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Government launches HUF 21 bln in tenders for additional wage compensation

The government has launched HUF 21 billion in tenders for additional support for employers to raise wages.

The fund supports employers who are unable to finance the required minimum 5% wage rise to compensate lower-wage earners for losses in net income due to the elimination of employee tax write-offs and a one-percentage-point rise in the health-insurance payroll tax, National Economy Ministry State Secretary Sándor Czomba announced on Tuesday. 

Czomba estimated that employers will use the additional funding to pay for a 2%-3% wage rise for 450,000 to 650,000 employees whose gross monthly income is less than HUF 216,806. 

The state secretary said that employers have 30 days to submit applications for the funding, 70% of which the government will make available in July and the rest in September. 

Eligible are employers who pay wage compensation to all workers affected, maintain headcount at or above last year's levels, do not make more than one-fifth of full-time employees part-timers, and did not pay average gross wages of over HUF 215,000 per month last year.

A first wage compensation support system, worth about HUF 100 billion this year, has been in place from the start of this year: employers who raise the wages of all employees can withhold the amount above the required 5%, if any, from their social security contributions.