In Hungary negotiations for 2020 minimum wage will start soon

The negotiations on the minimum wage hike for 2020 and the prospective new social contribution cut will start soon, the pro-government daily Magyar Nemzet reported. Negotiations will be also held on wages in the state-owned companies. According to last year’s wage agreement, the minimum wage and the minimum wage for skilled workers should be both raised by 8% this year, respectively to HUF161,000 and HUF210,600. The agreement states that the tripartite council will launch an entirely new negotiation on wages in case there is 1pp deviation from the agreed projections on inflation, GDP growth and productivity growth in 2019. In particular, the wage agreement had envisaged inflation of 2.7%, GDP growth of 3.9% and productivity growth of 2.9% for this year and the daily commented that inflation and GDP growth are expected to be higher but there is little chance of a 1pp deviation from these values.

Employers have argued that the 8% minimum wage hike is sufficient since the labor market is currently driven by demand and wages increase anyway. Employers are expected to call for a review of the formula for setting the social contribution cut, which might bring the cut forward to the beginning of the year. At present, the 2020 budget plans a 2pps social contribution cut as of Jul 2020 in case real wage growth exceeds 6%.

Wages of employees at state-owned companies were raised on average by 30% in the 2017-2019 period under the wage agreement signed in early 2017. The agreement expired this year so a new agreement will have to be negotiated, the daily said. The agreements will be different for each of the important companies — long-distance passenger bus operator Volan, Magyar Posta, the railway operator MAV and the water utilities. It is expected that wages in these companies will be raised by more than the average for the economy in order to retain the workforce and ensure safe provision of public services, the daily claimed.

A voluntary reduction of opening hours of retailers on Sundays will be also on the agenda of the upcoming tripartite negotiations.

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