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Wage monitoring committee reports to PM

Wages have been raised everywhere in the public sector to offset the effect of tax changes on net wages, head of the wage monitoring committee Antal Rogán of the major governing party Fidesz said on Tuesday after he submitted the committee's draft report to the Prime Minister on Tuesday.

Fidesz formed the wage monitoring committee to ensure that employers raise wages to compensate those whose net wages fell with the introduction of a flat 16% personal income tax rate and the reduction of tax discounts. The amended personal income tax regime resulted in less net wage for those earning less than about gross HUF 290,000 per month and having no children.

After his discussion with the prime minister, Rogán emphasized that they continue to insist that the new tax system cannot cause a fall in net wages for any employee and that the wage agreement for a 4-6% wage rise this year agreed on the National Interest-Coordination Council (OET) were met.

The propensity to raise wages is weaker than last year in the business sector where about 50% of the wage rises agreed in the National Interest-Coordination Council (OET) had been carried out, he said.

Rogán said that the cabinet considers it possible that the governing parties draw up a bill to be submitted to parliament in the spring and taking effect next January that would stipulate that the fulfillment of the wage agreement on the National Interest-Coordination Council (OET) regarding low- and middle-income employees would have to be observed until January 2014 as a condition to the disbursement of government subsidies and government preferences and to eligibility for government orders.

They will propose to amend the agreements made on the OET, to include a formula on preserving net wages for low and middle-level wage earners - those earning less than gross HUF 300,000. Is such an agreement is made they re-enforce it by legislation starting 2012.

Rogán also considers it possible that the amounts spent on wage rises in the above categories with the aim of preserving net wage could be exempt from social security contributions. The government will consider this, although the Prime Minister has not yet expressed full support for the proposal, he added.

The committee's draft report is expected to be published within one week.

The Central Statistical Office (KSH) said on Tuesday that more than 40% of full-time employees in the public sector received around HUF 5,100 on average per month in January-February 2011 as compensation for the tax and contribution changes. The supplement accounted for 2.6% of gross wages paid out in the public sector in the first two months, KSH said. It cost the sector an average monthly extra expense of HUF 1.4 billion, Econews calculated.