Hungarian Economy: Wage Growth and Double-Digit Inflation – UPDATE

The average gross salary in Hungary rose 14.9% year-on-year to 495,900 forints (1,250 euros) in May, according to data released by the Central Statistics Office (KSH) on Monday.

Data for full-time employees in companies with five or more people on the payroll show that the average take-home pay rose at the same rate to 329,700 forints. The median gross salary increased by 14.5% to 397,900 forints.

Hungary’s statutory minimum wage has been raised by more than 19% since the start of the year, while the wages of many people employed in the public sector have increased, putting wage growth in double digits from January .

Real wage growth was 3.8%, calculated with a May CPI of 10.7%.

Excluding the 76,200 Hungarians working full-time under host family work programs – who earned an average of 100,200 gross forints (253 euros) in May – the average gross monthly salary in Hungary was 506,600 forints.

The average gross salary in the business sector, which includes public enterprises, increased by 14.0% to 506,800 forints, excluding placed workers. The average gross salary in the public sector, excluding placed workers, increased by 12.2% to 499,000 forints.

In the non-profit sector, the average gross salary, excluding hosted workers, increased by 32.9% to 530,000 forints, as a number of people working in education who were previously counted in the public sector have been reclassified.

A broader set of data covering all full-time employees, not just those of employers with a payroll of five or more, shows the average gross salary was 481,600 forints and the average net salary 320,300 forints in May . The median gross salary reached 381,400 forints.

Excluding placed workers, full-time workers earned monthly 491,300 gross forints (1,240 EUR) and 326,700 net forints (826 EUR).

Hungarians employed in finance and insurance were the highest paid in May, with an average gross salary of 848,700 forints (2,143 euros). People working in commercial accommodation and catering earned the least: 314,000 forints.

During the January-May period, men earned on average 22.2% more than women.

András Horváth, chief analyst at Magyar Bankholding, said full-year wage growth could climb by just over 16%. Higher labor costs, as well as higher energy and basic material prices, could further strengthen companies’ intentions to increase prices, which could be easily achieved in the context of the current strong demand, he added.

K+H Bank senior analyst Dávid Németh said wage growth could lag inflation if companies fail to raise wages in the second half.

The Ministry of Technology and Industry (TIM) said in a statement on Monday that real wages continued to rise despite the epidemic, war and associated economic and inflationary difficulties, making their upward run unbroken for 113 months.

Laura T. Thrasher