New minimum wage, growing economy?

The Hungarian government has promised that the minimum wage will reach 300,000 forints (1200 EUR) by 2025.In Hungary, the current minimum wage (as of September 2024) is 232,000 forints, which is equivalent to about 580 euros at the current exchange rate.

This amount is among the lower ones within the EU.There is no uniform minimum wage in the EU; each member state determines its own level. This means that minimum wages vary significantly from country to country.In July 2024, the lowest minimum wage was in Bulgaria, at 477 euros per month, while the highest was in Luxembourg, at 2571 euros per month.

Both positive and negative impacts can be expected from a significant increase in the minimum wage, the quantification of which can only be specified after the wage increase has taken effect.

A significant increase in the minimum wage would allow low-income workers to maintain a higher standard of living. This could contribute to poverty reduction and the mitigation of social inequalities.

Thanks to higher wages, workers could spend more, which would stimulate the economy.

Increased consumption could lead to increased revenues for businesses and the creation of new jobs.

Fairer pay could motivate workers, leading to increased productivity.

This could also improve the competitiveness of businesses.Higher wages could make jobs more attractive, which could help retain the workforce and reduce turnover.

This could be particularly important in sectors experiencing labor shortages.Raising the minimum wage could increase businesses’ labor costs, which could force some businesses, especially small and medium-sized enterprises, to reduce their workforce or even close down.

This could lead to job losses.Businesses could pass on increased labor costs to consumers by raising prices.

This could lead to inflation, which could reduce the value of real wages.

A higher minimum wage could make Hungarian businesses less competitive with foreign companies, especially in sectors where price is the main competitive factor.

Due to higher labor costs, some businesses may turn to the black economy to avoid paying the minimum wage.

This could reduce government revenue and distort competition.

In the current Hungarian economic situation, with low growth rates, rising interest rates on loans, and a significant reduction in public investment, it is not clear what could cover the significant additional wages.Let me know if you have any other text you’d like translated or any questions!