Minimum wage regulation
The general law which regulates the minimum wage since 2012 is the Labour Code (Act I of 2012), Article 153. It mandates an annual revision of both the mandatory minimum wage and the guaranteed minimum wage amounts.
The annual statutory minimum wage is set by Government Decree, which is published in the Hungarian Gazette (Magyar Közlöny, MK). The minimum wage decrees specify not only the monthly but also the weekly, daily, and hourly statutory minimum wages. The most recent update of the minimum wage was set by Government Decree 508/2023 of 17 November 2023.
In the last ten years there were no changes in the minimum wage regulation.
There were no substantial changes in the minimum wage regulations in the past ten years.
Actors involved in determining the minimum wages
The annual minimum wage is negotiated by the tripartite Permanent Consultative Forum of the Competitiveness Sector and the Government (VKF). The VKF was set up in 2012.
The members of the VKF are the government, three trade union confederations, and three main employers' organisations.
Trade unions:
- Democratic League of Independent Trade Unions (LIGA)
- Hungarian Trade Union Confederation (MASZSZ)
- National Federation of Workers' Councils (MOSZ)
Employers’ organisations:
- National Federation of General Consumption Cooperatives and Trade Associations (ÁFEOSZ-Coop Szövetség, KÉSZ)
- National Confederation of Employers and Industrialists (MGYOSZ)
- National Association of Entrepreneurs and Employers (VOSZ)
Since its establishment, the membership of the VKF has remained unchanged. The annual minimum wage is referred to in the VKF statutes. Point 3.b) of the rules of procedure states that the members of the VKF shall consult and agree ‘on proposed government measures affecting the income of workers in the competitive sector (compulsory minimum wage, guaranteed minimum wage, wage supplements) [...]’
Article 153 of the Labour Code provides for the setting of the minimum wage but does not mention the VKF. It instead states that ‘the government shall set the minimum wage by decree, after consultation with the National Economic and Social Council (NGTT)’. Indeed, the NGTT discusses the principles for raising the minimum wage every year, but it does not decide on the level of the minimum wage increase. Nor is it able to do so as it represents not only the social partners but also academia, the churches, the arts and NGOs.
The VKF is not regulated by law, but it is included in the organisational and operational rules of the Ministry of Economic Development (Gazdaságfejlesztési Minisztérium, GFM). Article 23(b) states that the State Secretary for Employment Policy represents the Ministry in forums for social dialogue, including meetings of the Permanent Consultative Forum of the Competitiveness Sector and the Government (VKF). Its meetings are prepared by the VKF Monitoring Committee, headed by the State Secretary for Employment Policy. It may be convened at any time at the request of at least four members. The VKF is financed by the Hungarian government and is included in the budget of the GFM.
The government plans to submit an amendment to the Labour Code to Parliament in the spring session of 2024 in order to settle the legal status of the VKF. The relevant section of the Labour Code (art. 153) will designate the VKF (beside NGTT) as the forum for minimum wage negotiations.
Process of setting the minimum wage
The principles for setting the annual minimum wages, for both unskilled (‘standard’) and skilled workers (‘guaranteed’), have not changed in the last ten years. Article 153 of the Labour Code gives the government the power to set minimum wages, after consulting the social partners. The minimum wage is negotiated mainly between employers' and workers' organisations in the framework of the VKF. If social partners reach an agreement, the government, when setting the adjustment by decree, is bound by the level reached through social partners’ agreement. If social partners do not reach an agreement, the government can set the minimum wage level unilaterally. However, this has not happened over the past ten years.
The government's approach to negotiating the minimum wage has varied in recent years. There have been years (for example, in 2022) when the government came to the negotiations with a concrete proposal (which was accepted by the social partners), and years when the government did not intervene at all, despite the social partners' failure to reach an agreement. For instance, in 2020 the minimum wage did not finally enter into force until February of the following year (2021).
Criteria referred to in minimum wage setting
According to the Labour Code (art. 153 § 3), when determining the minimum wage, the characteristics of the national labour market, the situation of the national economy, the labour market characteristics of economic sectors and geographical areas must be taken into account. This shows that the law does not rule out the setting of sectoral or regional minimum wages, but in practice these types of wages are never set. As far as economic indicators are concerned, the wording of the law is very broad.
The economic variables taken into account in the consultation on minimum wages have depended on the characteristics of the economic situation in the corresponding year. Until 2020, in a period of low inflation, the main benchmarks were average wages and economic growth. In 2021, the year of the economic downturn due to the COVID-19 pandemic, the main dilemma was the ability of employers to raise wages. Since 2017, the unemployment rate in Hungary has been quite low, below 4%, so this has not been a primary factor in the decision to raise the minimum wage.
In the last two years (characterised by extraordinarily high inflation), the aim has been to preserve the real value of the minimum wage. This has shifted the focus onto the inflation forecast.
| Criterion | How is this defined/operationalised? | Regulation or practice |
| Inflation rate in base year | If the minimum wage loses value in real terms in any given year (as in 2023), this would also be reflected in the new minimum wage | Not regulated |
| Expected inflation rate in following year | The aim is at least to maintain (or increase) the real value of the minimum wage | Not regulated |
| Average wage increase in base year and expected average wage increase in following year | The aim is to gradually bring the minimum wage up to 60% of the average wage | Not regulated |
| Expected GDP growth rate | The ability of companies to pay higher wages | Not regulated |
In 2016, a six-year tripartite wage agreement was signed which set out the mechanism for raising the annual minimum wage until 2022 (based on average wage increase, gross domestic product (GDP) growth and the decrease of social contribution tax). However, this was discontinued after a few years due to the hectic evolution of economic indicators (and for example the impact of COVID). But what has been retained from the agreement is the reduction in social contribution tax each year, which was kept by the government.
There is currently no regulatory mechanism for minimum wage increases, but during the negotiations of the 2024 minimum wage agreement, the VKF members again raised the issue of developing a new minimum wage indexation mechanism. It is currently under preparation.
Coverage of the minimum wage and exemptions
The statutory minimum wage applies to all workers in Hungary, including the self-employed. The only exception is public workers, who may earn about half the minimum wage (about 65,000 persons at the end of 2023, and their numbers are falling as public workers are increasingly absorbed by the free labour market).
Part-time workers are paid a pro rata minimum wage (weekly, daily and hourly minimum wages are also regulated by law).
In the case of piece-rate wages or other types of performance wages, the performance requirement must be set at such a level that, in the case of meeting 100% performance requirements, the wage reaches at least the minimum wage defined by law (art. 138(5) of Act I of 2012 on the Labour Code). This means that, at least in theory, wages of workers compensated based on performance pay can fall below the level of minimum wage – if they do not reach 100% of the performance requirements. More specifically, art. 138(6) of the Labour Code provides that for employees compensated solely based on performance pay, it is mandatory to determine a minimum wage equivalent to at least half of the base salary (this provision must be intended in full-time equivalent terms)
Subminima and higher rates
In Hungary, there are no subminima connected to the statutory minimum wage. Only public workers, mentioned in the previous point, may earn less than the statutory minimum wage. Public workers' wages are set by the government annually on a unilateral basis.
There are two types of minimum wages: the ‘standard’ minimum wage and the ‘guaranteed’ minimum wage, the latter applicable to those with at least secondary education and introduced in 2006. The guaranteed minimum wage is about 25-30% higher than the standard minimum wage.
The proposal to merge the two types of minimum wage has been made several times in recent years. This would also be justified by the fact that the number of people employed on the standard minimum wage is steadily decreasing (currently just over 200,000), while the number of people employed on the guaranteed minimum wage is close to 750,000. No agreement has been reached so far, but in recent years the standard minimum wage has risen more than the guaranteed minimum wage, which has reduced the gap between the two types of minimum wage.
Some trade unions oppose the approximation of the two minimum wages, arguing that it puts skilled workers at a disadvantage compared to unskilled workers, possibly discouraging participation in education.
Frequency of payments and how the rate is defined
The statutory minimum wages include 12 monthly payments a year, with no additional monthly bonus. Every year a governmental decree on the minimum wage regulates the monthly, weekly, daily and hourly minimum wage in detail. The daily rate is for 8 hours, the weekly rate for 40 hours and the monthly rate for one calendar month (Govt Decree 508/2023, Section 3)
If the daily working time is less than (or more than) eight hours, the daily wage must be reduced (or increased) by the minimum wage per hour.
What counts towards the minimum wage
The annual minimum wage decrees of the government do not provide for any deductions or bonuses. Art. 153 of the Labour Code does not provide for any additional allowances either. The only condition is that the remuneration for the work must reach the minimum wage laid down by law.
A minimum wage worker is entitled to overtime and holiday allowances in the same way as any other worker. For this time, they are paid the daily or hourly minimum wage with the same multiplier as for non-minimum wage workers. The law does not mention any ‘board and lodging’ provisions, which implies that minimum wage earners are treated in the same way as other employees.
Regular national report on minimum wage setting
There is no regular report on the evolution of the minimum wage in Hungary in the sense of analysis of the impact of minimum wage increases, as there is no organization specifically dedicated to the evolution of the minimum wage. There exist only ad-hoc studies by independent researchers.
Other country resources on minimum wages
Balatoni, A. (2020), ‘A hazai minimálbér szintje megfelel gazdasági fejlettségünknek’. (‘The level of the domestic minimum wage corresponds to our economic development’) Magyar Nemzeti Bank. 18 November https://www.mnb.hu/letoltes/balatoni-andras-a-hazai-minimalber-szintje-megfelel-gazdasagi-fejlettsegunknek.pdf
- Gallai, S., Tóth, M.B. (2022), ‘Kinek fáj a minimálbér-emelés?’ (Who does the minimum wage increase hurt?) Corvinák, 14 January.
- Köllő, J. (2021), ‘Nálunk minden fordítva történt’ (With us, everything has been the other way around), Magyar Narancs, 11 October.
- Molnár, D., Regős, G., (2023), ‘A minimálbér emelés, mint gazdaságpolitikai eszköz’ (Minimum wage increase as an economic policy tool), Polgári Szemle, 2023/1-3, 13-30.
- Nábelek, F. (2022), A minimálbér és a garantált bérminimum emelésére adott vállalati válaszok, bérváltozások – 2022 (Business responses to minimum wage and guaranteed minimum wage increases, wage changes – 2022), MKIK-GVI, Institute for Economic and Enterprise Research at the Hungarian Chamber of Commerce and Industry, Budapest.
- Pogátsa, Z. (2022), ‘Az európai minimálbérre még éveket kell várni’ (The European minimum wage is still years away’), hu, 20 June
- Scharle, Á., Váradi, B., Krekó, J. (2022a), ‘Mire és hogyan hat a minimálbér-emelés?’ (What and how the minimum wage increase affects?) G7 EKONOMI, 10 December.
- Scharle, Á., Váradi, B., Krekó, J, (2022b), Mire nem jó a minimálbér-emelés? (What is the minimum wage increase not good for?) G7 EKONOMI, 14 December.
- Virovácz, P. (2021), ‘A túl magas minimálbér árát végül a háztartások fizetik’ (‘Households ultimately pay the price of an excessively high minimum wage’), Portfolio.hu, 23 June.