for this year, which roughly coincides with ING Bank’s own expectations: with an average wage increase of around 10 percent, inflation is expected to be 4.5 percent.
