Minister for National Economy Mihály Varga and representatives of employer and employee advocacy groups signed an agreement on minimum wages for the coming year.

President of the National Federation of Workers’ Councils Imre Palkovics stressed before the signing ceremony that that in 2014 the minimum wage will increase by 3.6 percent to HUF 101 500, while the guaranteed minimum wage (for skilled workers) will be raised by 3.5 percent to HUF 118 000, which increases are in line with the 3.5 percent wage hike recommended by welfare groups.

Mihály Varga pointed out that in 2014 the amount of minimum wage will exceed the HUF 100 000 mark and taking into account an inflation rate of 2.4 percent expected for the whole year this increase means a rise in real terms. He added that the Government sticks with the current inflation prognosis of 2.4 percent for 2014 as the 2014 budget is based on this figure.

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President of the advocacy group ÁFÉOSZ-Coop Zoltán Zs. Szőke stated that this agreement will help safeguard existing jobs and create new ones.
In the opinion of Imre Palkovics, this wage deal is fair and square. Employee representatives had aimed to bring the amount of minimum wage in line with that of the subsistence wage and the agreement for 2014 has been one step in this direction, although this amount is still only 73 percent of the subsistence wage.

The purchasing power of minimum wages depends mainly on inflation and the cutting of utility tariffs has narrowed the gap with the subsistence wage. The President emphasised that the wage hike was decent in case of the guaranteed minimum wage, too. Speaking about the wage offer, Imre Palkovics said that as opposed to the minimum wage and the guaranteed minimum wage, this element is not compulsory, but economic stakeholders may take it into consideration during wage negotiations.  He added that although employee representatives have been trying hard to secure a higher wage offer on the basis of next year’s brighter growth outlook, but the current amount still corresponds to a real wage increase of 1.1 percent.

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As Zoltán Zs. Szőke underlined, they consider it a positive sign that there has been tripartite coordination which facilitates a constant negotiating and deal-making process. Speaking about the viewpoint of the employer side he mentioned that economic potential shall always be considered first and wages can only be raised provided they do not bankrupt enterprises or reduce the number of jobs.

Mihály Varga stressed that the signing of the agreement concludes a series of meetings which had been characterized all along by a positive attitude aiming to reach common ground for which the Government expresses gratitude to the negotiating parties on both sides.

He pointed out that the deal on raising the minimum wage rests on the common understanding that Hungary’s future shall be based on work. The success of the deal, on the other hand, hinged on the parties’ insistence on formerly formulated goals, among them on preventing the loss of jobs through the higher wages and taking into account the profitability of enterprises.

The Minister for National Economy emphasised that Hungary’s economic growth depends on employment growth. Among the OECD countries, in 2010-2013 gross minimum wages increased to the largest extent – 38 percent -- in Hungary.

The employment rate is the highest in 21 years, he added, in comparison to the date of the change of Government, 235 thousand more people are in employment – of which 100 thousand are in the private sector --, the number of those in employment is nearing 4 million and the unemployment rate fell below the EU average of 10 percent.

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The Minister also mentioned that since 2010 wages in real terms increased as a whole by 7 percent, due to low inflation and the family tax allowance scheme. In addition, the Government has compensated for the lack of action of previous Governments by raising the wages of healthcare workers and teachers.

Only in October, wages in real terms were up by more than 6 percent and thus wages in real terms have increased for the tenth consecutive month underpinning the growth of household consumption.
Mihály Varga said that one must not forget about those with the poorest labour market prospects. These people are assisted by the Job Protection Action Plan, through which the Government managed to keep the jobs of more than 740 thousand career-starters, people above the age of 55 years, unskilled jobseekers and those returning to work after their childcare benefit period ends.

He added that the new Labour Code is designed to establish a workfare society and in addition to ensuring employee rights it stimulates employers to create new jobs through flexible regulations.

(Ministry for National Economy)