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The latest data from the Hungarian Central Statistical Office (KSH) offers insights into the country’s labor market, focusing on wage trends, employment growth, and the outlook for the coming years, writes Oeconomus in their latest reports.
Average gross earnings between January and August 2024, were HUF 634,000 (EUR 1,547), showing a 14% increase compared to the previous year. This growth is largely attributed to December’s minimum wage hike and wage increases in public sectors like education and health.
Real wages, reflecting purchasing power, have risen by around 10% since December 2023, due to lower inflation.
Hungary’s wage growth is remarkable internationally, with the second-highest real wage increase in the OECD in recent years. According to the OECD, real wages in Hungary grew by 13.5% from 2019 to 2024, significantly outperforming the OECD average.
Despite this, wages in Hungary are still lower than in Western Europe, with average hourly wages of EUR 11 in 2023, higher than those in Romania, Bulgaria, and Latvia but still below Western European levels.
In terms of employment, Hungary is experiencing a steady rise in the number of people in work, with 4.7 million employed in September 2024.
However, labor shortages, particularly in skilled labor, are becoming a concern as the labor market approaches full employment. This shortage is exacerbated by demographic factors, such as an aging population and a declining birth rate, reducing the labor supply. Employers and the government are focusing on activating underrepresented groups, such as young workers, retirees, and people with disabilities.
Looking ahead, wage growth is expected to remain dynamic, with the Hungarian National Bank predicting a 12.8-13.2% increase in gross earnings in 2024. However, inflation is projected to remain under 5%, maintaining real wage growth of around 10% for the remainder of the year.
Over the longer term, Hungary faces demographic challenges that could limit employment growth.
This will likely lead to a focus on re-employing older workers, increasing youth participation in the labor force, and leveraging automation and digitalization to fill vacancies.
In conclusion, Hungary’s labor market shows strong wage growth and rising employment, though challenges such as labor shortages and demographic changes will need to be addressed. As the economy continues to evolve, a focus on activating underutilized groups and technological solutions will be essential for sustaining growth.
Via Oeconomus; Featured Image: Pexels