Hungary gross wage growth slows to 3.8% in August

The slowdown mainly reflected a sharp drop of bonuses and other one-off premiums, but the growth of regular wages, excluding extras, also slowed, to 4.9% yr/yr from 6.5% in July. KSH also noted as a factor the growing proportion of low-paid fostered workers. The number of these workers, employed on public work schemes, rose almost 50% in one year while employment in other sectors fell.

January-August gross wages were up 4.7%, of which regular wages rose 5.5%.

August net wages were up 1.1% yr/yr after climbing 4.4% in July. January-August net wages rose 1.9% yr/yr. The rise well below gross wages reflects tax changes.

Net wages continued to rise well below inflation, with consumer prices rising 6.0% yr/yr in August and 5.7% in January-August.

Hungarians earned on average gross monthly HUF 214,680 in August, of which HUF 207,939 was in regular wages. The net wage, excluding family allowances, averaged HUF 138,663 in August.

Business sector gross wages averaged HUF 225,542 a month in August. Their yr/yr growth slowed to 6.6% from 9.2% in July, with practically all the slowdown related to bonuses and premiums. These fell a sharp 18.5% in the year to August after rises in the previous three months, including a 30% jump in July when annual bonuses were paid instead of May as last year. Regular wages in the sector were up 7.9% yr/yr in August, little changed from the 8.0% yr/yr rise in July.

January-August business sector gross wages rose 7.2% yr/yr, including a 8.3% rise in regular wages, up from the respective increases of 5.1% and 4.2% in 2011. Part of the sharp rise compensated taxation changes as net wages in the sector rose far less, by 4.2% in January-August.

Public sector gross monthly wages dropped 2.6% yr/yr in August to HUF 191,767, after a 0.9% rise in July and yr/yr drops in the preceding four months. They rose, however, 3.9% in twelve months to HUF 208,342 if the sharply lower wages of those on public work schemes were excluded. The August gross wages of the fostered workers, at HUF 72,733 a month, were down 10.2% yr/yr.

Regular wages in the public sector fell 2.1% in the year to August overall and rose 4.4% if those on public work schemes were excluded.

January-August gross wages in the public sector fell 1.8% overall and rose 3.6% if fostered workers were excluded. Regular gross wages for all employees in the sector were down 1.2% but rose 4.1% without those on public work schemes.

KSH reported that about 58% of full-time public sector employees and 8.6% of non-profit organization employees were paid an average HUF 10,200 a month as compensation in January-August to prevent tax changes - the elimination of preferences in lower wage categories - to cut their net income. The compensation reduced the fall of public sector wages by 1.7 percentage points, KSH said.

This wage compensation does not constitute a part of wages.

Gross wages of those earning less than gross monthly HUF 216,806 - little less than the average wage - had to be raised to prevent a drop of their net wages. The minimum wage was raised by 19% from 2011 to HUF 93,000 for the same reason. Government schemes have helped employers to foot part of the bill.