Collective Bargaining in Hungary
Viktor Orbán took office in 2010, first with a two thirds majority. His party, Fidesz, had the power to change laws, including the constitution, without consulting the social partners or the civil society. The new labour code was introduced in 2012 and its implementation aimed to attract foreign investment. Among other things, it includes very flexible overtime, more fragile posting of workers, unfair dismissals, regulation which weakens rights of trade unions at the level of enterprises, etc.
The new strike legislation introduced in 2011 is unclear and unions hesitate to organise strikes and inform. Many professions are excluded from the right to strike. Workers in the public sector and others are told that minimum services must be carried out despite strikes, for instance water supply, electricity etc. This means that the right to strike in the public sector only exists in theory, not practice.
Sectoral agreements have not been updated for 25 years now. There used to be 5-6 sectoral agreements, but unions need 10% of the workforce to bargain. This is difficult because of fragmentation. With very few exceptions (energy) there are only local agreements or interprofessional ones, but no national, nor sectoral ones. The management is obliged to negotiate, but not to sign agreements. The national employers’ associations normally don’t have a mandate to negotiate on behalf of their member companies.
In the electricity sector there is 100% coverage because of extensions. There is a legal framework in place for sectoral agreement. The employers’ association represents more than 50% of workers in the sector.
Unions have the majority in most works councils. Companies are only obliged to set up a works council if their workers ask for it. And if there is no union, the workers would normally not take such an initiative. Works councils are good for information purposes, but they are not involved in collective bargaining. Companies often don’t respect collective agreements even if the agreements are weak. They are only willing to sign agreements that are weak. In case of violations unions can seek help from labour inspectorates or labour courts. The latter take much more time to respond.
The new working time legislation (“the slavery act”) was introduced in November 2018. A series of demos were organised, however without success. Workers can have 400 overtime hours annually with some variations for companies with or without collective agreements and pay delayed for up three years. They risk being fired if they don’t accept the overtime hours.
The general retirement age is 65 and with few exceptions it is impossible to retire before 65, even if workers give up part of their pension benefits because of bad health. The minimum pension hasn’t changed since 2010 and is 85 EUR per month. All other social benefits are linked to pensions.
Minimum wages are increasing, however without prior consultation of the social partners. Hungary is strong in this respect in percentage, but with a low starting point. The East is still far behind the West, especially Hungary which not many years ago was a front-runner in the East. The Hungarian unions would be happy to see a European social pillar with minimum standards and a minimum wage that can alleviate problems in Hungary.
The local level can always diverge upwards from legal minimum wages. The average wage is almost twice as high. There is high wage inequality. The top 10% earn as much as the bottom 50%. The social partners can in principle divert from the labour code in collective agreements, but the government doesn’t encourage national agreements.
