BUDAPEST, Dec 4 (Reuters) - Hungary's Viktor Orban announced an 11% hike in the minimum wage for 2026 on Thursday after employers and employees reached a deal, despite an economic stagnation that has forced his government to slash growth forecasts for this year and next.
Facing a strong opposition in elections likely to take place in April, Prime Minister Viktor Orban's government has already announced wage hikes in the public sector, as it tries to boost consumption and revive the economy.
After strong wage growth in recent years, a weak economic performance and surging energy costs, companies will find it hard to finance next year's minimum wage rise, analysts said.
In Poland, Central Europe's largest economy, the minimum wage will rise by 3% next year while the economy is expected to grow by 3.5%, according to analysts' median projection. Hungary's economy is expected to grow by about 2% after three years of stagnation.
Orban told a briefing that the minimum wage would rise to 322,800 forints ($987.97) per month, while the minimum wage for skilled workers will increase 7% to 373,200 forints. These numbers are slightly below those agreed by employers and employees in late 2024 under a 3-year agreement that has had to be modified after the economy stagnated this year.
"Companies will still be pushed into a difficult position," said Peter Virovacz, an analyst at ING. "Average wage growth will remain close to 10% in 2026. That's a lot for an economy that has been stagnating for three years."
Virovacz said companies would either be forced to raise prices to cover rising labour costs, or they will lay off staff.
Orban, whose Fidesz party is trailing behind its opposition rival, has announced large-scale tax cuts for families, wage hikes, food vouchers for pensioners, a pension top-up to be paid in February and a subsidised housing loan programme to shore up its support.
($1 = 326.73 forints)
Reporting by Krisztina Than and Anita Komuves
Source: Reuters