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Gov’t proposes raising minimum wage, cutting payroll taxes

The Hungarian government is proposing a 15% raise in the minimum wage of unskilled workers for next year and a further 8% raise in 2018, economy minister Mihály Varga said on Friday, following a consultation with employers and employees representatives, Hungarian news agency MTI reported.

Payroll taxes could be cut by four percentage points in 2017 and a further 2 pp in 2018, Varga added. 

For jobs requiring skilled labor, the minimum wage could grow by 25% next year and by 12% in 2018.

The monthly minimum wage is currently HUF 111,000 for unskilled workers and HUF 129,000 for skilled workers.

The government is also proposing that, starting from 2019, payroll taxes could decrease by 2 pp annually for four years if real wage growth reaches an annual 6%.

Varga said the government believes that in this six year cycle real wages could rise by 40% in total, but this should not threaten the performance of the economy.

The government is interested in reaching a resolution that is acceptable to all parties involved and hopes that this proposal could be a base for a solution. The minister said the government wishes to sign an agreement for six years that would ensure everyone could plan ahead, and it will continue talks in the next few days.

Following the consultation meeting László Kordas, the head of the unions association MaSzSz, said that every actor representing employees considers the governmentʼs proposal a step in the right direction. However, Ferenc Rolek, deputy chairman of national business association MGYOSZ, warned that the governmentʼs proposal could not be carried out in its current form, and especially not the parts concerning 2017, but it still welcomed the governmentʼs desire to reach an agreement covering more than one year.