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Ministry proposal would expand wage compensation subsidy

Hungary’s National Economy Ministry has submitted an proposal to the government that would expand the range of the subsidy available to employers who raise wages to compensate lower earners for tax changes, state secretary for employment Sandor Czomba said in an interview published in Wednesday’s issue of business daily Vilaggazdasag.

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.

Under the National Economy Minister’s proposal, the government would grant employers support for wage increases of 2-3% to help them reach the 5% threshold, Mr Czomba said.

"We are working on the grant construction in the interest of preventing layoffs," he added.

He said the grants could add up to HUF 20bn and affect the pay of between 450,000 and 700,000 employees.