Hungarian employer, employee and government representatives are set to renegotiate a three-year wage agreement that had envisaged a 14 percent minimum wage increase next year. Employer representatives have instead proposed a rise of around 4 percent. A meeting of the Permanent Consultation Forum of the competitive sector and government is scheduled for 20 October.
Why the deal is reopened
The three-year wage agreement was signed by employers, employees and the previous government, based on a different economic path than the one now unfolding. Economic growth has slowed and inflation has come in lower than assumed when the deal was struck, prompting the renegotiation.
Employer representatives argue that a planned cut to personal income tax on the minimum wage alone significantly improves the situation of minimum wage earners, and that a 4 percent rise is therefore sufficient. Employees call this characterisation shameful. They are demanding the originally signed agreement be honoured in full.
Tax cut adds to the mix
Prime Minister Péter Magyar announced in Parliament on a Monday that the personal income tax rate on the minimum wage will fall to 9 percent next year. The announcement feeds directly into the employer side’s argument for a smaller wage increase.
