Hungary’s government on Monday received a written request from the European Commission (EC) to provide the European Union’s executive body with more information regarding the salary cap for public-sector employees, including the leadership of the National Bank of Hungary (NBH), that went into effect on September 1, the Ministry of National Economy informed MTI on Monday evening.
The Hungarian news portal Index.hu reported on Tuesday, however, that the European Union Economic and Financial Affairs Directorate General had, in fact called the government to amend the recent legislation regulating Mr Simor’s salary, giving the government one month to react to the request or face the standard EC procedure for violating EU treaties.
The ministry told MTI on Monday evening that “The Hungarian government provided the European Central Bank (ECB) with advance notification of measures exercising an impact on the salaries of central bank leaders. The government continues to believe that the imposition of a HUF 2m monthly limit on the central-bank president’s salary is compatible with the principle of central bank independence. The legislation prescribing a limitation on salaries applies to the entire public sector based on the principle of uniformity.”
The ECB announced on July 13 that any limitation should apply only to future central bank governors and leaders, and the Hungarian government must consult with the NBH regarding the proposed amendment in order to preserve the central bank’s autonomy.
“To protect the NBH’s autonomy in staff matters, part of the principle of central bank independence under Article 130 of the Treaty, the Hungarian authorities have an obligation to ensure that any amendment to the legislative provisions on the remuneration of the NBH’s staff is decided in cooperation with the NBH, taking due account of the NBH’s views,” the ECB said in July.
At a press conference on July 19, Mr Simor said, however, the government had not consulted with the management of the NBH before submitting the amendment to Parliament. In a statement issued a few days later the NBH reaffirmed its agreement with the European Central Bank’s stand that an amendment capping the pay of the central bank staff damages the institution’s independence.
The salary cap has reduced NBH Chairman Andras Simor’s pay by about 75pc. The amendment limited the salary of state employees to HUF 2m a month, or ten times the average gross monthly salary for the national economy.