Majority of employers have compensated for tax-triggered wage drop – govt official

Budapest, May 4 (MTI) – Three quarters of Hungarian employers have compensated their employees for a fall in wages following the new tax regime, and this proportion is expected to rise to 90 percent by June, a government employment official said on Friday.

Sandor Czomba, an economy ministry state secretary, told a conference organised by the European Commission’s Hungarian representation and the Szazadveg Foundation, that where possible people would be transferred from welfare to work. It is important they should feel they are taking a step forward income-wise, he said. Given that the wage for public employment is more than double welfare pay, this goal can be easily met, he added.


Laszlo Andor, the European Commissioner for employment, social affairs and inclusion, told participants that public works such as the scheme operating in Hungary was a way of mitigating the worst effects of an economically depressed country suffering from high unemployment, but such an enterprise was not good for the long term. Where there is fiscal room for manoeuvre, tax on work should be reduced but this should be directed to specific employment categories and implemented at the appropriate time, he said.


Czomba said that as long as there were budget restrictions in Hungary the opportunity to enforce a general reduction of employment tax and contributions would not be available. In the meantime, however, certain schemes were up and running to help, for instance, career-starters and people seeking work for over three months, he said. From 2013, employers of unskilled workers will pay social contributions set at 18 percent compared to 27 percent at present, he added.