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Analyst predicts continued gross-wages growth, ministry hails rise in private-sector employment

Takarekbank analyst Gergely Suppan predicted that gross wages would continue to rise moderately in Hungary, while the Ministry of National Economy highlighted the year-on-year rise in the number of people employed in the country’s private sector in September after the Central Statistics Office (KSH) reported on Friday morning that gross wages rose 5.2% yr/yr in September.

The KSH noted wage growth slowed from a 6.5% increase yr/yr in August, after accelerating in annual comparison from June’s 4.6% until August.

The Ministry of National Economy noted that the number of private-sector employees has risen every month in Hungary since May, 2010, when the current government took office, attributing the 14,500 private-sector jobs added in September to a 2.1% m/m rise in manufacturing jobs.

The ministry said that the overall 1.1% yr/yr decline in the number of employed in Hungary in September stemmed from the reduction of public-sector employees.

The Ministry of National Economy added that the government’s 16% flat tax has exercised a positive effect on wages.

Gergely Suppan of TakarekBank predicted that gross-wage growth would rise moderately primarily as a result of the base effect, noting that a portion of 2010 year-end wage benefits and bonuses were paid out in early 2011 as a result of personal income-tax changes.

Mr Suppan said that domestic demand was still too weak to fuel increased employment in the sectors of the economy based on production and services for the domestic market.

Mr Suppan remarked that Hungary’s labor market would remain slack as a result of decreasing GDP growth.

The TakarekBank attributed the 8.2% rise in public-sector gross wages partially to a one-third decline in the number of public-sector employees between September, 2011 and September, 2010.

Mr Suppan predicted that private-sector employment would continue to rise moderately as a result of manufacturing-industry investments.

The TakarekBank analyst said that consumption is unlikely to rise as a result of caution among consumers and the heavy burdens of foreign-currency-denominated loans.