Hungarian unions and employers agree on 2008 wage hike

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Hungarian government, employer and trade union representatives on Friday agreed a gross private sector wage rise of between 5.0 and 7.5% for 2008.

The two sides agreed to the nationwide recommendation today, Deputy Labor Minister Gábor Csizmár said in a meeting in Budapest. Hungary’s central bank was closely following the negotiations, but as the deal was broadly in line with their expectations it is unlikely to affect the bank’s decision process on setting interest rates. The bank was worried that high inflation this year would drive high inflation next year, pushing wage demands higher and forcing a more stringent monetary policy. Central bank President András Simor on Dec 17 said an agreement near 6% would be consistent with policy makers’ inflation forecast for next year. Inflation quickened for a second month in November, reaching 7.1%, more than twice the central bank’s 3% target. The bank expects the consumer price index to average 7.9% this year and 5% next year. Union leaders said they wanted to keep wages rising faster than inflation. (Gazdasági Rádió, Bg)

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