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Govt clears proposal expanding range of wage subsidies

Hungary’s government on Monday approved a proposal that would expand the range of the subsidy available to employers who raise wages to compensate lower earners for tax changes, government spokesman Andras Giro-Szasz said on Tuesday.

The government said earlier it aims to prevent anybody’s net wages from falling because of tax changes. To achieve this, workers who earn less than gross HUF 218,000 a month must be compensated because of the elimination of tax preferences.

At present, employers cover up to a 5% wage increase as compensation and the government pays for any rise over that. About HUF 100bn in budget funding is available for the compensation over 5%.

Under the bill, the government would grant employers support for wage increases of 2-3% to help them reach the 5% threshold, state secretary for employment policy Sandor Czomba said.

He said the grants could add up to HUF 21bn and affect the pay of between 450,000 and 700,000 employees.

Applications for the grants are expected to be called at the end of February or the beginning of March.