Chronic. The Hungary of Victor Orban is hardly a paradox. On June 10, the nationalist and conservative prime minister, candidate for his re-election in the legislative elections of 2022, promised to raise the minimum wage from 167,400 to 200,000 forints (from 475 to 567 euros) per month, in one or more stages. That is an increase of 19.4%, which Mr. Orban promises to accompany by tax cuts for companies.
Admittedly, this announcement has a purely electoral aim. Admittedly, the Hungarian minimum wage will remain despite everything one of the lowest in the European Union (EU), ahead of that of Bulgaria (332.30 euros) and Romania (458 euros).
This promise contrasts somewhat with the recurring opposition of some of the Eastern European countries, in particular Hungary, to fiscal and social convergence in Europe. And for good reason: the low cost of labor has enabled the region to attract industries in search of cheap labor. After the fall of the Communist bloc, Poland, Slovakia and even the Czech Republic have thus benefited from the relocation of part of the German automobile production chains, to the benefit of their growth.
But this model is reaching its limits. The move upmarket to which these countries now aspire will inevitably be accompanied by a rise in wages. She has already started. All the more so as the local popular and middle classes are asking for a more generous social model.
It is moreover by promising to respond to these aspirations that Droit et justice (PiS), the Polish Eurosceptic party, returned to power in 2015. As part of a vast policy of allowances, it notably distributed 500 zlotys (110 euros) per child and per month to families, without income conditions. Mr. Orban is now inspired by the PiS by also promising a series of aid to Hungarians.
Two trends at work
Such measures are far from replacing the construction of a true welfare state and they are accompanied by a conservative and authoritarian component on the societal level. Nevertheless: slowly but surely, the “catching up” of the East continues. “EU member states have seen their minimum wages, just like their average wages, converge over the past decade”, underlines a recent study of the European Foundation for the Improvement of Living and Working Conditions (Eurofound).
This convergence is the result of two trends: the modest growth in minimum wages in countries where their level is high (Belgium, France, Germany, Ireland, Luxembourg, the Netherlands) and the “Remarkable progress”, notes Eurofound, those of countries in which they are still weak, such as Romania, Bulgaria, Hungary, Poland or the Czech Republic, where they have almost doubled over the period. That’s not all: unlike the 2008 crisis, when a number of states had cut or frozen minimum wages, most of them maintained or even increased them in 2020 (+ 3% on average).
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