Working life country profile for Hungary
This profile describes the key characteristics of working life in Hungary. It aims to provide the relevant background information on the structures, institutions, actors and relevant regulations regarding working life.
This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are systematically updated every two years.
Between 2012 and 2022, Hungarian gross domestic product (GDP) per capita enjoyed robust growth (41.8%), and this growth rate was well above the EU average increase for the same period (15.3%). This led to record high employment levels, record high employment rates and record low unemployment rates around the final quarter of 2019. In 2020, as a result of the pandemic, GDP fell by 4.7% compared with 2019. Unemployment increased, most significantly for young people. However, strong economic growth returned in 2021 and much of 2022. As a result, the number of those in employment returned to the previous record level early in 2022 and reached a new high after that. The employment rate recovered quickly due to the decreasing working-age population. At the same time, the unemployment rate reached the pre-pandemic low (3.6%) in 2022. It should be noted, however, that the post-pandemic improvement was not uniform: the youth unemployment rate has never reached the pre-pandemic low. The post-pandemic recovery of the employment rate was faster for female than for male employees.
The overall legal framework was fundamentally revised in 2011–2012. Act I of 2012 on the Labour Code (2012. évi I. törvény a munka törvénykönyvéről) regulates employment and labour issues in the private sector.
The legal framework of industrial relations has also been profoundly changed, primarily through the transformation of the institutions of national consultation and negotiation and by revising the role of and rules on collective bargaining as part of the new Labour Code.
Act VII of 1989 (on the right to strike) was also significantly amended in 2010 and 2012.
A major change to the regulation of working time was adopted through an amendment to the Labour Code in 2018 (2018. évi CXVI. törvény a munkaidő-szervezéssel és a munkaerő-kölcsönzés minimális kölcsönzési díjával összefüggő egyes törvények módosításáról).
During the COVID-19 pandemic, temporary provisions were enacted to allow deviations from the Labour Code and other legislation, namely to extend employers’ unilateral decision-making on issues such as the work schedule, reference periods and teleworking.
Further amendments to the Labour Code were adopted at the end of 2022 (Act LXXIV of 2022). These covered, most importantly, the regulation of paid leave, employees’ right to information on their working conditions (for example, work schedules) and the conditions for employees unable to perform their work obligations due to ill health.
Over the past two decades, Hungarian industrial relations have altered gradually from strong national tripartite cooperation to limited consultation only, from considerable collective bargaining coverage to a rather low and uneven ratio, and from new structures (such as works councils, sectoral dialogue committees and regional tripartite bodies) to fewer and weaker institutions. Meanwhile, social partners have been struggling to retain their members and to maintain their role in the economy and society. Governments have always had a significant political role in forming industrial relations, not only by setting the legal framework, but also as a partner with varying levels of commitment to working together with social partners, counting also on their autonomous contribution.
In the early 1990s, the then Labour Code (Act XXII of 1992) established a particular form of co-existence of works councils (for participation) and trade unions (for collective bargaining) in workplaces. They functioned in this particular scenario of interdependence until 2012 when the new Labour Code (Act I of 2012) amended their roles and powers while retaining their parallel presence, which brought about tangible changes to workplace relations.
In 2004, bipartite sectoral dialogue committees were introduced to address the weakest link in the industrial relations system, although there was no tradition of bipartite social partnership. Currently, they exist in 24 sectors/subsectors and are mainly engaged in discussing sector-related issues. Despite their well-developed legal and institutional framework, the main form of collective bargaining happens at enterprise level.
For many years, the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT), which has had different names in the past, provided a tripartite framework whose powers were virtually unchanged. Not only were the annual agreement on mandatory minimum wages and the recommendations on general wage increases concluded here, but the parties also negotiated on various economic issues. The Orbán government dissolved this central body in 2010 and replaced it with multipartite/tripartite structures with much more limited roles.
There was no change in the institutional set-up regarding industrial relations during or after the COVID-19 crisis. The government continued to ignore the social dialogue forums when making important decisions. During the pandemic, various provisions of the Labour Code were temporarily suspended – mostly to the detriment of employees – by government decree, without previous consultations with the trade unions. Similarly, the unions protested in vain against a number of provisions in the amendment of the Labour Code in December 2022.
