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Minimum wage to be raised by 20 %

September 16th, 2021

A conservative economist agrees that Hungarian wages are low, but he still finds the government’s plan to raise the minimum wage by 20 per cent risky.

On Tuesday, the government announced that it plans to raise the minimum wage from 167,000 to 200,000 Forints from 2022.

On Portfolio, conservative economist Péter Ákos Bod contends that the minimum wage has been adjusted for political considerations in Hungary. Bod, who served as Minister of Industry and Trade then as National Bank President under the Antall government in the early 1990s acknowledges that the significant rise in the minimum wage in an election year is not just a campaign message but an important tool of social engineering as well. He points out that Hungarian wages are low in regional comparison: salaries are higher in all Visegrád countries, ‘and even in Romania’. But the significant hike in the minimum wage may fuel inflation, create tensions between the unskilled and the skilled workforce and lead to downsizing in certain sectors unless the government offers further subsidies, Bod fears. He believes that automatic annual minimum wage rises would be a more appropriate way than political bargaining to adjust the minimum wage each year.

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