A special pay deal could be on the cards - this is how employers see it
Wage negotiations between employers, workers and the government started in July this year, with a wide range of wage demands emerging. Although workers say that no concrete wage demands have yet been discussed, the vice-president of MGYOSZ says that a double-digit minimum wage increase next year is not ruled out. Like the workers, employers are not ruling out the possibility of company closures and redundancies in the autumn.
"The aim of this year's early wage negotiations is not only to reach an agreement on next year's minimum wage, but also to develop a 2-3 year programme to comply with the EU minimum wage directive. This could lead to a special wage solution, which could also modify the current minimum wage and guaranteed minimum wage system," László Perlusz, secretary general of VOSZ, told HR Portal. "For the time being, we do not have the macroeconomic indicators for this year or next year that would allow us to talk about wages in concrete terms, so for the time being we have only been talking about guidelines," added Ferenc Rolek, vice-president of MGYOSZ. According to him, the rate of minimum wage increase depends on the expected inflation rate, GDP and productivity. "At the moment, the situation is quite uncertain, as inflation has fallen significantly, but GDP has not been very positive. While it would be good to have a meaningful increase in the minimum wage, which is an important item for the livelihoods of the poorest, we do not yet see the resources to do so. This could happen, but the rate will be below what we have seen in recent years. However, minimum wage increases should not be used as a basis for average wage increases. The minimum wage is essentially a social category, i.e. it is about the livelihoods of the poorest, while the rise in the average wage is determined by the state of the economy and of businesses.
But how much is enough?
In real terms, the increase in the minimum wage could be no more than 10%, the increase in the average wage is obviously much less than that," added the MGYOSZ vice-president. László Perlusz said:"It is not possible to force an increase, because we have to take into account that last year was a recession, and this year it will be good if the economy grows by 2% with 4-5% inflation. And businesses have already implemented a significant minimum wage increase of 15% this year, with a 10% increase in the guaranteed minimum wage and average earnings up by more than 13% in the first half of the year. Businesses, however, have not yet earned these wage increases, which they are expected to pay." So employers warn that only an agreement that does not put them out of business or drive companies abroad is acceptable to them.
"It is possible to design a system where minimum wages increase significantly, but for a near-optimal agreement, the government has to get on board. In the 2017-2022 6-year wage agreement, employers agreed to a 2 percentage point socho cut for a 5% increase in real wages, yet this resulted in more revenue for the government overall, as it received more from VAT and VAT (due to increased wages and consumption) than before, and increased pension contributions generated additional revenue for the pension fund. In a booming economy, more revenue is generated than the government suffers by cutting contributions," said László Perlusz. Employers are also open to keeping the guaranteed minimum wage, but also to combining the two, he said, and even to introducing a sectoral minimum wage, although they say this cannot be introduced in a year.
Expectations
The unfavourable data that came out over the summer means that there are no positive expectations. "Businesses feel there is a lot of uncertainty in the economy and that's the worst part, because you can prepare for a sure bad one, you can make a business plan, but uncertainty is scary. With inflation falling back, wages rising, demand rising and the economy starting to pick up, this is unfolding very slowly, while much of Hungary's GDP depends on domestic consumption," the secretary general added. "The situation is not expected to get better for the rest of the year," added the MGYOSZ vice-president, "I am confident that next year, after the stagnation, the Hungarian economy can start to grow and continue to grow, and as a result, wages can also increase.