Pay rise: how much in 2025?

After last year's significant increases, perhaps the most important question for all workers was whether their pay would continue to rise in 2025. Perhaps the earliest to know about the pay rise was at Audi Hungária, which signed a two-year pay deal with the company last spring. Under the terms of this agreement, the company's basic wages were increased by 10.5 % from 1 April 2024 and by 8 % from 1 April 2025. In addition, employees will also receive an additional bonus of more than one million forints per year, Róbert György Fekete, deputy economic president of the Audi Hungária Independent Trade Union, told HR Portal.

In the autumn the agreement was also concluded at Magyar Telekom Nyrt. and Telekom Rendszerintegráció Zrt., where their employees will receive a differentiated wage increase of 6 percent on average from March 1, 2025. In addition, the company will pay its employees a gross one-off bonus of HUF 745 000 in December 2024 in recognition of their 2024 corporate achievements. Wage increases are also expected in most areas for employees in the retail sector. Among the already announced increases, Aldi, for example, will see a uniform 8% pay rise for sales and logistics and office jobs, with a few exceptions, the chain announced. SPAR is also increasing its pay, although the figure has not been disclosed. All that is known is that all sales staff and cashiers working in the chain will receive a gross monthly bonus of 30,000 forints a month from 1 January as a basic salary component. Under the new agreement with employees, the 13th monthly allowance, the SPAR Loyalty Programme and the 15% employee shopping discount will remain in place.

4-5% is not enough

"Some areas will start negotiations next week. But at Tesco, for example, negotiations are already underway, but we will only be able to announce the results at the very end," Zoltán Karsai, president of the Trade Union of Commercial Employees, told Hr Portal. He said that there are currently four places where wage increases are being negotiated, two of which have an agreement, but in two of them the outcome of the negotiations is uncertain. "We have broken off negotiations with Metro, where we could not reach a level where we could reach a wage agreement, so we have not reached an agreement. A rate of around 4-5 percent is not acceptable to us at this point. We told the workers that we would wait to see what wage increases the company would implement and then decide what they wanted to do," the union leader added. He said that after a difficult economic year last year, wage negotiations are not going to be easy. "We know it is difficult for the chains, but we obviously want to get the best for the workers. Then I think the wage increases of over 10% that we've had in recent years are not achievable this year. We are trying to find an optimum point that does not entail that we pave the way for a corresponding increase and then 200 people lose their jobs because of it", Zoltán Karsai said, underlining the complexity of the situation. He added: "where we cannot get the wage increase to the right level, we try to calculate the increase in relation to some kind of result, such as the EBITDA indicator (earnings before interest, tax, depreciation and amortisation). If that is met by July, i.e. the company's plans are going the way it wants, then we will try to get the increase during the year that we cannot get now at the beginning of the year because there is no budget for it."

In their experience, there is no one average raise rate that can be achieved across the board. They rely on the results of companies, they prepare for wage negotiations, they look at all the mid-year results that companies release, the previous year's balance sheet before they arrive at a wage negotiation. In any case, the 9% increase in the minimum wage and the 7% increase in the guaranteed minimum wage in 2025 are not relevant information for most retail chains, as all retail chains have already exceeded these wage levels, according to the KASZ president. "Minimum wage increases usually help us to raise wages, but this is not the case this year. Many are worried about whether the expected bounce-back will happen in 2025 and whether companies will be able to cope with this forced increase. We hope so," said the union leader.

Workers' bargaining power has deteriorated

While last year the minimum wage rose 16%, this year it's 9%, and the guaranteed minimum wage rose 10% last year and 7% this year, so we're seeing smaller increases this year. This also leads us to think that the increase in the average wage will be lower this year than it was last year. Last year we saw an average wage increase of between 13-14%. This year, the average wage growth rate will certainly be lower than that," József Hornyák, Portfolio.hu's economic analyst, told HR Portal. According to him, the economic situation and business sentiment do not justify such a strong wage increase this year. Last year, the economy grew very little, slipped into recession in the third quarter and the number of companies going out of business increased. So companies are not looking forward to these wage negotiations in a very favourable position, he added.

In principle, wage increases could be boosted by the tightness of the labour market, i.e. the extent of labour shortages in Hungary. The number of vacancies was at its highest in mid-2022, when there were no workers for 100,000 posts. But the number of vacancies has fallen by tens of thousands since then, while the unemployment rate has risen to around 4.5 percent. The last time such a high level was seen was during the Covid crisis. József Hornyák says this means that workers' bargaining power is not so strong at the moment. In addition, emerging company surveys show that managers want to raise salaries by between 5 and 10 percent. "I think you can find somewhere in between for most companies. The automotive sector is in a particularly difficult position at the moment, the construction sector, so it may be much more difficult to negotiate wages and they will be able to agree slightly lower wage increases with workers in those sectors. This is basically offset by growth in the services sector, with a broad spectrum of service firms performing well. Most of these are market services. People are now starting to shop more, go out to restaurants more, and these places are starting to capture some of the surplus income. Wage increases in the double digits are expected here. In these sectors, I think there is a labour shortage anyway, and these companies will have to make meaningful wage adjustments again," the analyst added.

Workers vote with their feet

This year's pay rise could ultimately affect staffing levels, he said. Indeed, companies where pay rises of only 3-5 percent are expected could see an increase in staff turnover. But those that want to retain workers and do not want to see turnover rise will be forced to raise wages by 8-10%. Smaller increases of 3-5% may make many workers think they are looking for another job, as such increases are in line with inflation. Moreover, trends in recent months show that people are starting to feel inflation is higher again, as food prices have risen back above 5%. "I think that overall, after last year's average wage increase of 13-14 percent, this year could bring an average wage increase of between 8-10 percent", József Hornyák said.

Caption: Pixabay