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Employers, unions, and gov't sign minimum wage deal

Deals

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Representatives of employers, unions, and the government signed an agreement on Monday that will raise the minimum wage by over 19% next year, according to a report by state news wire MTI.

The agreement, signed after months of negotiations, will raise the minimum wage for unskilled workers to a gross monthly HUF 200,000 and the minimum wage for skilled laborers to HUF 260,000.

To cushion the impact of the increase on businesses, the government has agreed to reduce overall employer payroll contributions by four percentage points to 13%, including a 2.5 percentage point cut in the social security contribution and the elimination of the 1.5% vocational training contribution. The government will also reduce the small business tax (KIVA) rate by one percentage point to 10%.

A six-year agreement with employers and unions coupling minimum wage rises with payroll tax cuts is set to expire in 2022. Under that agreement, the minimum wage for unskilled workers rose from a gross monthly HUF 111,000 in 2016 to HUF 167,400 from February of this year. During the same period, the minimum wage for skilled laborers climbed from HUF 129,000 to HUF 219,000.

The minimum wage agreement has supported marked headline wage growth in Hungary.

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