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June wage, jobs data point to further fall of real wages, more job cuts

Hungary’s June wage and employment data were more or less in line with expectations and augur more layoffs and a continuing decline in real wages, analysts told MTI.

Twelve-month gross wage growth in Hungary was 1.1% in June, slowing from 2.9% in May, the Central Statistical Office (KSH) said in the morning. Average twelve-month net wage growth slowed to 0.9% in June from 2.1% in May. Real wages dropped 2.7%, calculating with twelve-month CPI of 3.7% in June. Real wages fell 1.8% in May.

MKB Bank's chief analyst Zsolt Kondrát said real wages were likely to fall further because of higher inflation in the second half of the year. He put the decline for the full year at 3.5%-4%. MKB Bank sees average annual inflation reaching 4.6%.

Kondrát noted -- as KSH did too -- that workers who had been laid off were mainly low-earners, which distorts the average wage figure. Thus, the slowdown in wage growth was bigger than one would think from the headline figure. More job cuts are on the way, which could prompt MKB Bank to change its projection for the drop in domestic consumption from 8.6%.

ING Bank's Dávid Németh said the June wage data was as expected: the effects of the recession can be seen not only in the number of jobs shed, but in slowing wage growth too. The lost jobs will have a big effect on household consumption, he added.

Another wave of layoffs is likely to come in the autumn, with as many as 50,000 jobs cut, Németh said. Real wages will fall further, though the drop will be tempered by higher income tax bracket thresholds. (MTI – Econews)