Public sector unions protest against government cutback plans

Following repeated demands by various employers’ organisations, in September 2003 the Hungarian Prime Minister ordered staff cuts of 10% in central government offices. Meanwhile, it has been rumoured that the government plans to reduce the number of public service employees by 6%. The trade unions have protested fiercely and demanded the resumption of negotiations. So far, no official government decree has been issued on staff cuts and, while unions are united in their opposition, no countrywide strikes are expected.

The public sector employs 800,000 people in Hungary, 21.6% of total employment. In July 2003, the president of the Hungarian Chamber of Commerce and Industry (Magyar Kereskedelmi és Iparkamara, MKIK) said that drastic cutbacks should be made in public employment since, for example, a reduction of 50,000-60,000 would result in budgetary savings of HUF 120 billion to HUF 170 billion (EUR 480 million to EUR 680 million) in annual wage costs alone.

According to the president of the Trade Union Cooperation Forum (Szakszervezetek Együttműködési Fóruma, SZEF), the biggest public service trade union confederation, it is misleading to blame the public sector for causing government financial problems by employing too many people. The number of employees working in the public sector has fallen by 400,000 since the collapse of the state-socialist regime, while public sector tasks have increased substantially. SZEF proposed the establishment of a committee which could objectively investigate the number and wages of public employees: for example, examining how these compare to countries similar to Hungary in terms of size and level of development. SZEF reminded the government that, in its programme, it promised that wages would increase in line with EU wage levels, and also that the disparity between private and public sector wages would disappear. However, this process seems to have ground to a halt in 2003-4 following the 50% public services wage increase in 2002 (HU0207102F). SZEF also claimed that social dialogue forums have virtually ceased to function in the public sector over the last 18 months, while the preparatory work for restructuring a number of sectors (education, public health and public administration) has been in full swing. SZEF therefore urged resumption of the work of the National Public Service Interest Reconciliation Council (Országos Közszolgálati Érdekegyeztető Tanács, OKÉT) in order that disputes could be dealt with within the framework of social dialogue rather than in the media.

At the beginning of September 2003, the leaders of the National Association of Entrepreneurs and Employers (Vállalkozók és Munkáltatók Országos Szövetsége, VOSZ), one of the national employers’ confederations, repeatedly urged public sector job cuts, mentioning a figure of 200,000. The estimated HUF 1,000 billion (EUR 4 billion) savings could be used to cut taxes.

In his reply, the Finance Minister promised to reduce the number of public employees by the end of 2004. Accordingly, on 17 September 2003 the government made a number of decisions about tax for 2004, with the Prime Minister ordering a 10% cutback in staffing in ministries and related institutions. Budgetary institution funding will be reduced by HUF 300 billion (EUR 1.2 billion) in 2004. As for implementation, in the first few months of 2004 the government, with the participation of those affected, will review the tasks of public sector bodies and determine necessary staffing levels. Many parties consider the 10% cutback quite reasonable given the substantial rise in the number of public employees over the last couple of years due to amendment of the Civil Servants Act in 2001 and public sector pay rises in 2002.

In the second half of September, rumour had it that the government wanted public sector staff cuts of 6%, or 45,000 employees. A government spokesperson announced that while it planned a cutback of 8,000 employees in its own jurisdiction (ie in ministries and other central-government offices), no other cuts were planned. However, the SZEF president said that the Finance Minister had declared several times that cutbacks were needed not only in the central administration but also in other parts of the public sector. Nevertheless, government and trade unions have so far not had any formal discussions on this topic.

Trade union federations in various public sector branches protested against the government plans. The Trade Union of Employees in Higher Education (Felsőoktatási Dolgozók Szakszervezete, FDSZ) called on the Minister of Education to enable employees to have a say in government plans. Sectoral trade unions said that the government’s decision would result in 4,000 redundancies in higher education, and 1,350 at the Tax and Financial Control Administration (Adó- és Pénzügyi Ellenőrzési Hivatal, APEH). The APEH employees' trade union threatened to put pressure on the government if other means proved ineffectual.

So far, no official government regulation has been issued on where substantial public sector staff cuts will be made. However, the trade unions are preparing to present a united front against the plans, which would affect 53,000 people. At the moment there are no concrete plans on how the trade unions will make their protest, and no countrywide strikes are expected.