Part I — Situation overview

The Permanent Consultation Forum of the Business Sector and the Government (VKF), that is, the wage-bargaining forum of employers, trade unions and the Government, discussed specific figures for the 2027 minimum wage for the first time on 20 October (24.hu). According to Portfolio, the parties ended up “very far” apart. The employers’ side considers a 4 per cent gross rise achievable for both the minimum wage and the guaranteed minimum wage (the mandatory minimum pay for jobs requiring at least secondary education or vocational qualifications). Their argument is that together with the cut in personal income tax (SZJA) from 15 to 9 per cent, the net earnings of minimum-wage workers would still rise by 13 per cent. The trade unions insist on the 14 per cent laid down in the 2024 three-year agreement, ask for at least a double-digit rise, and say that the tax cut is paid for not by companies but by taxpayers (Portfolio). An 8 per cent compromise has also been floated informally. The Ministry of Social and Family Affairs has not taken a position; according to government sources, the cabinet has not committed itself in either direction (Portfolio).

Behind the dispute lies the absence of a yardstick. The three-year agreement assumed growth in gross domestic product (GDP) of 3.4, 4.1 and 4.3 per cent for 2025–2027, but only a fraction of this materialised. Fulfilment of the agreement was tied to three indicators: GDP, the average wage and inflation (Magyar Nemzet). The minimum wage became HUF 290,800 in 2025 and HUF 322,800 in 2026; the 2026 rise was 11 per cent, and that of the guaranteed minimum wage 7 per cent (Magyar Nemzet). On 20 October MIAK proposed that the gross rise and the tax effect be shown separately (Sectoral pay rises, the minimum wage bargain), and on 23 October that the parties fix the measure of the target in writing (A shrinking primary labour market).

This post is about the next step: the decision rule that sets the size of the rise on the basis of the measure. In MIAK’s reading, the 4 and the 14 per cent are not two negotiating positions but two unstated formulas. One counts the tax cut as pay; the other counts on a growth path that did not materialise. As long as the formula stays hidden, the bargain is about whose voice is louder, not about what the economy can bear.

Part II — Grounding in the literature

Three sources provide a framework for the formula. Thomas Piketty (French economist, leading researcher of long-term data on wealth inequality) argues in Capital in the Twenty-First Century that the level of the minimum wage cannot be set independently of a country’s productivity and average wage. Where employers have strong local market power, a wage floor can even raise employment, but raising the minimum wage too fast, far ahead of the average wage, backfires. Lee Kuan Yew (Singapore’s first prime minister, 1959–1990) describes in his memoir From Third World to First how Singapore’s tripartite National Wages Council issued a joint annual wage recommendation based on government data. He also shows how the principle was laid down that wage rises should not exceed productivity growth. The European Commission’s The European Pillar of Social Rights Action Plan cites Principle 6 of the European Pillar of Social Rights, under which wages shall be set in a transparent and predictable way, respecting the autonomy of the social partners. Together the three sources give the logic of the formula: a productivity-linked base, moderate convergence, a public calculation. The detailed discussion of the literature — by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The first lays down the formula itself, the second the decision procedure, and the third ensures that the impact of the formula is calculated before the decision, by region and for related wages.

3.1 The formula: a median-wage target, even convergence, a productivity brake (before the next VKF round, by 15 November 2026 at the latest)

MIAK proposes that the minimum wage rise for 2027 and subsequent years start from a public, two-component formula. The base component is the expected growth of median earnings, that is, of middle earnings, the level at which half of workers earn less and half earn more. This keeps the ratio of the minimum wage steady. The upper limit of the base component is the sum of expected inflation and the three-year average growth of labour productivity. The convergence component closes the gap between the target ratio and the actual ratio in even instalments, over a number of years fixed in advance. The target ratio should be expressed by the Kaitz index — the ratio of the minimum wage to a typical wage, here gross median earnings — rather than as a ratio to average earnings. The average is pulled upwards by the highest earnings: according to Portfolio, almost two-thirds of workers earn less than the average. Using August data from the Hungarian Central Statistical Office (KSH), the minimum wage of HUF 322,800 is 52.8 per cent of gross median earnings and 43.6 per cent of average earnings (illustrative calculation from monthly data). On this basis, the agreement’s current target — half of regular average earnings — corresponds to at most some 60 per cent of median earnings. Since regular earnings are lower than total earnings, the exact value is somewhat smaller. The parties decide the exact target value, but expressed in median terms. The productivity brake: if the three-year average growth of labour productivity falls short of a threshold fixed in advance, the convergence period is extended by one year. Lee Kuan Yew’s principle (see 6.4.2) thus applies as a rule, not as a negotiating argument. The SZJA cut does not count in the formula, because it is the state’s contribution. The formula is the computational core of the wage-bargaining modernisation in FO10 and of the wage-coordination council in G18.

3.2 Decision procedure: data sheet, expert recommendation, negotiating band, justified government decree (from 2027 every year between 30 September and 30 November; for the 2027 wage now, on an accelerated timetable)

Under the Labour Code, the Government sets the minimum wage and the guaranteed minimum wage by decree, after consultation in the designated forum, and the amount must be reviewed annually. The law does not require the calculation behind the decision to be public. MIAK proposes a four-step procedure. Step one: by 30 September, the KSH and the Magyar Nemzeti Bank (MNB) publish the inputs of the formula on a data sheet (median and average earnings, inflation forecast, productivity, employment by county). Step two: by 15 October, a three-member independent expert panel jointly nominated by the parties calculates the result of the formula and issues a public recommendation. Step three: the VKF negotiates within a band of plus or minus 2 percentage points (pp) around this recommendation. The parties justify any agreement outside the band in writing, with reference to the inputs. Step four: the Government publishes the calculation and the reason for any departure from the recommendation together with the decree. This is the Hungarian version of Lee Kuan Yew’s wages council (see 6.4.2): the recommendation is data-based, and the decision remains in the hands of the parties and the Government. For the 2027 wage, the trade union leader expects an agreement by early December (Magyar Nemzet), so it is worth completing the first two steps by 15 November. The proposal is a procedural element of the radical-transparency programme points G18 and G19.

3.3 Impact assessment before the decision: the county-level SME burden, the guaranteed minimum wage, linked benefits (together with the recommendation, every year by 15 October)

Under the Labour Code, the labour-market characteristics of individual sectors and geographical areas must be taken into account when setting the minimum wage. Today there is no public calculation of this. MIAK proposes that the expert recommendation be accompanied by a three-part impact assessment. The first part should show, by county and by company size, what percentage of workers earn below 110 per cent of the minimum wage, and by how much the wage costs of small and medium-sized enterprises (SMEs) would rise under the recommended variant and the two extreme (4 and 14 per cent) variants. The data can be produced anonymously from the monthly contribution returns filed with the National Tax and Customs Administration (NAV). Where the burden is greatest, the answer should not be a lower minimum wage, but a temporary, targeted contribution relief of at most two years for the additional cost arising from the convergence component. The Government can initiate this with a bill; its adoption is decided by Parliament. According to Piketty’s monopsony argument (see 6.4.1), it is precisely in areas with few employers that wages can be squeezed below productivity. The second part should track the ratio of the guaranteed minimum wage to the minimum wage. In 2026 the minimum wage rose by 11 per cent and the guaranteed minimum wage by 7 per cent (Magyar Nemzet), so the pay premium for skills narrowed. The formula should therefore also include a ratio band fixed in advance. The third part should list the statutory amounts and benefits linked to the minimum wage, each with the budgetary impact of a 1 per cent rise. The proposal applies the impact-assessment system of G20 and the employment data platform of FO1.

A common principle links the three proposals: the minimum wage can still be debated when there is a formula, but then the debate is about the inputs and the target ratio, not about percentages. According to the literature, the level of the wage floor is tied to productivity, the pace of convergence is limited, and the method of setting it should be transparent and predictable.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Workers The ratio of the minimum wage to median earnings approaches the target predictably; the pay premium of the guaranteed minimum wage does not melt away If the productivity brake kicks in often, convergence drags on for years
SMEs and regions The county-level impact assessment makes the burden foreseeable; the targeted relief cushions the shock in the most affected areas The contribution relief may become entrenched if it has no fixed expiry; the wage-cost advantage may cause temporary competitive distortion
Budget The SZJA cut and the gross rise are separated; the cost of linked benefits is known in advance The targeted relief needs funding in a year when deficit reduction takes priority
Wage bargaining and institutions The bargain is about inputs and the target ratio; a decision outside the band requires justification The parties may question the independence of the expert panel; the formula may make bargaining rigid

The most important trade-off is the pace of convergence. As an illustrative calculation: if median earnings grow by the 5.5 per cent the government expects for the average wage (assumption; Portfolio), the ratio of the minimum wage falls further with a 4 per cent rise. This is the numerical content of the employees’ side’s “falling behind” argument. If the 10–15 per cent gap estimated by Portfolio is closed over three years, the formula gives a rise of roughly 9–10.5 per cent for 2027; over four years, roughly 8–9.3 per cent. 14 per cent would close the gap within a year and a half, which is too fast for some firms given stagnating productivity. The figures are sensitive to the inputs: that is why the data sheet is needed, and why it is the KSH data and the parties, not MIAK, that decide the target ratio. The formula could tip into risk where the parties make the threshold of the productivity brake a subject of bargaining. This threshold must therefore be fixed several years in advance.

Part V — Measurability and summary

5.1 What is worth tracking? (proposed KPIs)

MIAK proposes tracking the following key performance indicators (KPIs):

  • Public calculation: whether the data sheet of the formula and the expert recommendation appear before the next VKF round, and, for the 2028 wage, the full four-step timetable between 30 September and 30 November.
  • Target ratio: the ratio of the minimum wage to gross median earnings each year, measured against the fixed convergence path (in 2027 and 2028 at least half of the path’s annual instalment should be achieved).
  • Regional employment: in the counties in the most affected quarter, the primary-labour-market headcount of SMEs 12 months after the rise, compared with the other counties.
  • Skills pay premium: the ratio of the guaranteed minimum wage to the minimum wage should not fall below the band fixed in the formula.

5.2 Summary

MIAK asks the Ministry of Social and Family Affairs and the members of the VKF to decide the 2027 minimum wage not as a middle way between 4 and 14 per cent, but on the basis of a public formula. The formula should contain a median-wage target, even convergence and a productivity brake. The data sheet and the expert recommendation should be completed by 15 November, and the Government should publish the calculation and the county-level impact assessment together with the decree. Two of MIAK’s foundational values are at stake. Data-drivenness, because today the decision depends on how loud the parties are, even though the inputs — earnings, inflation, productivity — are measurable. And transparency, because the minimum wage directly sets the pay of some one million people, so the calculation behind it must be just as public as the amount itself.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

Liberal-left band. HVG put the emphasis on the distribution of real wages: according to detailed KSH data, in the first half of 2026 one-fifth of workers saw their real wages fall, compared with one-third the previous year. At the same time, the paper recalled that Hungary performs poorly on productivity within the region. Material from Telex, 444.hu and Népszava on the minimum wage bargain was not in the processed set.

Public-affairs band. Relying on MTI, 24.hu framed the negotiating timetable: the first round on specific figures, the review of the three-year agreement, and the fact that the government is giving the parties sectoral data alongside the macro data. In a separate article it presented the KSH’s September labour-market data. Material from Index and ATV on the topic was not in the processed set.

Economic band. Portfolio was the main source. Citing its negotiating sources, it presented the positions of the two sides and the informal 8 per cent compromise. It calculated how large a rise the 50 per cent target implies on gross and net measures, and assessed the government’s 5.5 per cent wage expectation as an “extreme slowdown”. In its euro podcast it discussed double-digit wage rises as a risk to euro adoption.

Government-critical conservative band. Magyar Nemzet framed the issue from two directions. On the one hand, it quoted the Tisza Party’s 2024 promise that the minimum wage would double from 2027, and contrasted it with the current figures. On the other hand, it presented the employers’ argument in detail: the conditions of the agreement were not met, and the next wage bargain should fix a specific productivity indicator. Material from Mandiner was not in the processed set.

6.2 Facts and data

Item Value Source
Minimum wage 2025 / 2026 HUF 290,800 / HUF 322,800 Magyar Nemzet, 20 October 2026
Rise in 2026 minimum wage 11%, guaranteed minimum wage 7% Magyar Nemzet, 20 October 2026
For 2027 under the three-year agreement 14% minimum wage rise 24.hu; Portfolio
The agreement’s GDP path 2025–2027 3.4%, 4.1%, 4.3% Magyar Nemzet, 20 October 2026
Joint target for 2027 the minimum wage should reach 50% of regular gross average earnings Portfolio; Magyar Nemzet
VKF positions (20 October) employers: 4% (minimum wage and guaranteed minimum wage); trade unions: at least double-digit; informally: 8% Portfolio, 22 October 2026
SZJA at the minimum wage level from 2027 9% instead of 15% Portfolio; 24.hu
Gross average earnings, August 2026 HUF 740,600 (+8.4%) KSH, quoted by Portfolio
Gross median earnings, August 2026 HUF 611,400 (+8.5%) KSH, quoted by Portfolio
Minimum wage / median earnings (illustrative, monthly data) 52.8% MIAK calculation from the above data
Minimum wage / average earnings (illustrative, monthly data) 43.6% MIAK calculation from the above data
Average wage expectation 2027 +5.5% government, quoted by Portfolio
Immediate rise needed to reach the target (gross measure) 10–15% Portfolio calculation, 22 October 2026
Unemployment rate, September 2026 4.6% KSH, quoted by 24.hu
Primary labour market, Q3 2026 4,482,000 people (−22,000 in one year) KSH, quoted by 24.hu

Illustrative application of the formula to the VKF positions (MIAK calculation; assumption: median earnings grow by 5.5 per cent, the gap on the gross measure is 10–15 per cent):

Variant Gross rise in 2027 Effect on the minimum wage ratio
Employers’ offer 4% the ratio falls (the minimum wage falls behind)
Formula, four-year convergence approx. 8.0–9.3% the ratio approaches the target evenly by 2030
Formula, three-year convergence approx. 8.9–10.5% the ratio approaches the target evenly by 2029
Three-year agreement 14% most of the gap closes within one year

6.3 Policy dimensions

  • Economy (programme points) — the tripartite, data-based wage recommendation (G18), the publicity of decision calculations (G19) and impact assessment (G20);
  • Employment policy and the labour market (programme points) — wage-bargaining modernisation (FO10), the productivity programme as the way to release the brake (FO9) and the employment data platform (FO1);
  • Social policy (programme points) — consumption in the lower income bracket and the role of the tax credit alongside the gross rise (SZ8).

6.4 Literature in detail

6.4.1 Thomas Piketty: Capital in the Twenty-First Century

In the section on wage scales and the minimum wage, Piketty starts from the premise that the marginal productivity of individual workers, that is, their actual contribution to output, can be measured only approximately. Wage setting therefore cannot be left entirely to the employer’s discretion. If a local labour market has few employers (monopsony), they can push wages below productivity. In such cases a statutory wage floor is both fair and efficient, and may even raise employment. The level, however, cannot be arbitrary:

“Of course, everything depends on the level of the minimum wage; it is not possible to set an amount that bears no relation to the skill level and average productivity of the country concerned.” (MIAK’s own translation from the Hungarian edition)

Using the French example, Piketty also shows that the government that took office in 1981 could not keep raising the minimum wage twice as fast as the average wage, and was forced into a U-turn in 1982–83. According to the author, however, it is equally unhealthy if wage rises are kept below productivity growth for a long time. This offers two lessons for Hungary’s 2027 bargain. The first is that convergence must be phased, because a single large jump can be reversed (3.1). The second is that in the county-level impact assessment, a lower minimum wage is not automatically the right answer in areas with few employers (3.3).

📖 Source: Thomas Piketty: Capital in the Twenty-First Century (2013), section “Wage scales and the minimum wage”

6.4.2 Lee Kuan Yew: From Third World to First

In the chapter on the social compact with the trade unions, Lee Kuan Yew describes how in 1972 Singapore set up the National Wages Council (NWC), in which representatives of the trade unions, employers and the government sat. Each year, relying on the facts and figures available to the government, the council formulated a joint recommendation on the following year’s wage increases. The recommendation, with sectoral variations, was accepted as the guideline for all wage negotiations. He records the principle as follows:

“From the outset, all parties agreed on the principle that wage increases should not exceed productivity growth.” (MIAK’s own translation from the Hungarian rendering)

Two elements can be transferred to the Hungarian situation. One is the procedure: an annual, data-based, tripartite recommendation that does not take away the parties’ right to decide (3.2). The other is the productivity principle, but as a rule, not as a negotiating argument. In the proposed formula, the upper limit of the base component is therefore tied to productivity, and convergence is slowed by the productivity brake (3.1). Singaporean practice was built on a strong, dense social compact, whereas trade union density in Hungary is low. Here, therefore, the public calculation substitutes for the trust that close cooperation provided there.

📖 Source: Lee Kuan Yew: From Third World to First — The Singapore Story 1965–2000 (2000), chapter on the trade unions

6.4.3 European Commission: The European Pillar of Social Rights Action Plan

The action plan summarises the principles of the European Pillar of Social Rights. Principle 6 on wages has three parts: workers have the right to fair wages that provide for a decent standard of living; adequate minimum wages shall be ensured in a way that maintains access to employment and incentives to seek work; and finally:

“All wages shall be set in a transparent and predictable way according to national practices and respecting the autonomy of the social partners.” (MIAK’s own translation from the Hungarian rendering)

Earlier MIAK posts used the Pillar to justify the measure of the target. Here the second half of the sentence is what matters: predictability and the autonomy of the social partners together give the logic of the formula and the negotiating band. The calculation is public and known in advance, and the parties negotiate freely around the recommendation, with justified departures (3.2).

📖 Source: European Commission: The European Pillar of Social Rights Action Plan (2021), annex, Principle 6

6.5 International comparison

Singapore. As described in subsection 6.4.2, the National Wages Council has issued a tripartite, data-based recommendation every year since 1972. MIAK’s programme point G18 is built on this model.

Independent expert bodies in Europe. In several European countries, an independent or mixed-composition commission prepares a recommendation or proposal on the minimum wage. Examples include the United Kingdom’s Low Pay Commission and the German Minimum Wage Commission. What they have in common is that the decision-maker decides relative to a public, justified recommendation. A departure is politically possible, but it must be explained. Proposal 3.2 fits this logic to the Hungarian VKF procedure.

EU framework. According to Portfolio and Magyar Nemzet, the target that the minimum wage should reach half of average earnings can be derived from the EU directive on adequate minimum wages. The Hungarian three-year agreement laid this down. Proposal 3.1 does not change this target; it merely also expresses it in median terms, so that movements in the highest earnings do not distort it.

Economy

  • G18 — Tripartite wage-coordination council
  • G19 — Radical transparency in economic decision-making
  • G20 — Economic-policy impact-assessment system (Drucker audit)

Employment policy

  • FO10 — Wage-bargaining modernisation — tripartite wage-coordination forum
  • FO9 — Productivity movement — workplace innovation incentives
  • FO1 — Employment data platform

Social policy

  • SZ8 — Stimulating consumption in the lower income bracket

Proposed new programme point: A public minimum wage formula — a median-based target ratio, a productivity brake, an independent expert recommendation, a VKF negotiating band and a county-level impact assessment — for the Employment policy and the labour market area.

6.7 List of sources

Press sources (MIAK topic monitor, 25 October 2026 — topic 1; MIAK press monitors referenced: 18, 20 and 23 October 2026):

Knowledge-base references (literature):

  • 📖 Thomas Piketty: Capital in the Twenty-First Century (2013)
  • 📖 Lee Kuan Yew: From Third World to First — The Singapore Story 1965–2000 (2000)
  • 📖 European Commission: The European Pillar of Social Rights Action Plan (2021)

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G18, G19, G20)
  • MIAK policy area: Employment policy and the labour market (programme points and background material; programme point ID: FO1, FO9, FO10)
  • MIAK policy area: Social policy (programme points; programme point ID: SZ8)
  • MIAK topic monitor, 25 October 2026 — topic 1, score: 90/100

Supplementary public data sources:

  • Act I of 2012 on the Labour Code, Section 153 (setting the mandatory minimum wage and the guaranteed minimum wage) — https://net.jogtar.hu/jogszabaly?docid=a1200001.tv
  • KSH earnings statistics, August 2026 (gross average and median earnings), as reported by Portfolio

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