Data

The lowest earners are excluded from wage statistics

37% of Hungary’s salary earners are excluded from official wage statistics. They also happen to be the lowest earners. Lucky for the statistical office because the government was getting really irritated by news of stagnant wages.

A freedom of information request unearthed the secret to the ever-growing average wage data. It is that the statistical office purposely excludes the wages of employees who work at the most precarious sector of the economy, for enterprises that employ five people or less – or those who work part time. They are also the ones who are paid the less and whose position is the most fragile.

Out of roughly 4.5 million employees only 3.76 million is reported to the tax authority. Out of that only 2.85 million work full time. The average wage data is based on those employees – minus the ones who work for microenterprises. But it gets worse when we look at the median data of all employees.

The whole question emerged when a union surveyed actual wages (as reported to the tax office) and found that they simply don’t match the official data of the statistical office, not even close. (They had to resort to this because the statistical office refused to supply the data in the first place.) Their own surveys based on public data by the tax office showed serious anomalies compared to the data churned out by the statistical office.

According to the statistical office that massaged the full dataset provided by the tax authority, average wage in February 2019 was HUF 345900 per month (that’s 1048 euros) before taxes – or HUF 230024 after taxes. That is

697 euros in take home pay per month. 

According to wage data by the tax authority for the same workers, average wage was HUF 331197 per month (or 1003 euros per month) before tax. That is HUF 220246 after tax.

EUR 667 per month after taxes.

(** see tax rate calculations below)

But that is only the workers included in the official statistics and the discrepancy thereof. When the unions included the employees that the statistical office left out of the calculations altogether (those who work for microenterprises or part time) the number went down even further.

For all registered employees the average monthly take-home wage was EUR 903 per month before taxes, that is

EUR 600 in monthly take-home salary 

But it gets worse, because the median is only 77% of the average (due to a few very high earners pulling up the average). The EU-average is 88%.

In Hungary the median wage of all workers, after taxes, in February 2019 was:

EUR 462 in monthly take-home salary 

So they asked the statistical office where things went wrong, where statistics transformed from real to (politically) beautiful. When asked about the discrepancy, the statistical office claimed data consistency and swore to keep excluding the lower numbers. Not surprisingly, since their wage-giving master, the ministry was getting really pissed off by the political discontent brewing for stagnant wages a couple of years back – right before the official numbers started to shoot upwards. What a coincidence.

Statisticians are not typically the most rebellious segment of society – why would anyone expect truth from them is a mystery to me. Because truth requires defiance and courage in any age and in any situation – but under political oppression it gets even more difficult.

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** The total cost of labor on the average wage (for the best 63% of earners) is HUF 411621, of which the employee pays 115.877 to the state and the employer pays 65721 on top of the gross wage into the budget. That makes the total tax on employment 44%. What you see as an employee, the difference between your gross wage and after-tax wage is 33%. Another 11% of your gross wage is paid on top of that into the budget.

It feels a bit like your pimp taking away 44% of what you get from your john. The question arises whom do you really work for? Is your employer the john or the pimp? The one you provide the service for – or the one who takes a 44% cut? And which one should you bitterly attack when your workers’ rage gets the best of you? Is your dispute really with the one you face during work – or have you both been duped into picking on each other while the pimp evades scrutiny?

 

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