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Minimum wage hike may shutter 1,000s of small stores

Retail

While big retail stores are not thought likely to be hit by the Hungarian government’s planned rise in the minimum wage, smaller retail stores may be forced to close their doors, György Vámos of the Hungarian Trade Association has warned Hungarian daily Világgazdaság.

If the government’s plans for the minimum wage are passed by Parliament, prices could also increase, for example of food, although its effect could be moderated by a well-considered decrease of taxes on salaries, news portal index.hu reported. The minimum wage hike the government has in mind would be the biggest in the past five years, index.hu added.

According to Vámos, thousands of small stores could be shuttered if the planned 15% raise in the minimum wage for unskilled workers next year (to be followed by a further 8% raise in 2018), announced by economy minister Mihály Varga a week ago, is realized.

Vámos noted that bigger stores in Hungary currently offer a gross monthly total of HUF 250,000-300,000, while the average pay in the sector is just HUF 160,000. Vámos believes the bigger chains will be able to finance the hike in wages.  

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