Hungarian real wages drop amid sky-high inflation
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Loading... - Astrid Barfuss
- 30 Mar 2023
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Despite a 16.1% rise in average gross wages on a yearly basis, inflationary pressures have caused a decline in real wages for five consecutive months. Looking ahead, the drop in purchasing power will continue well into the second half of the year.
The Hungarian Central Statistical Office (HCSO) has released the latest wage data which shows that real wage growth was negative for the five consecutive months up to and including January. Based on data across a full range of employers, gross wages rose by 16.1% on an annual basis, while net wages increased by 16.0%. Average regular gross earnings (adjusted for non-recurrent payments) show a more significant wage outflow, as the key figure decelerated from 18.4% at the end of last year to 17.3% in January. This suggests that the moderation in gross wage growth is mainly due to weaker one-off payments at the beginning of 2023.
As positive as these figures look, the purchasing power of wages has nevertheless declined, with real wages shrinking by 7.6%, as inflation (which hit 25.7% in January) continued to dampen households’ purchasing power. January is the fifth consecutive month in which real wage growth has been negative, and we believe that this trend will continue at least until the end of this summer.
Nominal and real wage growth (% YoY)
In the private sector, growth of gross earnings (including bonuses) somewhat moderated in January, with average wages in this sector rising by 17.0% on a yearly basis. Given that median earnings rose more dynamically, by 18.9% year-on-year, this indicates that companies were mainly adjusting the salaries of lower earners in the light of high inflation, which peaked in January. In contrast, gross earnings in the public sector slowed to 13.6% YoY, after the uptick in December’s data when bonus payments were allocated. Read More…
