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Minimum Wage and Guaranteed Minimum Wage Increased from 1 February 2021

Minimum Wage and Guaranteed Minimum Wage Increased from 1 February 2021

Hungary
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In the last decade, the amount of minimum wage and the guaranteed minimum wage has been rising year by year. However, the process of determining the minimum wage in 2021 was different from previous years in two ways: firstly, the agreement on the wage, after 7 negotiation sessions, was not reached by the end of December 2020, therefore, after reaching agreement at the end of January 2021, the new minimum wage figures are in effect from 1 February 2021, and secondly, the increase was lower as seen before in the last years.

Minimum wage was increased by 4%, while the guaranteed minimum wage for jobs requiring at least a secondary education or a secondary vocational qualification was increased by 3.8%. As a result, the gross minimum wage in Hungary is HUF 167,400 (ca. EUR 466) and the gross guaranteed minimum wage is HUF 219,000 (ca. EUR 610). Government Decree 20/2021. (I. 28.) contains in detail the amounts for weekly, daily and hourly wages and part-time work accordingly. Due to the effect date of 1 February 2020, the increase will be experienced for the first time in March, when the February wages are paid.

When comparing these new figures to those of 2010, minimum wage increased by 128 percent and the guaranteed minimum wage increased by 145 percent, however, Hungary now has the second lowest minimum wage in the EU, trailing only after Bulgaria.

The Government continues to work to ensure that wages continue to rise and that companies can perform better so that the Hungarian economy can bounce back from the effects of the coronavirus pandemic. The results of this work can be seen in the employment data, as the number of employees exceeds 4.5 million and the number of registered jobseekers is less than 300,000.

Finally, it is worth mentioning that it is possible to increase the minimum wage and the guaranteed minimum wage once again in 2021. In 2016, it was agreed in a 6-year wage agreement that, provided that real wage growth in the private sector exceeds 6% in 2020, the amount of mandatory minimum earnings could automatically increase by a further 1% from July 2021 if the social contribution tax is lowered to 13.5%. In this case, from July, the minimum wage may be HUF 169,000 (ca. EUR 470) and the guaranteed minimum wage may be HUF 221,200 (ca. EUR 616).

By Levente Csengery, Partner, KCG Partners Law Firm

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