After a good look at the wages and taxes that Hungarian workers have had to face recently, the Hungarian government has made some sweeping changes that affect everyone – employees and employers – when it comes to who is paid what, and how.

There is a big problem with recruitment in Hungary, with many preferring to either apply for government benefits or move to other countries in order to find work. Both of these options are financially better for Hungarian workers than having a low paying job there, and this is mainly due to the fact that the minimum wage was extremely low, and taxes were very high.

All that has changed, however, in a bid to help solve the labour shortage in the country.

The minimum wage in Hungary has now been increased by 15 percent in 2017 (followed by an additional 12 percent in 2018) for unskilled workers. And the payroll tax will be cut 5 percent in 2017, following by another 2 percent in 2018. For skilled workers, the jump in wages is even more noticeable – the minimum wage for this category will increase by 25 percent in 2017, and then 12 percent in 2018.

It is hoped that those who have left Hungary to seek better paying work elsewhere will be tempted back home with these wage increases. However, although Peter Virovacz of ING Bank acknowledges that this is a good idea, and that the increases are a step in the right direction, he is concerned – as are many other people – that it is too little too late. Instead, he suggests that the education needs to be modernised to enable people to gain more skilled jobs within the country.

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