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Last-minute agreement reached on minimum wage

Hungarian employers and unions reached agreement on minimum wage increases on Sunday, December 30, a day before the deadline. The sides agreed to raise the minimum wage for both skilled and unskilled workers by 8% from the start of 2019, and again by 8% in 2020, according to official government website kormany.hu.

The two-year agreement was reached at a meeting of the Permanent Consultation Forum of the Competitive Sector and the Government. The forum determined the rate of the recommended wage increase at 8% for both years, Minister of Finance Mihály Varga announced.

Varga said that, as a result, the minimum monthly wage for skilled workers will rise to a gross HUF 195,000, while unskilled laborers will get at least HUF 149,000 from January 1, 2019. From 2020, the minimum wages for skilled and unskilled workers will climb to HUF 210,600 and HUF 161,000, respectively.

State news agency MTI recalled that late in 2016, employers, unions and the government reached a six-year agreement on minimum wage rises paired with payroll tax cuts. The agreement set minimum wage rises for 2017 and 2018, but employers and unions had until the end of 2018 to negotiate a deal on the increase for 2019.

The agreement was signed by all parties concerned, including the government, all employersʼ interest representations, and worker organizations, with the exception of the National Confederation of Hungarian Trade Unions (MSZOSZ).

Varga noted that the pay increases will further improve the financial situation of Hungarian families. He pointed out that the government also supports the establishment of families and raising of children through family tax allowances, for which more than one million families are now eligible. Next year the tax allowance of families with two children will increase by HUF 5,000, so that they will be able to save twice as much as in 2015, or HUF 40,000 monthly, he added.

Varga said that pursuant to the six-year wage agreement signed in November 2016, from July 2019 the social contribution tax will decrease by another two percentage points, from 19.5% to 17.5%, further reducing the tax burden on businesses. The reduction of employer taxes will allow businesses to provide the highest possible pay rises for employees, he added.

Varga stressed that, parallel with pay rises, employment is also continuously rising: the number of those in employment is now above 4.5 million, and so there is scope for further rises in earnings.

Along with minimum wages, wages falling into higher pay categories have also continuously increased in recent years, claimed kormany.hu. As a result, it added, at the level of the national economy, the real value of net earnings, including the effects of family allowances, increased by 36% on average by 2017 compared with 2010.