Wage growth still strong in Hungary’s business sector

Hungarian average gross and net salaries increased by 10.2% YoY in March, showing a sharp deceleration after the February figure. The details, however, indicate the drop mainly comes from the public sector, where wages only grew by 5.3% YoY. due to the expiration of wage settlements affecting law enforcement bodies. Wage dynamics in the business sector are still really strong at 11.7% YoY, although the March measure showed a little deceleration. An acute labour shortage is primarily driving wage growth, especially in manufacturing, construction, information and communication. In terms of wage growth, the business sector has been outperforming others since September 2018, and the differences are just becoming more evident.

As for labour demand, employment in the primary labour market increased further. At the same time, the number of 'fostered' workers, those working in state-financed, low skilled jobs, has declined significantly since February. And that's led to the overall employment level decreasing on a monthly base, but it's still sitting at the January level of almost 3.2 million. With a record low unemployment rate, this shows that the Hungarian economy has more or less reached full employment.