Domestic wage growth remains in double digits, while in the countries of our region it is much lower, but still significant despite the crisis.
Wage dynamics have not decreased
Statistical data on domestic wages are now available for the entire first half of the year, and the coronavirus epidemic and the accompanying crisis do not seem to have curbed wage growth at all so far. This is the case in our region, too, and although in other countries the nominal wage increase is smaller than in Hungary, it does not lead to faster catch-up in our case, because the forint weakened considerably during the first half of the year.
The most interesting data are, of course, the most recent ones: the Central Statistical Office has now published the data for June. These data were significantly distorted by the one-off extra allowance given to healthcare workers, the effect of which will be excluded from the calculation so we can see a more realistic picture. We also exclude the tax reliefs provided during the hardest months of the epidemic, as these were only temporary and would also distort the figures.
Data excluding single factors
Average gross earnings in June, including the extra allowance for healthcare workers, amounted to 421,700 forints, which would mean an increase of more than 15 percent on an annual basis. However, a more realistic figure is calculated on the basis of a 10.6 percent increase in regular average gross earnings, which is still a very good value, as it shows that wage dynamics have not declined so far.
Thus, the adjusted figure is about 405 thousand forints, but if we exclude the earnings of public employees so that we see the actual labour market situation, we have to add 12 thousand forints to that, i.e. the amount will be 417 thousand forints. Net earnings are calculated from this following the general rules, i.e. deducting taxes to be paid by employees, which amount to 33.5 percent of gross wages.
The average net earnings in June thus amounted to 277 thousand forints.
For the international comparison, we have to convert this amount to euros, which at the average exchange rate of 346-348 forints in June makes approximately 800 euros (if we leave out the effect of the forint depreciation during the crisis and calculate with the exchange rate of 330 forints at the beginning of the year), we get 840 euros. First, let us compare the data of the Visegrád countries and the processes there.
In Slovakia, data are only available for the first quarter, when average net earnings were 830 euros.
In the case of Poland, we have the figures for July, which show an increase of 5% in zlotys compared to the same period last year (i.e. the growth rate is only half of ours), and so average net earnings were 875 euros.
In the case of the Czech Republic, only data for the first quarter are available, and they were 960 euros.
Thus, among the Visegrád countries, the Hungarian figure is in the last place in nominal terms, but in the last year the gap has been closing, especially compared to Slovakia.
Our neighbours in the southeast and southwest
For Romania, data for June are available, showing the same growth in local currency as Poland (5 percent), net earnings amounting to 680 euros, which is 15% lower than in Hungary. For Croatia, we also have data for June, with a wage increase of only 2 percent in one year, but the nominal amount is not low, it is 890 euros.
As far as high-paying EU countries are concerned, there has been no significant change compared to the previous data, i.e. there is no increase in wages;
the German figure is 2440 euros, three times as much as the average Hungarian wage.
It should be noted that these data are difficult to interpret in relation to the first half of the year, as in most places special benefits can distort them significantly, while many jobs that have been temporarily lost are not included in the statistics. A meaningful comparison will only be possible if crisis-related benefits have stopped and employment returns to near pre-epidemic levels.
Crisis as an opportunity
It is a fact, though, that Hungarian wages are growing the fastest practically in the whole of Europe.
If this trend continued or if the pace of growth decreased only slightly, and the forint was stable in the future, the dynamic wage catch-up could continue even during the recovery from the crisis, and we would be able to eliminate the small difference we still have compared to the Visegrád countries.