With rising productivity, Hungary can reach 3-5% GDP growth, says Varga

Banking

In order for Hungarian living standards to catch up with those of Europe as a whole, annual economic growth needs to be pushed into the 3-5% band, which can only be done if productivity rises, Minister for National Economy Mihály Varga said yesterday on state-owned all-news channel M1.

The most important task in the coming years is to generate a qualitative change and to raise added value through improving productivity, the minister said in the television interview, according to Hungarian news agency MTI. The minister noted that there will always be countries where labor is cheaper and if Hungary only wishes to stay competitive in wages, then it will fall behind. 

Commenting on the governmentʼs agreement yesterday with employers and unions on minimum wage increases and a cut in the payroll tax, the minister said the move is expected to support economic growth and could draw additional foreign investment.

The Hungarian government reached an agreement with employers and unions yesterday on planned increases to minimum wages. The increases will be paired with a combined seven percentage-point reduction in the 27% payroll tax.

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