Trade unions refuse to back Hungary’s new minimum wage Trade unions refuse to back Hungary’s new minimum wage

Trade unions refuse to back Hungary’s new minimum wage
11 Jan 2019

An increase in Hungary’s minimum wage agreed between the government, employers and worker organisations has failed to win the backing of the National Confederation of Hungarian Trade Unions.

The move comes as the unions unite with opposition groups to threaten strike action unless the nationalist government of President Viktor Orban abolishes its “slave law”, which was passed last month to regulate overtime hours and payment.

But the new minimum wage deal means that skilled workers’ pay will rise by 8% in 2019, followed by a further 8% in 2020.

Finance Minister Mihály Varga said: “The minimum monthly wage will increase to HUF149,000 (US$529), while the guaranteed minimum wage will be HUF195,000 (US$693). These amounts are double what they were in 2010.”

He also told the Budapest Business Journal that the tax allowance for families with two children will increase by HUF5,000 (US$17.77) next year, enabling them to save twice as much as they could in 2015, which should be on average HUF40,000 (US$142.13) each month.

Moreover, as a result of the six-year wage agreement signed in November 2016, the social contribution tax will drop by another two percentage points, from 19.5% to 17.5%, as of July 2019, further reducing the tax burden on businesses. The aim of cutting employer taxes is to allow them to provide the highest possible pay rises for employees, Varga added.

He also stressed that, in parallel with pay rises, employment is also continuing to increase. The number of people in employment is now more than 4.5 million, which means there is scope for further rises in earnings as firms compete to attract workers, according to Emerging Europe.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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An increase in Hungary’s minimum wage agreed between the government, employers and worker organisations has failed to win the backing of the National Confederation of Hungarian Trade Unions.

The move comes as the unions unite with opposition groups to threaten strike action unless the nationalist government of President Viktor Orban abolishes its “slave law”, which was passed last month to regulate overtime hours and payment.

But the new minimum wage deal means that skilled workers’ pay will rise by 8% in 2019, followed by a further 8% in 2020.

Finance Minister Mihály Varga said: “The minimum monthly wage will increase to HUF149,000 (US$529), while the guaranteed minimum wage will be HUF195,000 (US$693). These amounts are double what they were in 2010.”

He also told the Budapest Business Journal that the tax allowance for families with two children will increase by HUF5,000 (US$17.77) next year, enabling them to save twice as much as they could in 2015, which should be on average HUF40,000 (US$142.13) each month.

Moreover, as a result of the six-year wage agreement signed in November 2016, the social contribution tax will drop by another two percentage points, from 19.5% to 17.5%, as of July 2019, further reducing the tax burden on businesses. The aim of cutting employer taxes is to allow them to provide the highest possible pay rises for employees, Varga added.

He also stressed that, in parallel with pay rises, employment is also continuing to increase. The number of people in employment is now more than 4.5 million, which means there is scope for further rises in earnings as firms compete to attract workers, according to Emerging Europe.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

National protests due to overtime-related "slave law" shake Hungary

Hungary: A land of opportunities and challenges

Hungary to continue payroll tax cuts - if wages rise fast enough

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