Living and working in Hungary

Actors and institutions

Trade unions, employers’ organisations and public institutions play a key role in the governance of the employment relationship, working conditions and industrial relations structures. They are interlocking parts in a multilevel system of governance that includes the European, national, sectoral, regional (provincial or local) and company levels. This section looks into the main actors and institutions and their role in Hungary.

Public authorities involved in regulating working life

The key ministries regulating working life are the Ministry for National Economy (Nemzetgazdasági Minisztérium, NGM); the State Secretariat for Vocational Training and Labour Market (formerly the State Secretariat for Employment Policy); the Ministry of the Interior ( Belügyminisztérium, BM); and the Deputy State Secretariat for Public Works Programmes and Water Management.

NGM has overall responsibility for employment and labour market policy and strategy. NGM prepares the draft laws related to the world of work in general (including labour legislation and setting the legal framework for industrial relations and social dialogue). NGM represents the Government in national tripartite and multipartite dialogue.

BM has a specific role in setting the legal and financial framework for public works programmes as well as managing them involving the local governments.

The Administrative and Labour Courts are courts of first instance. They worked with the Labour Arbitration and Mediation Service (Munkaügyi Közvetítői és Döntőbírói Szolgálat, MKDSZ) and the National Labour Office – Labour and OSH Inspectorate (Nemzeti Munkaügyi Hivatal – Munkavédelmi és Munkaügyi Igazgatóság, NMI MMH).

MKDSZ and the Labour and OSH Inspectorate werepart of the National Labour Office (Nemzeti Munkaügyi Hivatal, NMH), and thus part of the national Public Employment Service (overseen by NGM). Further to the labour and health and safety inspectorates and the employment service-related functions, NMH manages the administration of vocational education and training as well as adult training. NMH supports and manages the sectoral social dialogue committees (ágazati párbeszéd bizottság, ÁPB), through its special unit, the Centre for Social Dialogue (Társadalmi Párbeszéd Központ, TPK). NMH merged with the NGM and MKDSZ was abolished in 2015. Currently, the Labour Consultation and Dispute Resolution Service (Munkaügyi Tanácsadó és Vitarendező Szolgálat, MTVSZ) operates in place of of the MKDSZ since 2016, but there are a few differences between MKDSZ and MTVSZ. The most important are the following: in MTVSZ, the labour law approach is the dominant one and the most prominent of the types of procedure is counseling. As far as the issues involved are concerned, the door is open as wide as possible along the dynamic interpretation of the concept of interest-dispute. Due to the regional organisation of MTVSZ, local presence is strong, and whereas MKDSZ was a state mechanism, MTVSZ is rooted in autonomous and social partnership.

Representativeness

Representativeness of social partners at national level is not explicitly incorporated in Hungarian legislation. Nevertheless, the law on the main national civil dialogue body, the National Economic and Social Council (Nemzeti Gazdasági és Társadalmi Tanács, NGTT) stipulates detailed criteria for the social partners’ participation in the NGTT. This is widely considered to function as a sort of representativeness criteria at national level.

NGTT was established by Act XCIII of 2011. The members of NGTT include six trade union confederations and nine employers’ organisations. Other members are listed in the relevant tables below, representing the national chambers, the foreign chambers which operate in Hungary, science experts, art representatives and traditional churches. Union and employer confederations are invited to participate in NGTT (according to Article 9) if they meet the following set of criteria:

For unions, if they have:

• a member organisation in at least four economic sectors and at least 12 subsectors;
• a member organisation in at least eight counties (or its member organisations have regional organisations);
• plant organisations at a minimum of 150 employers;
• affiliation to the European Trade Union Confederation (ETUC).

For employers, if they have:

• a member organisation in at least two economic sectors and at least six subsectors;
• member organisations in at least ten counties;
• affiliated members or member organisations representing at least 1,000 companies or companies employing altogether 100,000 employees;
• affiliation to a European employer organisation.

In the main tripartite social dialogue body, the Permanent Consultative Forum of the Private Sector and the Government (Versenyszféra és a Kormány Állandó Konzultációs Fóruma, VKF), no representativeness criteria is applied. VKF is based on an agreement, which does not refer to representativeness, but provides the list of social partners involved, based on the parties’ mutual recognition. Three trade union confederations (LIGA, MOSZ, MASZSZ) and three employer organisations (ÁFEOSZ, MGYOSZ, VOSZ) participate in VKF, all of them are members of NGTT as well.

More information on representativeness of the main social partner organisations can be found in Eurofound’s representativeness study of the cross-industry social partners or in Eurofound’s sectoral representativeness studies.

• Publication: Representativeness of the social partners in the European cross-industry social dialogue
• Topic: Representativeness

Trade unions

About trade union representation

According to the Labour Code (Act I of 2012), every worker has the right to join a trade union in order to promote his/her economic and social interests, or not join a union (Art. 231). The detailed rules how this right can be exercised is stipulated by Act CLXXV of 2011 on the right of association, the status of general public benefit, and on the functioning and support of civil organisation; Act CLXXXI of 2011 on the registration of civil organisations and the related administrative procedure; and by the new Civil Code (Act V of 2013). Public sector employees also have the right to organise, but their right of collective bargaining is limited (for public employees) or is absent (for civil servants in public administration).

The unionisation rate is around 9%. Workplace trade unions are affiliated to various sectoral or regional federations, and through them (or sometimes directly) to six national trade union confederations. Pluralisation appears also in workplaces.

The new Labour Code (Act I of 2012) amended the rules on collective labour law, including modifying the right to collective bargaining at company and higher level.

No information is available on the effect of the above legal modifications on the unionisation rate, but presumably it has not changed the confederations’ relative weight, or the national unionisation rate.

According to the new Labour Code, works councils also have the right to negotiate and agree on the regulation of working conditions (except wages, or wage-related issues), if the employer has not yet concluded a collective agreement, or if there is no trade union eligible to conclude a collective agreement at the given employer (Art. 268 Sec 1). An agreement concluded in this way is called a plant agreement. A plant agreement with this wider content is, however, not considered to be a collective agreement and is beyond the scope of mandatory reporting, even though parties may negotiate as for collective bargaining over the normative content (for instance, parties can agree on a longer working time reference period or more annual overtime). Since there is no obligation to report on plant agreements to the Ministry, no information is available on the number and content of this type of agreement in effect.

Trade union membership and trade union density

Main trade union confederations and federations

There are six trade union confederations at national level, all affiliated to ETUC.

Formerly all of them acted on the worker side of the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT). Since 2011, all are members of the multipartite civil dialogue forum, the NGTT, while only LIGA, MOSZ and MASZSZparticipate in the VKF, the tripartite national body for the private sector.

Regarding membership, MSZOSZ was still the largest national organisation in 2012 (when the latest comparative data are available), when it had  186,000 members  (125,000 active).

• Friedrich-Ebert-Stiftung: Magyarország szakszervezetei mozgásban - Kísérlet az erők koncentrálására

The effect of the new Labour Code, the decline of social dialogue in general, the unfavourable political climate and a long-standing need for integration has begun a merger process among some national trade union confederations since 2013. The Alliance of Autonomous Trade Unions (Autonóm Szakszervezeti Szövetség, ASZSZ), Forum for the Co-operations of Trade Unions (Szakszervezetek Együttműködési Fóruma, SZEF) and National Confederation of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége) announced their integration on 1 May 2013. The plan was to create a new confederation – and this was accomplished – but the process took longer than planned and in the meantime the Forum for the Co-operations of Trade Unions stepped back. At present, the new confederation is operating as the Hungarian Trade Union Confederation (Magyar Szakszervezeti Szövetség, MASZSZ).

National trade union confederations are not directly involved in collective bargaining in the traditional understanding of the term, in a bipartite manner. They are, however, involved in tripartite negotiations on the minimum wage and wage recommendation in the framework of VKF, as indicated in the table below.
 

Main trade union confederations and federations

In 2014, two confederations – the Autonomous Trade Union Confederation (Autonóm Szakszervezetek Szövetsége) and National Confederation of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége) – announced their intention to merge by establishing the Hungarian Trade Union Confederation (Magyar Szakszervezeti Szövetség, MASZSZ), creating in effect the country’s biggest confederation. Based on their announcement, the new organisation would have approximately 115,000 members (active employees) and intends to represent unity and solidarity in the trade union movement.

Employers’ organisations

About employers’ representation

Affiliation to employer organisations is voluntary.

At national level, nine employer organisations play a role – they were also the members of the employer side of the former OÉT. Due to historical reasons, some of them are actually sectoral organisations, which are active both at national and sectoral level.

The elimination of OÉT created a serious challenge for employer organisations, since for many of them the main function of the body was to take part in national social dialogue and it had the expertise, staff and infrastructure to do this. Furthermore, being a member of OÉT was an additional reason for members when deciding to affiliate to the given employer organisation. Similarly to trade union confederations, only three national employer confederations (please see below) are members of VKF, while all nine organisations participate in NGTT.

Since 1 January 2012, companies and entrepreneurs have to register at the relevant economic chamber to comply with Act CXXI of 1999 (as modified by Act CLVI of 2011). This mandatory registration costs 5000 HUF (around €16) annual registration fee, but does not provide the same rights and obligations as those of full members of chambers. Employer organisations were hostile to the mandatory registration, since it does not give companies any benefit and could simply be considered as a tax. It weakens companies’ willingness to join employer organisations, which are based on the freedom of association.

Employers’ organisations - membership and density

*Percentage of employees working in an establishment which is a member of any employer organisation that is involved in collective bargaining.

Main employers’ organisations

The two most significant employer organisations are MGYOSZ and VOSZ in the private sector. Together with ÁFEOSZ, they are members of VKF. These three employer organisations have managed to keep their role in national level consultation and negotiation, while the others tend to boost their activity in sectoral social dialogue, or are forced to look for different ways of adaptation to the changed structure of social dialogue.

Main employers’ organisations and confederations

Tripartite and bipartite bodies and concertation

Since 2012, the only forum of tripartite dialogue at national level is the Permanent Consultative Forum of the Private Sector and the Government (Versenyszféra és a Kormány Állandó Konzultációs Fóruma, VKF). It cannot be considered a replacement for OÉT (which ceased to exist in 2011). The operation of VKF is not regulated by law. Its sessions are organised on an ad hoc basis, without an annual agenda, and in a way that does not enable parties to have profound debates. Its meetings usually are not open to public. Annual consultations and negotiations on national minimum wages and the wage recommendations, and on the subsequent agreements, have been the only constant topics of national level tripartite dialogue recently.

The National Economic and Social Council (Nemzeti Gazdasági és Társadalmi Tanács, NGTT) is a multipartite forum to consult on wide-range of socio-economic issues, involving large number of actors as detailed earlier. It cannot be considered as a social dialogue body. It is a symbolic consultative civil dialogue body, without any negotiation function.

Sectoral social dialogue committees (30 altogether) have existed in Hungary since 2004. They have been established to facilitate sectoral dialogue in general, including sectoral collective bargaining which has not yet been fully integrated into the system of collective bargaining. Sectoral social dialogue committees are governed by legislation (Act LXXIV of 2009) which regulates the operation of sectoral and mid-level social dialogue. Legislation also stipulates in detail the criteria for representativeness at sectoral level. Legislators had the explicit intention when drawing up the new Labour Code (Labour Code) to foster trade unions’ bargaining activity and shift collective bargaining from the traditional company level to the level of sectors. According to experience so far, the new code has not resulted in the multiplication (or increase) of the number of sectoral level collective agreements.

Main tripartite and bipartite bodies

Workplace-level employee representation

Trade unions and works councils coexist in Hungarian workplaces. Their role, rights and obligations, as well as their relationship with the management/employer are regulated by the Labour Code (Act 1 of 2012), Part 3. on Industrial Relations.

Role, rights and obligations of unions and works councils

The new Labour Code (Act I of 2012) has introduced specific modifications in relation to industrial relations at workplaces. Key points are as follows.

• Prior to 2012, trade unions’ representativeness at enterprise level depended on the number of their members elected to the works council. In the new Labour Code this rule is replaced by a 10% threshold (number of trade union members/total number of workers at the employer) set in relation to the right of collective bargaining.
• If there is no ‘representative’ trade union at the employer (a trade union empowered to enter into collective bargaining) and no collective agreement is in force, the works council has the right to conclude a ‘plant agreement’ with the employer which also regulates working conditions, except wages.
• Works councils possess an ‘inspection’ function and have the right to follow the lawful operation of the employer; however, only a union has the right to represent workers in complaints of unlawfulness or other disputes.
• An employer now has information and consultation obligations towards a works council only (under the former legislation, the enterprise-level trade union also had this right.)

Regulation, composition and competences of the bodies

Employee representation at establishment level

In the figure, we see a comparison between Hungary and European Union for the people with 'Establishment size : All' when asked 'Official structure of employee representation present at establishment'. For the 'Yes' answer, Hungary's score is lower than the European Union score. For the 'No' answer, Hungary's score is higher than the European Union score. The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: ECS 2013. Private sector establishments with more than 10 employees. Eurofound data visualisation.