Wage increase 2025: past, present, future
When presenting next year's budget, it was said that the government forecasts a net real wage increase of 5.3% in real terms, with average gross earnings of 8.7% and inflation of 3.2%. Subsequently, the wage agreement was also reached, so we can now draw conclusions from this and from past events about what will happen in terms of wages in 2025.
Let's start with perhaps the most recent information on the wage agreement.It already happened once in 2016 that the parties reached an agreement on the minimum wage for a longer period than one year, and this year we have again reached a longer-term agreement on the minimum wage. Accordingly, the minimum wage
has been set for the next two years.
- By 2020, the minimum wage will rise by 9 percent
- by 13 per cent by 2026
- by 14 per cent in 2027
will increase if macro expectations (inflation, GDP growth) allow. The government is trying to offset the impact of the wage increase on company budgets by reducing the burden on employers, one version of which is that the burden will be paid on top of the previous year's minimum wage. This plan projects that the minimum wagewill rise by 40% by 2027 compared to this year. The ultimate goal is for the minimum wage to reach 50% of the regular gross wage.
Where are we now in this process?
If we look at the KSH data from 2020 onwards, 50% is not an unachievable target. The minimum wage has increased by an average of 13% per year, which is roughly equal to the average increase in the regular gross wage and, accordingly, the minimum wage has accounted for 43-45% of the regular gross wage. If we look at the present moment, the KSH estimates the regular gross wage for September at HUF 605 100, compared to which the minimum wage is 44% behind. The mathematical chance is therefore there that this target will be met.
Minimum wage | Growth rate | Regular average gross earnings | Growth rate | Minimum wage as an average of regular gross earnings | |
2020 | 161 000 Ft | 8% | 360 802 Ft | 45% | |
2021 | 167 400 Ft | 4% | £393 297 | 9% | 43% |
2022 | 200 000 Ft | 19% | 457 210 Ft | 16% | 44% |
2023 | 232 000 Ft | 16% | 529 341 Ft | 16% | 44% |
2024 | 266 800 Ft | 15% | 596 167 Ft | 13% | 45% |
2025 | £290 800 | 9% | |||
2026 | £328 604 | 13% | |||
2027 | 374 609 Ft | 14% |
The accelerating pace of minimum wage increases will almost certainly have an impact on the wage market, as companies are forced to adjust their wage structures to some extent to reflect this effect if they do not want to see the established wage hierarchy or wage spiral close dramatically. And there is a chance of this happening, because analysis has shown that the number of minimum wage workers will increase, which means that not everyone will be able to keep up with these steps, compressing the wage structure.
Looking at the data so far in 2024, regular average gross earnings are 12.7% higher than the previous year, and 4.6% higher than January. In 2023, the same period ( January-September) showed a 6.8% year-on-year increase in wage growth dynamics, slower than last year.
Regular average gross earnings | |||||
2 023 | Difference from previous month | 2 024 | Difference from previous month | Difference year/year | |
January | 502 900 Ft | 578 300 Ft | 2.3% | 15.0% | |
February | 505 400 Ft | 0,5% | 578 000 Ft | -0,1% | 14.4% |
March | 520 600 Ft | 3.0% | 598 400 Ft | 3,5% | 14.9% |
April | 523 400 Ft | 0,5% | 596 200 Ft | -0,4% | 13.9% |
May | 527 900 Ft | 0,9% | 607 800 Ft | 1,9% | 15.1% |
June | 525 300 Ft | -0,5% | 598 200 Ft | -1.6% | 13.9% |
July | 526 800 Ft | 0,3% | 602 200 Ft | 0,7% | 14.3% |
August | 528 500 Ft | 0,3% | 601 300 Ft | -0,1% | 13.8% |
September | 537 000 Ft | 1.6% | 605 100 Ft | 0,6% | 12.7% |
October | 540 200 Ft | 0,6% | |||
November | 548 600 Ft | 1,6% | |||
December | 565 400 Ft | 3,1% | |||
Change January to December: | 12.4% | ||||
Change January-September | 6.8% | 4.6% |
The pattern suggests that by the end of the year, average regular gross earnings are expected to be around HUF 620-625 thousand, so the rate of increase could be between 7.5-8% within a year.
What happened in terms of real earnings?
The data so far for 2024 shows an almost constant rise of around 10%, thanks to -so far- average inflation of 3.6%. However, never forget that a fall in inflation does not mean a fall in prices, the low inflation rate is due to the base effect, so the increase in real income on a year/year basis is correct, but if we look at the longer time horizon, I think the sustained and significant fall in real income between August 2022 - September 2023 is being worked off. This is supported by the fact that volume change in retail stores continues to stagnate, with payroll demand falling or stagnating. Of course, one could cite here that the savings rate has risen in turn, but not in the context of talking about minimum wages and average gross wages. This is backed up by a study by the Equilibrium Institute, Poverty Research 2024, which points out that spending 100,000 Forints today causes a good proportion of people to have a headache. ( The study can be read at https://egyensulyintezet.hu/szegenysegkutatas-2024/)
The inflation forecast for 2025 (2.7-3.6% - MBN), the minimum wage increase (9%) and the projected wage increase figures (8-9%) provide some guidance for planning next year's wage increase, but for implementation, other impacts and aspects should and can be taken into account, of which I would highlight two:
- Whatis the market dictating (and here we are thinking of shortage occupations)
-Mwhat can the budget bear?
I have deliberately left individual preferences and performance out of the list, the reason is infinitely simple. As we have read in countless articles and analyses over the last few years, the supply side of the labour market has been tightening, with insufficient numbers and skills to find the right people in the market. We have read and heard reports of a 'bricklaying' crew who watched a video in the morning on how to plaster, and then plastered the same day, in other words, recruitment has become a bloody business. It logically follows that in some disciplines, wages were determined by absolute supply and demand and not by individual performance, quality or qualifications. Labour market pressures appear to be easing somewhat, so that this aspect may again play a role in next year's wage increase, the question is how much will be absorbed by maintaining the wage structure and what will be the economic position of companies. There are now countless salary databases to help determine the position in the wage market, the decision in principle will be what kind of seniority jump the company (not HR) budget will allow, or what measure (e.g. efficiency improvements) will create more room for our salary increases. It is certain that until our employees feel that rise in living standards and until the tide turns in the labour market, the wage pressure will remain with us, so double digit wage increases will be with us for a while.
Find out what your net pay will be in 2025. Use our 2025 wage calculator!
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