Net wages grew at the same pace as gross wages, also growing by 13.1 percent, to 626 euros (193,149 forints). The KSH noted that wages have been boosted by a higher minimum wage as well as pay increases for social services and health-care workers and some state employees.

Excluding the 164,200 Hungarians in fostered work programmes in July, the average gross wage rose by 11.8 percent to 303,824 forints, while net wages also increased by 11.8 percent to 655 euros (202,042 forints).

Full-time fostered workers earned 264.25 euros (81,500 forints) before tax on average during July, 3.4 percent more than in the same period a year earlier. The number of fostered workers was slightly down from the 169,000 registered in June. Their number fell by an annual 21.6 percent in July.

Economy Minister Mihaly Varga told a news conference that the rise in real wages were thanks to government measures and market effects. He said around two-thirds of the wage growth could be attributed to government policymaking, including the wage deal with employers and unions and the career model scheme. Varga added that the stronger economy had a positive effect on real wages, since increasing demand for labour also encouraged employers in the private sector to raise wages.

The minister said the growth in wages did not go hand in hand with a shrinking economy and that inflation remained low. The forint, meanwhile, is fluctuating within a tight exchange rate and the stock of orders was continually expanding. Further, the employment rate is growing and the government plans further reductions to the public burden, he added.

Varga said the biggest wage rises had taken place in areas and professions where incomes were depressed, such as in health care and tourism. In poor regions such as Szabolcs-Szatmár-Bereg county, the growth in average wages exceeded 15 percent, he said.

Taking the CEE region as a whole, wage developments in Hungary have also shown dynamism. Since 2010, only Poland has done better in this respect among the Visegrad Group countries, he said. Analysts told MTI that wages were likely to have grown by 13-14 percent by the end of this year, and the pace of wage growth was likely to be sustained.

András Horváth of Takarékbank noted the squeeze on the labour market, saying pay was likely to rise by an annual 13 percent, based on the wage agreement and the higher minimum wages.

This pace is expected to endure next year, he added. Dávid Németh of K and H Bank said that based on the government’s plans and outlook this year, both gross and net wages may rise by 10 percent next year, while he expected wage growth of 13-14 percent this year.

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