The gap between labor productivity and wage growth in Hungary is expected to widen, according to a new report by Erste Group. Productivity has not significantly improved in the country over the last several years, and the trend is unlikely to change in the near term, according to the report.
“The more-or-less stagnation in labor productivity was coupled with stable net real wage growth in the last couple of years, which significantly accelerated at the beginning of 2016,” Erste Group wrote in its report. “Net real wage growth was led by the visible tightening of the labor market, the PIT cut and an increase in the family tax credit this year, while the inflation rate remained very much subdued. As productivity is unlikely to soar, the gap between productivity and wage growth rates should widen.”
