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Gov't to continue talks on longer-term minimum wage deal

Government

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Hungary's government will continue talks in the future with employers and unions on a minimum wage agreement that extends beyond 2022, state secretary for employment policy Sándor Bodó told public media on Tuesday, according to a report by state news wire MTI.

Bodó said an agreement on next year's minimum wage rise is "ready to be signed". The deal does not extend any further because of supply chain interruptions and because the fourth wave of the pandemic is "waiting at the door", he added.

In the future, talks will continue on a minimum wage agreement for the longer term "in the interest of predictability", Bodó said.

An agreement between the government, employers, and unions on raising the minimum wage by more than 19% next year was reached a week earlier, after months of talks. The government is cutting overall employer payroll contributions by four percentage points to 13%, while also reducing the rate on the small business tax (KIVA) by one percentage point to 10%, to compensate businesses for the increase.

When preparations for the talks began in the summer, Finance Minister Mihály Varga said the next minimum wage agreement should extend "at least until 2024".

A six-year agreement with employers and unions coupling minimum wage rises with payroll tax cuts is set to expire in 2022. Under that agreement, the minimum wage for unskilled workers rose from a gross monthly HUF 111,000 in 2016 to HUF 167,400 from February of this year. During the same period, the minimum wage for skilled laborers climbed from HUF 129,000 to HUF 219,000.

Meanwhile, employers' social security contribution was cut from 27% to 15.5%, although they must also pay a 1.5% vocational training contribution on payroll.

The minimum wage agreement has supported marked headline wage growth in Hungary.

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