Unprecedented: Hungary has a record of reducing inequality among developed economies
In the Mandiner Macronome section, “Let the numbers speak!” Before the elections, we launched a series of articles with the aim of occasionally analyzing a statement that may be encountered step by step, but the facts show otherwise. In Section 8, we examine the ratio of one to the lowest earnings. In Hungary, in 2020, the average salary of the lowest paid 10 percent was 2.58 times the average salary of the paid 10 percent. This ratio is the 5th best in the latest data from 42 countries in OECD statistics, and we have the best earning scissors in ten years. Such an improvement has never happened before in Hungary, nor in any other country.
The OECD has already published key indicators of average earnings for 2020, including decile ratios of average gross earnings, for 22 countries and the OECD average. and there are 20 more countries where 2019 or 2018 is the last known data.
Out of these 42 countries of the world, Hungary was in the first year of the epidemic the 5th lowest ratio of the average earnings of the top and legal deciles in 2020.
Before us, only Sweden, Norway, Finland and Belgium are on the list.
The average earnings of the 10 percent paid were 2.58 times the average earnings of the lowest 10 percent. The OECD average is 3.34, so the gap between the lowest and highest earners is much larger.
In 2010, Hungary was still in 32nd place, with a ratio of 4.25 being the tenth worst figure at the time.
much worse than the OECD average of 3.56. At that time, the scissors between the high-income earners and the low-income earners were much bigger.
Our improvement of 1.68 between 2010 and 2020 was by far the largest among the countries measured. The decline of Colombia and Korea, which have produced the two biggest improvements since then, was only 1.17-1.18, the OECD average improvement over a decade was 0.22, and scissors opened in 14 countries, the gap between the two extreme earnings categories widening.
These facts also show that the opposition’s accusations that the wages of well-earners are rising better and those of low earners are falling behind are unfounded.
Significant increases in the minimum wage of 20 per cent over the last 12 years have in all cases raised the wages of low-wage earners to a greater extent,
and there was no such increase on average in the upper categories. The scissors just opened between 2002 and 2010when the higher wage categories grew better and the minimum wage was lower, the annual increase often did not even reach inflation.
The DK’s European minimum wage proposal would also open the scissors, because the union says only about the level of the minimum wage to adjust to the poverty line and inflation. In Hungary, the Hungarian minimum wage is above the poverty line, the poverty line ratio was the third in the EU according to the latest data, and since 2010 we have been much higher than inflation, which is also shown by the doubling of the real value.
In Hungary, the most significant increases in the minimum wage in the last 30 years have always been accompanied by employment.
Next to last year’s yellow Nobel Prize in Economics is American scientist David Card, who has shown empirically that raising the minimum wage will not reduce employment. Card’s scientific results also confirm that the success of the practice of conservative Hungarian governments is not a matter of chance, but
it is possible to raise the minimum wage and expand employment at the same time, and this will close the gap in earnings.
Author of the article Szalai Piroska labor market expert.