Businesses must complement net wages to get EU co-funding - paper

Only companies that raise the wages of at least two-thirds of their employees to prevent a drop of their net wages will be eligible for Hungarian state co-funding at tenders for European Union funding, the daily Vilaggazdasag reported citing National Economy State Secretary Sandor Czomba on Wednesday.

Under legislation passed last year, employers must raise the wages of at least two-thirds of the employees affected to compensate lower earners for tax changes in order to prevent their exclusion from public procurements and government support for a period of two years. The elimination of tax preferences reduces the net wage of workers who earn less than gross HUF 218,000 a month this year.

The two-third rule applies to EU funding if it is complemented by co-funding from the Hungarian central budget or separate state funds, Mr Czomba confirmed to the daily.

Under regulations in effect, the government gives a wage compensation to businesses complementing the net wages of all affected employees, whereby these businesses finance the necessary wage rise up to 5% and the government pays for any rise necessary over that. About HUF 100bn in budget funding is available for the compensation over 5%.

Under an additional measure approved by the cabinet on Monday, the government would grant employers support for wage increases of 2-3% to help them reach the 5% threshold. The grants could add up to HUF 21bn in budget expenditure, and affect about between 450,000 and 700,000 employees, mainly those who earn the minimum or the guaranteed minimum wage, Mr Czomba told the press on Tuesday.

The minimum wage rose to HUF 93,000 a month in 2012 from HUF 78,000 last year, and the minimum wage for qualified workers rose to HUF 108,000 a month from HUF 94,000. The sharp rise compensated for the elimination of preferences and left the net minimum wage nominally unchanged.