Government to stop consulting unions on minimum wage

The Hungarian government will no longer have to consult unions over setting the minimum wage as of 1 January 2012. It is changing the tripartite interest reconciliation system, with a new body, the National Economic and Social Council (NGTT) replacing the National Interest Reconciliation Council (OÉT). The NGTT will include representatives of employers, workers, chambers of commerce, and churches, but it can only propose changes. Unions and employers are against this.

Background

In Central and Eastern Europe (including Hungary) institutionalised tripartism has been a common feature of the national industrial relations (and political) systems since the 1990s.

The National Interest Reconciliation Council (OÉT) has been the tripartite forum for employees, employers and the government since 1988, but the current form was adopted in 2002 (HU1010011I). The present Hungarian government, a coalition of the Hungarian Civic Union (FIDESZ) and the Christian Democratic (KDNP) parties which came to power in May 2010, did not convene a meeting of OÉT until four months after it won the general election, in response to demands by employees and employers (HU1010011I).

Although Prime Minister Viktor Orbán praised the role of the (OÉT) and emphasised the need for social dialogue at the meeting, he also mentioned that the current form of representation might be changed and amended.

Economy Minister György Matolcsy announced, on 30 May 2011, plans to replace OÉT with the National Economic and Social Council (NGTT) as of January 2012. The parliament passed the law establishing the NGTT on 4 July

The decision is similar to that of Orban’s first administration in 1999 when the reconciliation forum became a so-called labour council, decreasing the tasks and power of the tripartite body. Decisions, including setting the minimum wage, were made by the government without consulting the trade unions. In 2002 when a coalition of the Hungarian Socialist Party (MSZP) and the Hungarian Alliance of Free Democrats (SZDSZ) formed the government, social dialogue was once more opened up in the OÉT.

National Economic and Social Council

The NGTT will be a combination of the OÉT, the Economic and Social Council (GSZT) and the Economic Interest Coordination Forum (GEF), all of which now operate in parallel. The government says this will mean an ‘obsolete and inefficient’ system will be replaced.

Members of the NGTT will include unions and employers, representatives of business chambers, social and scientific civil organisations as well as Hungary’s historical churches. However it will no longer include state representatives. However, at the council’s plenary sessions ministers will take part as observers.

Council members will not have decision-making rights, only the option to draft proposals to the government. In effect, the cabinet alone can now decide on wage and employment-related regulations.

The members will have a mandate for four years without any remuneration.

Elimination of interest reconciliation

The presidents of all six Hungarian trade union confederations say the government’s plan will be a step backward.

János Borsik, President of the Alliance of Autonomous Trade Unions (ASZSZ) said the new body would not be capable of taking over the functions of OÉT, and added that the move goes against generally accepted European norms. István Gaskó, President of the Democratic League of Independent Trade Unions (Liga) said it appeared from the plans that the government does not want to continue talks with trade unions. Imre Palkovics, head of the Federation of Workers’ Councils (MOSZ), said that the government had not consulted the social partners about the plans. He added, however, that the new National Economic and Social Council, replacing the OÉT and two other forums, would be a broad consultative body, which could help to involve large groups of society in efforts to solve problems of the country.

Employers are equally critical. Ferenc Dávid, General Secretary of the National Association of Entrepreneurs and Employers (VOSZ) stressed that, since 1988, the OÉT has facilitated constructive reconciliation and the main stakeholders have been consulted on wages and taxes prior to any decisions. Zoltán Zs. Szőke, President of National Federation of Consumer Cooperatives (ÁFEOSZ) said that if the OÉT had been working in the previous 12 months the country could have avoided some of the industrial action, strikes, protests and marched that have taken place. However, he added that employers are loyal partners of the new government , that several consultations have been conducted on various matters so far, and that they are ready to talk whenever the need arises.

Nevertheless, László Parragh, President of The Hungarian Chamber of Commerce and Industry (MKIK) said the MKIK have been trying for some time to change the national system of interest reconciliation. He said the Hungarian system does not follow common European practices, saying that, in Hungary for example, if the social partners conclude an agreement on the minimum wage, then it becomes legally binding.. Peter Kiss, former Minister of Labour said that during the crisis there is an increased need for reconciliation and European examples prove that more social dialogue can help countries exit from the crisis. He said there must be dialogue at both local and sectoral levels.

Commentary

Since the government came to power, several decisions and resolutions have been taken without consulting the social partners. In the last year, the OÉT has been convened only twice, demonstrating that the government has a different perspective to the last government on the role of social dialogue and industrial relations. Most members of the OÉT have been aware that the role of the social dialogue will change in the next few years.

Máté Komiljovics, Solution4.org

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