Hungary promises teachers 34 percent pay hike, with more to come

Reuters News
Posted: Jul 10, 2013 12:59 PM

BUDAPEST (Reuters) - Hungary will raise the pay of 150,000 teachers from September by an average 34 percent and give further hikes every year until 2017, a government minister said on Wednesday.

The measure could help Prime Minister Viktor Orban's Fidesz party to cement its comfortable opinion poll lead in the run-up to a national election expected next April or May.

Zoltan Balog, minister for human resources, told a news conference that teachers' pay would rise again in September 2014 by an average 10 percent, with further rises each year to 2017.

Primary and secondary school teachers earn an average 160,000 forints ($700) a year, according to a recent survey, below the overall Hungarian average of 230,000 forints.

Economy Minister Mihaly Varga told state news agency MTI in an interview that the budget impact of the wage increases would amount to 40-45 billion forints this year and 170-180 billion in 2014.

However he added that the government would keep the budget deficit at 2.7 percent of economic output both this year and next partly with the help of tax rises announced last month.

"It's hard to interpret this in any other way than the government is preparing for 2014 elections and it seems that it increases spending," said Orsolya Nyeste, an analyst at Erste Bank.

Last month the European Union took Hungary off the list of member states which must take measures to cut their budgets deficits, removing the threat of cuts in development funds from Brussels.

This year the government targets a deficit of 2.7 percent of gross domestic product, below the 3 percent EU ceiling, and Nyeste said the teachers' wage hike should not threaten this target because the government has passed new revenue-boosting measures.

Nyeste added that she did not expect any significant widening in the budget deficit in the medium term as the government looked committed to keeping it under control.

Political analysts say government-imposed cuts in household energy prices have helped the conservative populist Orban to keep ratings for Fidesz well ahead of rivals in opinion polls and the wage rises could support its popularity further.

Orban has used his two-thirds majority to enact hundreds of laws since winning power in 2010 and has clashed with Brussels over allegations he has weakened democratic checks and balances.

Hungary's leftist opposition remains divided, while close to half of voters are still undecided based on opinion surveys.

($1 = 228.96 Hungarian forints)

(Reporting by Krisztina Than; Additional Reporting by Marton Dunai; Editing by Ruth Pitchford, Ron Askew)