Renewal and extension of collective agreement in bakery sector

In May 2006, employers terminated the previous collective agreement in the bakery sector. After several rounds of negotiations, the social partners agreed on a renewed sectoral agreement in September 2006 and jointly requested its extension. As part of the new agreement, various bonuses and allowances for employees are curtailed, while the trade unions managed to maintain the employers’ support for the extension procedure.

On 20 May 2006, the Hungarian Association of Bakers (Magyar Pékszövetség, MPSZ), the industry’s leading employer organisation, terminated the sectoral collective agreement, one of the country’s earliest sectoral framework agreements and one of four sectoral agreements extended to include all employers in the sector by the Minister of Labour in 1998 (HU0608019I). Reactions from commentators and trade unions stressed the importance of maintaining standards across the industry. They highlighted such issues as widespread use of undeclared work in small bakeries – especially in rural areas – and common violations of existing regulations in support of introducing an extension to the collective agreement.

Procedure of renegotiation

Negotiations on the renewal of the agreement between MPSZ and the Bakery Workers’ Trade Union (Sütoipari Dolgozók Szakszervezete, SDSZ) began as early as September 2006, less than four months after MPSZ announced its intent to terminate the agreement. The original agreement required parties to commence conciliation talks with a view to seeking a resolution within 15 days of a termination announcement or risk invalidating the termination. The agreement was officially announced in May 2006, but it remained in force until 20 September 2006 due to a required four-month notice period. Thus, it was not surprising that the parties took steps to speed up the negotiations at the beginning of September 2006. On 18 September 2006, a new agreement was finally concluded at the session of the Bakery Industry Sectoral Social Dialogue Committee (Sütoipari Ágazati Párbeszéd Bizottság). In this way, the social partners managed to avoid any suspension of the collective agreement.

Main changes

The new agreement reflects the bargaining character of the negotiations. The compromises reached show that trade unions had to give in to some of the employers’ demands, with respect to greater flexibility and a decrease in labour costs, in order to gain some ground for their other demands. For instance, although shift bonuses (for working in the afternoon, at night and on Sunday) decreased, they still remained more advantageous for workers than what is stipulated in the Labour Code. This was also the case for severance pay and meal vouchers: contrary to the employers’ demands, meal vouchers remained compulsory, although their value was slightly reduced. In exchange, the trade union maintained its consent to Sunday work as part of the regular working schedule of employees. The new regulation on employees’ liability for damages and on disciplinary procedures can be considered a gain for employers. According to the Hungarian Labour Code, as an exception to the generally applied favourability principle (Günstigkeitsprinzip), these issues are among those that can be regulated by collective agreements to the detriment of employees.

Furthermore, the new agreement maintains the industry’s wage tariff system; however, it includes an updated and simplified job list. The actual wages agreed, especially for unskilled and semi-skilled workers, are slightly higher than the national minimum wage for unskilled workers and the minimum wage for skilled workers. However, the signatory parties were well aware that, from January 2007 onwards, mandatory minimum thresholds would rise as a result of the three-year national wage agreement signed in 2005 (HU0512104F). The sectoral agreement includes a 5.3% increase in basic wages to compensate for a reduction in bonuses, but the actual increments will most probably be higher in 2007 due to the abovementioned national agreement. Nonetheless, the 2007 wage bargaining round already began in December 2006, as the vested interests of both employers and trade unions were to adjust tariff wages to the automatically increasing wage minimums.

Extension procedure

In October 2006, the signatories’ joint claim for an extension of the agreement was endorsed by the Wage and Collective Agreement Committee (Bér- és Kollektív Megállapodások Bizottsága) of the National Interest Reconciliation Council (Országos Érdekegyezteto Tanács, OÉT). Following this customary social dialogue round, the Minister of Social Affairs and Labour, Péter Kiss, issued a decree to extend the agreement, which came into effect on 28 November 2006. Therefore, the agreement is enforceable for all employers operating in the following two subsectors: ‘manufacture of bread; manufacture of fresh pastry goods and cakes’ (NACE D 15.81) and ‘manufacture of rusks and biscuits; manufacture of preserved pastry goods and cakes’ (NACE D 15.82). At the same time, the new government decree cancelled the previous extension bills, thus ensuring a smooth transition of the agreement’s extension.

László Neumann, Institute of Political Science, Hungarian Academy of Sciences