Negotiations on next year's wages started at the beginning of October 2023, with stakeholders - employers and trade unions representing workers - and the government as an observer taking part in the wage negotiations, which can last several weeks.
At this so-called Permanent Consultation Forum of the Private Sector and the Government (hereinafter: "VKF"), both employers and employees agreed to give the employees a one-off wage compensation of HUF 100,000 at the end of this year due to the fall in real wages. The significance of this compensation plays an important role in reducing the purchasing power of wages, as the minimum wage has increased by 16% and the guaranteed minimum wage by 14% this year, while inflation is expected to rise to 18%. In addition to the tax-free wage compensation, the planned increase in the minimum wage and the guaranteed minimum wage was also discussed, with the minimum wage set to rise by 15% and the guaranteed minimum wage by 10% next year. The consultation also brought forward a strategy to 2027 that would focus on the EU's minimum wage plans, with the long-term goal of merging the minimum wage and the guaranteed minimum wage, after which skilled workers could earn more with the wage floors set by sectoral collective agreements. These proposals have been submitted to the government by the stakeholders.
However, at the end of October, the one-off wage compensation initiative was dropped, as one-off wage compensation proposal was seen as flawed by its optional nature, which would have meant that it could not have been guaranteed that both minimum wage earners and guaranteed minimum wage earners would receive this benefit. Finally, the employees' and employers' group suggested a new alternative by bringing forward the minimum wage increase to 2024, it was a welcomed solution by the government.
On 16 November, at the VKF meeting, after lengthy discussions the parties concerned finally reached an agreement. Accordingly, the minimum wage in 2024 will increase by 15% to HUF 266,800, while the guaranteed minimum wage will rise by 10% to HUF 326,040. In addition, minimum earnings could rise sooner, as early as December 2023. Furthermore, following the announcement by the Ministry of Economic Development, the participants agreed to make a recommendation to maintain the real value of wages in the competitive sector for 2024, taking into account the possibilities, and therefore all companies are encouraged to further increase wages according to their own business, financial and wage market situation. The parties also initiated further discussions on the concept of a renewal of the wage system in such a way that wages can maintain their purchasing power in the long term.
By Levente Csengery, Partner, KCG Partners
