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OECD: Hungary Should Reduce Tax Wedge On Low Wages

Tamás Székely 2015.02.10.

The Organization for Economic Co-operation and Development (OECD) has said Hungary should reduce the tax wedge on low wages, scale back disincentives for older workers and make education more equitable to support economic growth. After reforms which help the labour market, measures are needed  to improve productivity in Hungary, the head of Hungary’s permanent representation to the Paris-based organisation said, commenting on an OECD report.

Going for Growth, an annual study of the OECD, provides an analysis of the reforms put in place by each member country – among them Hungary – from the aspect of economic growth. Hungary has implemented serious reforms in the area of employment and labour utilisation, as a result of which Hungary has the fourth most flexible regulations among EU countries which belong to the OECD, Zoltán Cséfalvay said. From the point of view of economic growth, the emphasis should be placed on productivity reforms. The creation of a more effective higher education system as well as tools to promote an active labour market and human capital were called for. Further, innovation and research and development were high on the list, he said.

The OECD recommended further reducing the tax wedge on low salaries by targeting cuts in social contributions more effectively and introducing an employment tax credit that progressively declines with the wage level. Among the reform priorities for 2015 the OECD underlines that obstacles hampering the participation of groups with poor job prospects on the labour market, such women, young people, unskilled and elderly jobseekers, must be removed . OECD also said Hungary should index the statutory retirement age to gains in life expectancy and close pathways into early retirement for women.

via hungarymatters.hu, kormany.hu and oecd.org; photo: Victor Tonelli – OECD – flickr.com


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