The wage agreement on the minimum wage of HUF 200,000 in 2022 was solemnly signed by the parties in mid-November, after the employers and employees agreed on the government’s guidelines in early November. The guaranteed minimum wage increased to HUF 260,000 gross from today. At the end of October, it was also decided that as a significant increase in the minimum wage would place a heavy burden on businesses, the government would favor a reduction in contributions in return. As a result, the social contribution tax has been reduced by 2.5 per cent from today (from 15.5 per cent to 13 per cent) and the 1.5 per cent vocational training contribution has been abolished.
The question then arises:
how much of it stays on the net?
Hundreds of thousands of people are directly interested in the answer, because, as the Portfolio wrote earlier: in Hungary, more than 850,000 employees in the corporate sector are affected by the issue of the minimum wage and the guaranteed minimum wage. The issue of a regular increase in the minimum wage is therefore significant in itself in this respect. This also means that the increase in the minimum wage and the guaranteed minimum wage directly affects 34% of those employed in the corporate sector, ie every third employee in a company receives the lowest salary in Hungary. It is important to note that this only covers the corporate sector (it is worth looking at the proportion of those earning the minimum wage on a map by county), there may also be hundreds of thousands in the public sector who receive the lowest wages. In total, we estimate that the earnings of 1 million people are directly determined by the outcome of a reconciliation process between employers, employees and the government. And then the indirect effect of the increase in the minimum wage, which may have a spillover on the wage scale, was not even mentioned.
Calculated according to the currently known tax rules, the gross minimum wage of HUF 200,000 (calculated without the effect of the family tax credit)
THE NET AMOUNT WILL BE 133 THOUSAND HUF.
In other words, the employee earning the minimum wage may earn HUF 21,700 better per month next year, so his annual income may be HUF 260,400 higher than this year.
|Changes in the amount of the minimum wage|
|Pace of raising the minimum wage||Gross minimum wage amount (thousand HUF)||Net minimum wage amount (thousand HUF)||Net minimum wage increase (thousand HUF, year / year)|
The last similar increase in the minimum wage (calculated on a year-on-year basis) was in 2012 (19.2%), and the rate of increase was higher only in 2002.
Cover image: Prime Minister Viktor Orbán (b5) and László Perlusz, Secretary General of the National Association of Entrepreneurs and Employers (b), Zoltán Zőke, President of the ÁFEOSZ-COOP Association, Tamás Székely, Székely Vice-President of the Trade Union Confederation (b3), Melinda Doszpolyné Mészáros, President of the League Trade Unions (b4), László Palkovics, Minister of Innovation and Technology (j4), Ferenc Rolek, Vice-President of the National Association of Employers and Industrialists (J3) President (j2) and Sándor Bodó, Secretary of State for Employment Policy at the Ministry of Innovation and Technology (j), after signing the wage agreement at the Carmelite Monastery on 15 November 2021. Source: MTI / Prime Minister’s Press Office / Zoltán Fischer