In light of the latest statistics of the Hungarian Central Statistical Office (KSH), the positive trend of increasing real wages in place since the beginning of the year is continuing. In January-July 2013, average gross and net wages were up year-on-year by 3.2 percent and 4.6 percent, respectively, within the national economy. In this period, real wages increased by 2.2 percent parallel to an inflation rate of 2.3 percent, which development resulted from lower utility charges, lower taxes on wages and a minimum wage increase which exceeded the pace of inflation growth.

Since 2010, this is the third year when wages in real terms increased year-on-year within the national economy. Previously, 2006 was the last year when wages registered gains in real terms and this was followed by a decrease of altogether 6 percent in 2007-2009. Under the current Government, however, since 2010 real wages have increased on average by 6 percent which was also attributable to the introduction of family tax allowances in 2011. Thanks to that, disposable income from wages increased above average at employees with more than one child. The expected broadening of the scope of family tax allowances is believed to boost this process in 2014, especially among employees with children earning median and below average incomes.

In the initial seven months of this year, the average gross wage of full-time employees was HUF 228 400 within the national economy, while net wage excluding family tax allowances was HUF 149 600. According to KSH data, in July 2013 the average gross wage of full-time employees was 229 700 forints within the national economy, up by 2.1 percent year-on-year. The net wage figure of HUF 150 452 is calculated without the family tax allowance applicable for those with children. Taking into account an annual inflation rate of 1.8 percent in July, wages were up by 1.9 percent in real terms.

Government measures have also had a positive impact on enterprises, as these – along with the Job Protection Action Plan – safeguarded jobs and stimulated employment. The higher number of available jobs and the concurrent wage increase help stabilize households’ finances and they are also expected to boost domestic demand.

These developments are indicators of a successful Government policy, and the expected further real wage increase is anticipated to contribute to economic growth through buoying consumption. According  to the latest prognoses, economic growth may be high as 2.0 percent in 2014.

(Ministry for National Economy)