Business association protests ‘drastic’ minimum wage rise

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Hungarian business association MGYOSZ called a planned minimum wage rise "drastic" and a government proposal to raise overall wages by 5% "unjustified and unfeasible" in a statement released on Thursday.

The government said in September it wants to raise the basic minimum wage to HUF 92,000 and the minimum wage for qualified workers to HUF 108,000 a month. At present, the basic minimum wage is HUF 78,000 and the minimum wage for qualified workers is HUF 94,000. The government also proposed business raise wages by 5% next year.

MGYOSZ said on Thursday the minimum wage rise could push SMEs in the direction of the shadow economy and take job opportunities away from hundreds of thousands of Hungarians looking for work. Raising overall wages by 5% in segments of the economy where unemployment is high can only make the situation worse, it added.

Although employers welcome government plans to share the extra cost of wage rises, this alone is not enough to counter the unfavorable effects on competitiveness and employment, MGYOSZ said.

MGYOSZ stressed that it agreed with the government's main aims to reduce state debt and preserve workplaces as well as create new jobs, and it also agreed with need for changes to regulations and a broad restructuring of state institutions.

"From the point of view of businesses, the volatility of government decisions, the lack of preliminary consultations and the disregard for professional opinions could result in uncertainty, unpredictability and, in a number of cases, a failure to achieve the intended result or the creation of deficient legislation," MGYOSZ said.

The association said the bank levy and an early repayment scheme for forex mortgages at a discounted exchange rate would soak up banks' resources for lending to businesses.

MGYOSZ said the forint's volatile exchange rate was a problem not just for SMEs, but for big companies too. "Credible and predictable economic policy, and cautions government communication could help dampen hectic exchange rate movements," it added.

In the interest of increasing investment activity, MGYOSZ said measures to simplify and accelerate payment of European Union funding could not be postponed further.

MGYOSZ issued the statement a two days after the first meeting of the National Economic and Social Council (NGTT), a body that replaces earlier forums for employers, unions and the government.

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