KSH noted that wages have been boosted this year by a higher minimum wage as well as pay increases for the Armed Forces and wage top-ups for social services and healthcare workers. Calculating with September inflation of 0.6%, real wages were up 7.7% in net terms.

Excluding the 204,600 Hungarians in fostered work programmes, the average gross wage rose by 6.7% to 272,501 forints while net wages increased by 8.3% to 181,213. Full-time fostered workers earned a gross 78,327 forints on average during the month, 0.6% more than in the same period a year earlier.

As a result of the government agreement with employers and unions on next year’s payroll tax reductions and wage rises, gross wages could rise by annual double digits, while inflation is likely to rise to around 2%, said András Oszlay of Takarékbank.

The analyst added that real wages are to rise by at least 7%, with a favourable knock-on effect on consumption. Péter Virovácz of ING Bank noted that the ever-growing labour shortage had an impact on the bargaining power of employers, and fast-paced wage hikes could be expected as a result.

He forecast an annual rise in gross wages at the end of this year of 6.4%.

Republished with permission of Hungary Matters, MTI’s daily newsletter.