In 2024, the average gross earnings of full-time employees were HUF 646,800, an increase of 13.2% in one year. Real wages, i.e. the purchasing power of earnings, grew by a remarkable 9-10% last year in Hungary. In 2025, wage dynamics will continue to be driven by the 9% increase in the minimum wage and the 7% increase in the guaranteed minimum wage at the beginning of the year, which also affects higher wage brackets in order to avoid the end of wage differentiation. Average gross wages could rise by around 8-9% this year on average across Hungary, while real wages could increase by around 3-4%. According to a survey of domestic companies conducted at the beginning of this year, 96% of firms plan to increase their employees’ pay in 2025. On a European level, Romania (16.7%), Croatia (14.8%) and Hungary (13.7%) recorded the highest year-on-year increases in earnings in the third quarter of 2024. However, despite the high wage growth, domestic earnings in euro terms still lag behind wage levels in Western Europe.
Pay processes in 2024
The Hungarian labour market remained strong in 2024, with dynamic earnings growth. According to KSH, for the whole of 2024, the average gross salary in the national economy was HUF 646,800, up by 13.2% compared to 2023. Net average earnings grew at a similar rate last year (HUF 430,100/person/month on average, +13.2%).
The increase in the minimum wage and the guaranteed minimum wage at the end of 2023 (+15% and +10% respectively) played an important role in dynamic wage growth, affecting higher wage categories. This was a one-off event, but it significantly boosted earnings – an effect that was sustained throughout the year. On the other hand, in the public sector, substantial central wage increases around the median wage were implemented in 2024: the education and health sectors also implemented one-off wage increases.
At the same time, real wages – inflation-adjusted earnings, which show the purchasing power of incomes – have been rising since September 2023. This means that nominal wage growth is outpacing inflation. Real wages had been rising at around 9-10% since December 2023, before slowing down in November-December 2024 (December: +6.1%). It is also important to note that the average earnings of the lowest and middle earners (income deciles 6 and 7) increased the most in the first ten months of 2024, by 16-17% year-on-year.
Dynamic real wage growth lays the basis for both the expansion of household consumption (retail sales expanded by 2.6% in 2024 compared to 2023) and the growth of savings. The former stimulates economic growth, while the latter increases the resilience of the population to possible future economic shocks.
The figure can be referenced here: https://public.flourish.studio/visualisation/22275283/
Expected trends in 2025
At the beginning of 2025, the minimum wage increased by 9% and the guaranteed minimum wage by 7%. As a result, the minimum wage increased to HUF 290,800 gross and the guaranteed minimum wage to HUF 348,800 gross from 1 January 2025. The increase in the minimum wage has an impact on overall wage dynamics: in order to avoid the end of wage differentiation, increases are also expected in wage categories above the minimum wage.
Employers are increasing the wages of those earning above the regulated wages as a result of the minimum wage increase in order to maintain the wage gap between jobs requiring different expertise, experience and skills. Without this, wages would be squeezed together and wage tensions would emerge.
One study shows that every 1 percentage point increase in the minimum wage also increases average wages by 0.3 percentage points.
However, the single-digit increase in the minimum wage in 2025 could also slow down the pace of average wage growth compared to 2024: average gross wages could rise by less than 10% this year, by around 8-9% on average across Hungary, while real wages could rise by around 3-4%.
According to the MNB’s December forecast, average gross national income is expected to grow by 8.6-9.6% in 2025, while real household income is expected to grow by 3.7-4.4%. In the draft 2025 budget, the Ministry of Finance expects average gross earnings growth of 8.7% in 2025, coupled with a 5.3% increase in net real wages.
Two medium- to long-term factors can also affect wage developments:
- While labour shortages have eased in general in recent times, they continue to have a significant impact, especially in areas with skills and talent shortages.
- It may be a reason for optimism that large factories (BMW, CATL, BYD) may start up in Hungary in 2025, creating a greater demand for labour and thus being a potential wage driver in the given area.
According to the results of a survey of domestic companies conducted at the beginning of this year (based on reports from 400 business decision-makers), 96% of companies plan to increase their employees’ pay in 2025, but with inflation falling, the pace of wage increases planned by employers is slowing significantly.
No one is planning a pay rise of more than 15%: 61% of firms are planning a pay rise of 6-10%, more than a quarter (27%) are planning a 1-5% rise and only 8% are planning a rise of 11-15% this year to attract and retain talent (including 21% of respondents in the FMCG sector, 13% in industrial manufacturing and 12% in real estate/construction).
However, another survey showed that these wage increase plans fall short of employees’ expectations, as they consider a larger increase to be realistic in the current market situation and their expectations are rising. Almost half of employees (45%) would like a pay rise of more than 20%, but none of the firms surveyed plan such an incease.
The figure can be referenced here: https://public.flourish.studio/visualisation/22275389/
Earnings trends in the European Union
According to Eurostat data, earnings in the third quarter of 2024 increased by 5.3% on average in the European Union compared with the same period of the previous year (calendar and seasonally adjusted data), a rate of wage growth that was typical for the whole of 2024. However, there were significant differences between member states in the third quarter of last year. The highest year-on-year increases were recorded in Romania (16.7%), Croatia (14.8%) and Hungary (13.7%), while the smallest increases were in Luxembourg (1.1%) and Belgium (2.6%), and Greece recorded a year-on-year decrease (-1.7%).
The figure can be referenced here: https://public.flourish.studio/visualisation/22275583/
Despite the high wage growth, in euro terms, domestic earnings are still lagging behind Western European wage levels: in 2023, the average hourly wage in Hungary of €12.8 was higher than in Romania and Bulgaria.
The figure can be referenced here: https://infogram.com/copy-berek-euroban-eu-20232-1h7v4pdmm7qxj4k?live
The sources for the article can be found here, here and here.
