Hungary’s gross average wages rose 8.4% y/y in August to HUF740,600 ($2,180), accelerating from 7.5% in July as pay growth picked up in both the private and public sectors, the Central Statistical Office (KSH) said on October 16. Net average wages climbed 10% to HUF519,900, while net real wages, adjusted for inflation, rose 8.6% as consumer prices increased just 1.3% over the year. The net median gross wage rose 9.9% to HUF433,400.
The August figures were a positive surprise after wage growth had slowed to around 7% in recent months, suggesting pay increases are regaining momentum. Analysts said the acceleration could reflect improving business confidence, expectations of an economic recovery and temporary sector-specific factors.
Net pay is growing faster than gross wages partly because of tax changes, including higher family tax allowances and expanded personal income tax exemptions for mothers raising children. These measures have boosted take-home pay without requiring equivalent increases in employers’ wage costs.
The combination of strong nominal wage growth and low inflation continues to lift household purchasing power. That could support consumer spending seen as the main engine of growth. The government targets 1.6-2% growth this year, which is slightly bearish compared to the IMF’s 2.1% target in its latest World Economic Outlook but is in line with the Hungarian National Bank's (MNB’s) 1.8% projection.
Talks on next year’s minimum wage have entered a new phase with employers saying that the 14% increase laid out in the three-year agreement with unions in 2024 is unsustainable. A recent survey found that two-thirds of businesses can offer wage increases of no more than 6%, amid weaker orders, lower revenues and worsening business confidence, employer group VOSZ said.
Economic researcher GKI warned that rapid wage growth is difficult to sustain while productivity remains stagnant, potentially squeezing profits, curbing investment and putting businesses at risk.
Unions on the other hand are willing to lower their demand if the government introduces the tax credit for lower-income earners promised during its campaign. Even with that concession, unions would accept at least a 10% rise in the gross minimum wage. The three-year agreement in 2024 set minimum wage increases of 9% in 2025, 13% in 2026 and 14% in 2027, but these were tied to specific economic growth targets. The planned 2027 increase is in question due to the weaker-than-expected growth.
Peter Virovacz, chief economist at ING Bank, said that improving business confidence and expectations of an economic upturn may be helping to drive the trend. But one-off factors could also have played a role, including overtime payments linked to summer heatwaves and the handling of issues at Hungary’s Paks nuclear power plant.
The gap between overall wage growth and the slower increase in regular earnings supports that explanation. Regular gross wages, excluding bonuses, awards and other one-off payments, rose 7.6% y/y to HUF710,600 in August.
Regular wage growth was 7.2% at businesses, 8.9% in the public sector and 7.9% at non-profit organisations.
Despite the August acceleration, average gross earnings have fallen from their March level of HUF780,000, declining for several consecutive months. In August, gross average wages were HUF4,900 lower than in July, while net average wages fell by HUF3,400.
ING analyst said the latest data did not change the broaer outlook, with annual average wage growth expected to reach around 9-10% in 2026.
Gabor Regos of fund manager Granit said wage growth could remain around its current pace for the rest of 2026. Next year, the outlook will depend heavily on labour-market tightness and how much of the agreed 14% minimum-wage increase translates into actual pay rises.