BUDAPEST: A major trade union association is urging the government to start consultuation talks on employment issues after the Minister for National Economy recently raised the possibility of reducing payroll taxes.
Mihály Varga told the daily newspaper Magyar Idők in an interview published on Monday that he was weighing a possible reduction in payroll taxes with a view to helping to resolve current employment problems in Hungary. According to Mr. Varga, 250 000 Hungarians are currently out of employment while 50 000 jobs are vacant in the country and there is a severe shortage of labour in several professions and regions across the country.
The Liga trade union association, which claims to have a membership of 110 000, said that any reduction in taxes and contributions should serve to boost employment although it is questionable as to whether this is feasible, it said. The reduction in contributions will only strike its target if employers use it to employ more people and increase wages, thereby boosting purchasing power, the trade union association added.
Liga pointed out that the gross labour cost in Hungary is extremely high in a European comparison, mainly as a result of 27% social contribution payments. A notable reduction in payroll burdens could help but the downside is that the pension and health-care systems may be compromised, it added. National business association VOSZ said on Monday that they would support a proposal to lower payroll taxes.
Statistics show that the cost of employing workers on the minimum or average wage is the highest in the Central European region but cheapest in the case of families with two or three children due to family tax concessions. However, an index.hu article addressing the subject suggests that emigration to the West due to low salaries could continue even despite a radical decrease in payroll taxes because Hungarian workers’ wages would have to be almost doubled to reach the Austrian standard of living.
