According to the Hungarian Government's spring 2024 legislative program, the Hungarian Parliament may decide on the introduction of a “European minimum wage” as early as this spring session. The EU minimum wage directive highlights the importance of European social dialogue frameworks in reaching agreements on minimum wages among Member States.
Firstly, every Member State is urged to develop criteria for determining the appropriate level of the minimum wage, ensuring that the lowest-paid workers are not exposed to the risk of poverty. Secondly, each country is called upon to devise a timetable for promoting collective contractual protection for workers, aiming for at least 80 percent coverage of employees under collective agreements within a few years. Finally, Member States are encouraged to intensify inspections and strengthen labor authorities to ensure that every worker has actual access to the minimum wage and all necessary information.
The directive requires minimum wages to be set at 60% of the median gross wage or 50% of the average wage. However, many European countries fall short of these targets. OECD data from 2022 shows that ten EU nations, including Hungary, have minimum wages below 50% of the median wage, with only Portugal, Slovenia, and France exceeding 60%. Consequently, Hungary is expected to encounter increased pressure to reassess its minimum wages in accordance with the EU directive's standards. This could potentially create challenges in the labor market, as implementing such adjustments may necessitate a double-digit percentage increase, posing difficulties in aligning wage increases for workers in higher income brackets.
The European minimum wage directive was announced by the EU in October 2022, and the Member States have two years from the official publication date to align the directive with national legislation. This means that by October 2024 at the latest, the legislative amendments necessary to bring the "European minimum wage" to Hungary will come into effect.
By Levente Csengery, Partner, KCG Partners
