Hungary: Social partners involvement in unemployment benefit regimes

  • Observatory: EurWORK
  • Topic:
  • Social protection,
  • Published on: 20 Diciembre 2012



About
Country:
Hungary
Author:
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

There were three significant modifications in the unemployment benefit regimes in the last decade in Hungary, all of them were initiated by the Government. Social partners did not proposed any modification on it, due to the system and tradition of Hungarian social dialogue system, and due to the fact, that self-government unemployment funds do not exist in Hungary. The unemployment insurance system based on legislation: employers and employees are obliged to pay targeted contribution to the National Employment Fund (former Labour Market Fund), which is an extrabudgetary fund of the state budget. It had self-governing element in the last decades, but recently it is governed only by the government and the relevant institiutions.

1. The characteristics of the UB system in the country

Table 1: Types of Unemployment Benefit and Social Assistance programmes
 

Benefits

Main qualifying conditions

Funding

Unemployment Insurance (UI)

earnings-related

involuntary unemployment - employment record - actively looking for work

contributions from employer and, sometimes, also employees, often topped by government payments

Unemployment Assistance (UA)

social minimum, partly means-tested

unemployment insurance expired or not eligible for it - (often) a short employment record - actively looking for work

contributions from employer and employee and/or government payments

Social Assistance (SA)

social minimum, comprehensively means-tested

unemployment insurance expired or not eligible for it - (for most categories of claimants) actively looking for work

taxes

1.1. Recent changes/transformations of the UB system in your country:

1.1.1. In the last 10 years, has the country’s UB regime been modified? Have new forms of interventions been introduced?

  • Regarding the UB:

Regarding the UB: Yes, there was two important modifications, in 2005 and in 2011, as follows:

Changes on unemployment benefits
2005-2010

Till 01.11.2005

Modifications in force from 01.11.2005

Modifications in force from 01.01.2010.

Modifications if force from 01.09.2011

Requirements of receiving unemployment benefit:

Being registered unemployed person;

who have spent at least 200 days in labour relation within the last 4 years before losing the job;

not entitled for disabled persons’ allowance or sickness pay;

actively looking for job but does not manage to find, and the regional office of PES cannot offer him/her the appropriate job.

The measure of the unemployment benefit:

Basis: the average salary which were reached in the last quarter before losing the job. The basis of the daily amount of the benefit is the 1/30 part of former average monthly salary.

Monthly amount: maximum the 65 % of the basis.

Duration of receiving benefit: It depends on the period which had been spent it labour relation within 4 years before losing the job, but 270 days maximum.

In case the labour contract terminated because of the employee, he/she cannot except for benefit in the first 90 days after the termination’s date.

Source of unemployment benefit: Labour Market Fund of the state budget, which revenues come from the 1 % contribution of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary.

(Nr.4/1991 Act on Employment)

The “unemployment benefit” renamed for “jobseekers’ allowance”, with the aim to strengthen the insurance function of the unemployment benefit and boost it’s function of motivating for jobseeking.

Requirements of receiving jobseekers allowance:

Being registered unemployed person;

who have spent at least 365 days in labour relation within the last 4 years before losing the job

not entitled for disabled persons’ allowance or sickness pay;

Actively looking for job but does not manage to find, and the regional office of PES cannot offer him/her the appropriate job.

The measure of the jobseekers’ allowance:

Basis: the average salary which were reached in the last 4 quarters before losing the job. The basis of the daily amount of the benefit is the 1/30 part of former average monthly salary.

Monthly amount: maximum the 60 % of the basis in the first section of payment (for maximum 91 days), and 60 % of the monthly mandatory minimum wage in the second section of payment (for maximum 179 days).

Duration of receiving benefit: It depends on the period which had been spent it labour relation within 4 years before losing the job, but 270 days maximum.

In case the labour contract terminated because of the employee, he/she cannot except for benefit in the first 90 days after the termination’s date.

Source of jobseekers’ allowance : Labour Market Fund of the state budget, which revenues come from the 1 % contribution of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary.

(Nr.70/2005 Act on modification of Unemployment benefit system)

Entrepreneurs are also obliged to pay the contribution for the Labour Market Fund, at least on the basis of monthly mandatory minimum wage. They should pay both the 1 and 1,5 % contribution. By this measure entrepreneurs are purchase entitlement for receiving jobseekers allowance after finishing business activity.

(Nr. 84./2009 Act on burden sharing, which modifies the Nr. 4. /1991. Act on Employment)

Source of jobseekers’ allowance : Labour Market Fund of the state budget, which revenues come from the 1 % contribution of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary.

Requirements of receiving jobseekers allowance:

Being registered unemployed person;

who have spent at least 360 days in labour relation within the last 3 years before losing the job

not entitled for disabled persons’ allowance or sickness pay;

Actively looking for job but does not manage to find, and the regional office of PES cannot offer him/her the appropriate job.

The measure of the jobseekers’ allowance:

Basis: the average income, which were reached in the last 4 quarters before losing the job. (Income means ever type of taxable income.) The basis of the daily amount of the benefit is the 1/30 part of former average monthly salary.

Monthly amount: 60 % of the basis, which cannot exceed the 60 % of monthly mandatory minimum wage.

Duration: It depends on the period which had been spent it labour relation within 4 years before losing the job, but 90 days maximum

The Labour Employment Fund renamed for National Labour Market Fund

(Nr. 191/2011. Act on Public Work Schemes, which modifies Nr.4/1991 Act on Employment)

  • Regarding the UA: Related to the modification of UB regimes, the system of unemployment assistance were also modified in 2005 and 2011.
Modifications in the system of unemployment assistance
2005-2010

till 01.11.2005

Modifications step into force in 01.11.2005

Modifications step into force 01.09.2011.

Aid for ageing unemployed person:

Requirements of receiving:

• Those persons who are have less then 5 years to reach the relevant retired age limit; and

• Received unemployment benefit at least for 140 days, and

• who achieved the services period which necessary to have entitlement for pension

• there is no appropriate job available

Measure: 80 % of national minimum of guaranteed monthly pension

Duration: till he/she does not find job or receive entitlement for old-age pension or disabled person’s allowance, without time limitations.

Benefit to stimulate job-seeking:

Requirements of receiving: Those persons who received unemployment benefit at least for 180 days and they did not find appropriate job.

Measure: 85 % of national minimum of guaranteed monthly pension

Duration: maximum 180 days, in case the claimer is older then 45 days it lasts for maximum 270 days.

Returning travel expenses:

It is based on the actual travel cost for travelling on job-seeking purposes, which has to be proofed with invoinces

Reasonable travel cost relating to job-seeking could be reimbursed by Public Employment Service.

Aid for ageing unemployed person:

Requirements of receiving:

• Those persons who are have less then 5 years to reach the relevant retired age limit; and

• Received jobseekers’ allowance least for 140 days, and

• who achieved the services period which necessary to have entitlement for pension

• there is no appropriate job available and does not earn any state allowance

Measure: 40 % of mandatory monthly minimum wage.

Duration: 180 days.

Aid for job-seeking:

It was applicable after the job-seekers’ allowance’ period exhausted, and the unemployed person did not manage to find job.

• Requirements of receiving: Those persons who received unemployment benefit at least for 180 days and they did not find appropriate job, or

• who have spent at least 200 days in labour relation within the last 4 years before losing the job, and not entitled for jobseekers’ allowance.

Measure: 40 % of mandatory monthly minimum wage

Duration: 90 days

Returning travel expenses:

Reasonable travel cost relating to job-seeking could be reimbursed by Public Employment Service.

(Nr.70/2005 Act on modification of Unemployment benefit system)

Aid for ageing unemployed person:

Requirements of receiving:

• Those persons who have less then 5 years to reach the relevant retired age limit; and

• Received jobseekers’ allowance at least for 45 days, and

• who achieved the services period which necessary to have entitlement for pension

• there is no appropriate job available and does not earn any other state allowance.

Measure: 40 % of mandatory monthly minimum wage.

Duration: without time limitation till purchasing right for having any other state allowance or benefit.

Returning travel expenses:

Reasonable travel cost relating to job-seeking could be reimbursed by Public Employment Service

(Nr. 191/2011. Act on Public Work Schemes, which modifies Nr.4/1991 Act on Employment)

The aid for job-seeking has been cancelled.

  • Regarding the SA (if relevant): The most significant change was the introduction of public work schemes and the modification of the social assistance system. It proceeded in two steps, in 2008 and 2011.

See 1.2.3.

1.1.2. For each of these changes/innovations indicate:

Jobseekers’allowance:

  • date of introduction: 01/11/2005
  • who took the initiative (government, unions, employers’ associations, other organisations): Government
  • the content of the change / of the new programme: The “unemployment benefit” renamed for “jobseekers’ allowance”. The amount of the allowance has been changed: it is gradually reduce during the disbursement period, while it was common before. See 1.1.1
  • the aim pursued: The aim was to boost its function for motivation to come back to the labour market and to strengthen the insurance function of the unemployment benefit.

2.)

  • date of introduction: 01/09/2011
  • who took the initiative (government, unions, employers’ associations, other organisations):

Government

  • the content of the change / of the new programme:

On 1st September 2011 and on 1st January 2012 the eligibility of the jobseekers' allowance was changed. First of all the two part of duration was ceased. From 1st September 2011 the duration of the benefit has consisted of one part. The length of duration decreased from 270 days to 90 days. Before 1st Sept 2011 the jobseekers had to spent in employment 365 days during the four years prior to becoming a job-seeker, from the above mentioned date the time spent in employment was decreased to 360 days and the period prior to becoming a job-seeker was increased to 5 years. From 1st January 2012 the period prior to becoming a job-seeker was decreased 3 years.

  • the aim pursued: On the one hand the aim was budgetary saving. Secondly, by shortening the period of the allowance and establishing the “National Public Work Scheme Program” (see 1.2.3.) government’s aim was to stimulate legal employment and increasing the rate of employment.

Jobseekers’ assistance

  • date of introduction: 01/11/2005
  • who took the initiative (government, unions, employers’ associations, other organisations):

Government

  • the content of the change / of the new programme:

The main aim was to restructure the whole system of unemployment regimes in order to motivate unemployed persons to seek new job. This modification (Nr.90/2005 Act on the unemployment benefit system) renamed and restructured the requirements of the allowances, as follows:

  • Change the amount of aid for ageing unemployed person. It related to the national minimum of guaranteed monthly pension before, after this modification the basis is the monthly mandatory minimum wage. When the programme was introduced, the amount of the allowance was 80 % of the minimum guaranteed monthly pension, now it is 40 % of the monthly mandatory minimum wage. When this measure was launched, the two amounst were more or less the same. Today – due to significant increase in the minimum wages in 2011-2012, and the fact, that the amount of the minimum guaranteed monthly pension have not increased since 2008 – the recent amount is higher comparing the previous calculation.
  • Similarly the amount of aid after the unemployment allowance’s expiry is also changed in the same way, but the range of entitled persons widened: the new regulation ensures benefit for those who are not entitled for jobseekers’ allowance, because they do not correspond for basic requirements of it.
  • the aim pursued: to minimize the counter-motivation effect of unemployment benefit system, at the same time providing assistance for disadvantaged unemployment groups.
  • date of introduction: 01/09/2011
  • who took the initiative (government, unions, employers’ associations, other organisations):

Government

  • the content of the change / of the new programme:

According to the modified Employment Act, from 1st September 2011 the eligibilities and duration of the jobseekers' assistance were changed. “a” (jobseekers' assistance recipients those exhausted jobseekers' allowance) type and “b” (jobseekers' assistance recipients with shorter time to gain eligibility) were ceased to exist. (see the table under 1.1.b “aid for job-seeking”) These types of assistance are ceased, the only left is the aid for people before the retirement age.

Only one eligibilities of jobseekers' assistance within 5 years before retirement were changed. 140 days (has received jobseekers' benefits for) was decreased to 90 days. From 1st January the 90 days decreased to 45 days.

  • the aim pursued: ensuring protection more favourable requirements for the entitlement of ageing unemployed persons’ social assistance, regarding their disadvantaged labour market situation.

This modification took into consideration the disadvantaged labour market situation of ageing workers.

1.1.3. For each of these changes / innovations please indicate from the main SP who was in favour or supported and who was against or resisted to it, and why:

2005: Employers supported the modification, by agreeing with the government that the motivational function of the allowance should be strengthened.

Trade union opposed it, because of reducing the amount of the allowance.

2011: Employers and trade unions have more or less the same opinion about the changes, but they had only rarely access to express opinion or possibility to intervene. (see point 3.)

1.2. The main characteristics of the UB system as it is now

1.2.1. Unemployment Insurance.

  • Coverage:

UI regime covers everybody, who pays the necessary contribution. (It means employees and self-employed people and single entrepreneurs.) The amount of the contribution is 1 % of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary. (The contribution is mandatory to pay, ruled by Nr.80/1997 Act on Social Security Contribution.) Entrepreneurs should pay both amount (1+1,5 % ) at least on the basis of monthly minimum wage in every month.

  • Eligibility:.
  • Being a registered unemployed person;
  • who has spent at least 360 days in labour relation within the last 3 years before losing the job
  • not entitled for disabled persons’ allowance or sickness pay;
  • actively looking for job but does not manage to find, and the regional office of PES cannot offer him/her the appropriate job.
  • Duration:.

It depends on the period which had been spent it labour relation within 4 years before losing the job, but 90 days maximum. There is no minimum duration prescribed.

  • Replacement rates:

The measure of the jobseekers’ allowance:

  • Basis: the average income, which were reached in the last 4 quarters before losing the job. (Income means ever type of taxable income.) The basis of the daily amount of the benefit is the 1/30 part of former average monthly salary.
  • Monthly amount (replacement rate): 60 % of the basis, which cannot exceed the 60 % of monthly mandatory minimum wage.
  • Financing:

Source of unemployment benefit: National Employment Fund of the state budget, which revenues come from the 1 % contribution of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary.

  • SP involvement: Yes/No. If Yes, specify briefly:

No

1.2.2. Unemployment Assistance. Are forms of UA present? If yes, please indicate their general characteristics with specific attention to:

  • Coverage: Unemployment Assistance exist targeted for ageing unemployed person.
  • Eligibility: Those persons are entitled
  • who are have less then 5 years to reach the relevant retired age limit; and
  • who have received jobseekers’ allowance at least for 45 days, and
  • who achieved the services period which is necessary to have entitlement for pension
  • there is no appropriate job available and does not earn any other state allowance.
  • Duration: Without time limitation till purchasing right for having any other state allowance or benefit (for instance: receiving disability allowance or reaching the age limit to have pension)
  • Replacement rates: It does not depend on the previously earned salary, the amount is 40 % of mandatory monthly minimum wage in every month.
  • Financing: National Employment Fund of the state budget, which revenues come from the 1 % contribution of the employees’ and 1,5 % contribution of the employer, on the basis of the employee’s monthly gross salary.
  • SP involvement:

No

1.2.3. Social Assistance. Are SA programmes with a direct relationship with the UB system and/or SP involvement present? If yes, please highlight the factors underlying such a relationship.

If the unemployment insurance expired or not eligible, the unemployed person’s maintenance is withdrawn from the labour market institutions’ regimes, and take over by the municipalities. It meant a payment of social benefit every month, till 2008. (The amount was the same as the national minimum of guaranteed monthly pension – HUF 28.500 (EUR 95). It is ruled by the Nr.3/993 Act. on social administration and maintenance system. It’s modification in 2008 established the „maintenance system of active age group”: every persons who are under 50 years and able to work receive a so-called „on-call subsidy”, and obliged to cooperate with the local employment office to find a job. In case there are no job available, he/she is obliged to participate in public work, which is organised by the municipality,from the own sources. Attending in public work is the basic condition if someone wants to receive the on-call subsidy, otherwise there will not be entitled for any benefit from state sources. The amount of on-call subsidy is the same as social minimum. In case of attendance in public work, the person earns wage, it’s amount is the same as the monthly guaranteed minium wage.

The new government (step into office in 2010) strenghtened this system and introduced the National Public Work Scheme. It renamed the „on-call subsidy” for „employment replacement subsidy”, but the content behind is the same. The amount reduced: it cannot exceed the 80 % of national minimum of guaranteed monthly pension. The availabe wage in public work is also reduced. The public work scheme is financed by the National Employment Fund, instead of the municipalities own sources, as it has was before 2011.

  • Coverage: Those unemployed persons, who are not entitled for any benefit by the unemployment insurance system, and supported by the municipality. (Based on the Nr.3/993 Act. on social administration and maintenance system.)
  • Eligibility:

maintenance of active age group:

requirement of entitlement:

  • The unemployment insurance expired or not eligible, or
  • disabled, or
  • maximum one person per household, only if the income of the household is not satisfactory. The definition of “non-satisfactory income” is: 90% of national minimum of guaranteed monthly pension per person in the same household, without having any properties.
  • does not receive any benefit from state source, and
  • regulary cooperates with the local employment office.

employment replacement subsidy:

requirement of entitlement:

  • who entitled for maintenance of active age group, and
  • actively searching for job.

regular social benefit:

requirement of entitlement:

  • who entitled for maintenance of active age group, and
  • reaches the retirement age limit within 5 years, or
  • educates at least one child who is younger then 14 years, and there is no available daytime childcare service and do not receive and maintenance from state source, or
  • regarding the mental and physical health situation, based on the appropriate municipality’s resolution.
  • Duration: There is no time limitation any of the listed benefit.
  • Replacement rates:

The amount of the benefits do not depends on the previous income, it is related to national minimum of guaranteed monthly pension. (HUF 28500 /month (EUR 95/ month)

maintenance of active age group: 90 %

employment replacement subsidy: 80 %

regular social benefit: adjust to the family’s income, cannot exceed HUF 57815/month (EUR 195)

  • Financing: The 3 types of benefits financed from the sources of appropriate municipalities. The system of Public Work Scheme is financed from the National Employment Fund.

Social Partners opinions see in point. 3.

2. SP involvement in the UB regime

2.1. The development phase

2.1.1. In your country, did SP participate in the development phase of UB programmes over the last decade?

Yes, they were involved from 1996 till 2011.

2.1.2. If yes, please provide detailed information on the SP involvement in the development phase of UB regimes with respect to the following dimensions, distinguishing between UI and UA and reporting any important changes during the decade.

  • Who did take the initiative of involving SP in the design process? Did they ask themselves?

All the relevant bodies of social dialogue were established by law. (see b.,)

  • Which are the forms of such kind of SP involvement? Are/were they informed, consulted by the relevant institutions? Does/did some kind of negotiation or concertation between the SP and the institutions take place?

Two different ways of social partners’ involvement had been existed from 1996 to 2011:

  • Governing Board of the Labour Market Found (Munkaerőpiaci Alap Irányító

Testülete, MAT): tripartite body, which were established for the self-governing of the extra-budgetary fund of state budget – the Labour Market Fund (LMF). The revenues of the LMF come from the mandatory payment of employers and employees: the labour market contribution should be paid on the basis of monthly gross salary of the employee. The measure is 1,5 % by the employee, and 1 % by the employer. This Fund ensured all sources of labour market maintenance system between1991 and 2011. The sides of MAT consisted of 6 representatives of national level trade union confederations (ASZSZ, ÉSZT, LIGA, MOSZ, MSZOSZ, SZEF) 6 representatives of national level employers’ confederations and 6 representatives of the state (including the appropriate ministry of labour market affairs, ministry of financial affairs and public employment service). The aim of MAT was to represent social partners in the management of LMF, to inspect the fulfilment of its resolutions and legal operation, in this way to contribute for releasing labour market tension. MAT (and its predecessors) was established by a modification of Nr. 4/1991. Act on Employment (Flt.) in 1996, and it had existed till 2011. Social partners could contribute in the financial matters of unemployment benefit system through this body.

National Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) was the highest tripartite body of social dialogue. It had existed under several names from 1990-2011. Social partners were able to intervene to unemployment benefit in the level of policy making through OÉT. They had possibility to discuss about detailed professional issues in the Labour Market Committee of OÉT. The members were 6 national level trade union confederations, 9 employers’ confederation and the representatives of the Government. In 2011 the recent government ceased MAT and OÉT, since then there are no organised body for the social partners’ involvement into formulating the unemployment benefit regimes. This was not revised since, even there is a successor of OÉT, the National Economic and Social Council (Nemzeti Gazdasági és Szociális Tanács, NGTT) for general consulting the social partners – but it is not about unemployment benefit regimes. The government considered that OÉT was not able to hamper the spread of the economic crisis in Hungary, it’s operation was not transparent and “out of date”. There were no official reason for ceasing MAT, but it linked to the government’s imagination on restructuring (“renewing”) the social dialogue system.

The new bodies of dialogue are the National Economic and Social Council (Nemzeti Gazdasági és Szociális Tanács, NGTT) and the Reconciliation Forum of Social Partners in the Competitive Sector (Versenyszféra Érdekegyeztető Fóruma, VÉT). Both of them were established in 2011-2012. The first one is strictly consultative, there was no any agenda held about unemployment benefit regime till this day. It’s members are not only social partners, but churches and NGO’s are also represented. The second body were established by the government, 3 employer and 3 trade union confederations (LIGA, MSZOSZ, MSOZ), the founding agreement were settled in January 2012. It took nearly half a year that this new body started working. There are negotiations about some issues ( labour law, minimum wages, the government’s “Action Plan on Protection of Workplaces”, what includes targeted tax-reliefs for the employment of disadvantaged labour market groups.) But up to now it does not entouch the operation of unemployment regimes. The sessions are more or less regular, up to the governmental work, and ensure the floor for professional debates on the listed issues. However, social partners agree that more issues (taxation, budget-linked topics, employment-unemployment regimes) should be involved to this range.

  • In which way is/was their involvement in the policy design process legitimated/accepted? Through their participation in formalised and stable organisms (like tripartite or bipartite bodies)? Through their participation in lightly formalised ad-hoc commissions, or in occasional interaction? In other ways?
  • Governing Board of the Labour Market Fund (Munkaerőpiaci Alap Irányító Testülete, MAT) were regulated by Nr.4/1991. Act on Employment.
  • National Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) and it’s Labor Market Committee were determined by Nr. 73/2209 Act on National Reconciliation Council. This is not in effect from 2011.
  • National Economic and Social Council were established by Nr. 93/2011. Act on National Economic and Social Council (Nemzeti Gazdasági és Társadalmi Tanács, NGTT).
  • Reconciliation Forum of Social Partners in the Competitive Sector (Versenyszféra Érdekegyeztető Fóruma, VÉT) were established by an agreement of social partners (see above).
  • How frequent is/was such involvement? Regular and predictable, or episodic, ad-hoc?
  • MAT and OÉT held sessions regularly, every month, or more frequent if it was necessary.
  • NGTT hold sittings occasionally, via plenary meetings. There is no stage for professional debates or committee work in frame of this forum.
  • VÉT had not been held any sessions till today.
  • At what levels does/did such involvement occur? (e.g. national, regional, local, cross-sectoral, sectoral, company, other level(s))

After ceasing MAT, OÉT and RLMC dialogue exist only in theoretical level in the NGTT

  • Which are/were the effects of such involvement (with regard to both a more efficient/effective functioning of the programmes, and the strengthening and legitimation of the SP themselves)?

MAT and OÉT ensured the floor for social partners to intervene or contribute to shaping unemployment benefit regimes in proper way. They have no possibility to do this through NGTT. Although social partners had high hopes regarding VÉT, this slightly calmed down. Based on the funding agreement this body would be eligible for proper discussions and dialogue, but it has not started it’s work yet.

2.2. The implementation phase

2.2.1. Distinguishing between UI and UA programmes, please describe the SP' role in accomplishing specific functions related to UB schemes (such as selecting the officials in charge of UB’ services, collecting contributions, etc).

In the level of operation social partners have never had proper tasks. Through MAT and OÉT they were able to reconcile about financial background and political decisional. Today social partners have no possibility at all to intervene/formulate unemployment regimes. As the function of the SP were even before 2011 limited in UI and UA, it is not possible to distinguish between them.

2.2.2. Furthermore, please analyze such SP involvement in terms of:

  • degree and institutional relevance of their involvement (mandatory, advisory or voluntary presence):

Social partners’ involvement were mainly advisory.

  • incidence of their involvement in the implementation process (at the beginning, throughout and/or at the end of the process):
  • in OÉT: social partners discussed about governmental initiatives, which were focusing on legal modification
  • in MAT: social partners decided about the annual budget plan and monitored the fulfilment of financial plans and activities.
  • the strategic positions possibly held by SP:

The basic principle was in MAT and OÉT, that as the owner of state income (the owner of revenue side of LMF) social partners are entitled to intervene or inspect the usage of their paid contribution. On the basis of insurance principle their aim was to make the redistribution (unemployment benefit regimes) effective as much as possible.

2.3. The management phase

.

2.3.1. In this case, distinguishing between UI and UA programmes, please describe SP’ role in terms of:

As the function of the SP were limited in UI and UA, it is not possible to distinguish between them

  • organisational commitment: are their specific sections of their organisations dedicated to the UB programmes?

No

  • organisational coordination among possible different levels of SP dealing with UB:

No

  • dedicated staff (composition of SP’ personnel in charge of UB programs):

No

  • operational autonomy (self-governing, conditioned by the state, other):

MAT was a self-governing body. Social partners achieved it’s leadership in annual rotation.

  • financial autonomy (self-sufficient, dependent by the state, other):

No

2.3.2. Distinguishing between UI and UA programmes, please describe the role of SP in case they are engaged in the financial management of the UB funds.

2.3.3. Distinguishing between UI and UA programmes, please answer to the following questions:

  • is the SP’ role in the organisation and provision of UB programmes linked to the organisation and provision of other programmes/services (for instance, related to education and training)?

Yes. Labour Market Fund financed both active and passive LMPs. These included not only unemployment benefit regime, but – among others - the maintenance system of disabled persons’ employment, VET provision (The Labour Market Fund has a part called “Fund for Vocational Education Training”. These contains the source of VET-targeted state subsidies), companies’ employment-related subsidies for job-keeping etc.

  • if there is some kind of organisational relationship/integration among different labour market policies and programmes, does it lead also to an administrative/operative relationship between the SP and the Public Employment Service, or with private employment agencies?

They were consulted in frame of MAT, but there were no other formalized cooperation in the level of operation. Since 2011 social partners have no possibility at all to intervene/formulate unemployment regimes. As the function of the SP were even before 2011 limited in UI and UA, it is not possible to distinguish between them.

  • if yes, did this lead to mergers, networks or coalitions building among the SP and public and/or private organizations (eventually at the local level)?

No

2.4. The monitoring phase

2.4.1. SP involvement in monitoring/evaluating the UB performance

  • Are the SP involved in the monitoring and evaluation of the UB system?

Yes, but only in budgetary scene. MAT (and members) participated in annual budget planning, and it should approve the final annual report. The SPs never have distinguished between UI and UA when they were involved in these issues. Since 2011 social partners have no possibility at all to intervene/formulate unemployment regimes.

  • Which aspects of UI/UA functioning are put under evaluation (e.g. procedures, results, other)?

Financial aspects

  • Who is in charge of such monitoring/evaluation (a commission, an external body, etc.)?

Governing Body of Labour Market Found (MAT)

  • How and when the monitoring process take place (in which phase of the process, with which frequency,…)?

Annually, at the end of the budgetary year.

  • Which is the output (a report, other) of such process and which the possible outcome (formal recommendations, rewards, sanctions, other)?

The final outcome was a report. If MAT found that there were some failures in any part of the operation (for instance in the evolution of a subsidy program), it would able to deny the approval of the final report or the given fiche of it.

  • How extensive and relevant is the SP’ role in the assessment process?

It was quite intensive, as a proper governing function. On one hand, every decision about the sources was approved together by the social partners in MAT. The government has reported to this body annually about the finances of the MAT. On the other hand, social partners had the possibility to intervene in the legislative process through OÉT, and it’s Committee of Labour Market Affairs. Although – based on the rules of reconciliation – the government was not obliged to follow the advices of the social partners; the OÉT ensured a forum for detailed debates prior the parliamentary section of the bills.

2.4.2. monitoring the SP involvement in the UB system

  • Is the SP role within the UB system subject to evaluation and monitoring?

No, not in targeted way, just from the side of fair usage of financial sources, see above.

3. Final observations

3.1. Public debates and policy discussion:

Social partners’ involvement into shaping UB regimes actually finished in 2011, by the ceasing of high-level tripartite bodies (MAT and OÉT). Meantime the structure of the LMF has also changed. While every labour market related measures were financed from LMF till 2011, many of them have been withdrawn and fit into general budget headings of the state budget. (see. 3.2). At the same time, proper national level social dialogue also pushed back, it means that not only the financial monitoring but social partners’ involvement into the policy making progress also declined.

As it seen in 1.1.1 b, a significant change has been established in the unemployment benefit system in September 2011.

Social partner are in more or less the same opinion regarding this measures.

a. They opposed the restructuring of jobseekers’ allowance. The reasons are:

i. The replacement rate of the previously earned salary was declined.

ii. The sources of the National Employment Fund have been redirected for maintaining the public work schemes, which means that social partners’ mandatory contribution do not serve insurance-type aims.

iii. It is not reasonable to cut the unemployment benefit system within the recent crucial employment and economic surroundings.

b. They have considered the system of public works schemes as necessary steps to attract back to the labour market those very disadvantaged groups, who have never had working experiences, and maintain themselves by social transfers (social assistance) decades ago. Social partners have the following concerns on the system of public work schemes:

i. It does not related to the market economy, considering that this is organised by the municipalities. Mainly it is not productive work, do not produce new added value. The public work schemes should link to the competitive sector somehow.

ii. At the same time, training and education should be ensured for the target groups, which misses now.

iii. Financially not sustainable, considering that does not produce income for municipalities.

iv. Strong concerns of social partners, that Government tries to treat two types of unemployment with the same method within public working schemes: highly educated unemployed people, who lost their job because of economic reasons, are also participates in public work, as the non-skilled, disadvantaged groups should do. Otherwise they lose all type of allowances and assistance.

v. The minimum wage, which should be paid for those who participate at public working schemes, is 20 % less, then the national mandatory minimum wage. Trade unions strongly concern that these two types of minimum wage distinguish between employee and employee, and not eligible to ensure the minimum of living standards.

c. By eliminating the two main bodies of social dialogue – MAT and OÉT – social partners have lost their influence in shaping unemployment regimes. It took nearly half a year that this new body started working. There are negotiations about some issues ( labour law, minimum wages, the government’s “Action Plan on Protection of Workplaces”, what includes targeted tax-reliefs for the employment of disadvantaged labour market groups.) But up to now it does not entouch the operation of unemployment regimes. The sessions are more or less regular, up to the governmental work, and ensures the floor for professional debates on the listed issues. However, social partners agree that more issues (taxation, budget-linked topic, employment-unemployment regimes) should be involved to this range. A number of researchers have been wondering about the reasons, why government took the steps to first eliminate the OÉT and then restructure the system. But all the answers depend on the political point of view of the researcher. The government itself did not articulate in public the decision.

3.2. Research:

  • Mária Frey, A munkaerőpiaci politika jogszabályi és intézményi környezetének piacgazdasági fejlődéstörténete, Budapest, 2002, http://econ.core.hu/doc/mt/2002/hun/frey.pdf
  • Frey Mária, A magyarországi munkaerőpiacot érintő jogszabályi és intézményi változások, Budapest, 2003, http://econ.core.hu/doc/mt/2003/hun/frey.pdf
  • Károly Fazekas, György Molnár, The Hungarian labour market – annual review and analysis, MTA, Budapest, 2011, 2010, 2009..., http://econ.core.hu/kiadvany/mt.html

4. Commentary

The social partners’ involvement into unemployment regimes had been ceased in the last two years. By finishing the activity of OÉT, social partners’ involvement into legislative processes became consultative, without having forum for detailed debates. At the same time, the structure of financing the regimes had been modified as well.

The low level of the national employment rate and other budgetary strains compelled strong cut in the unemployment benefit system, and the labour market policy focuses on the public working schemes. Nevertheless it makes any positive effort on the employment indicators, and the financial background of that system is missing from the state budget. It is questioning the long-term sustainability of the National Public Working Schemes’ problem, while its activities are not directly connected to the competitive sectors’ labour market. Long term financial sustainability of the Public Works Scheme is concerned, having regard to the fact, that it is financed from the Labour Market Fund (state budget). It, does not link to the competitive sector’s labour market to create proper transition to the labour market. So, the biggest concern is the financial sustainability, however, some of the social partners’ representatives agree, that at this time the economy is unable to create jobs for these unemployed people. At the same time, they show in the labour market statistics, as who are in employment, increasing the number of employed persons.

At the same time, social partners concern that there are less and less state sources for companies’ disposal to develop human resources (trainings, employment targeted subsidies.)

4.1. Assessments and comments:

As it has been described before the current involvement of SP in the UB system is fully withdrawn. When changing the system in 2010 there has been a long lasting disputes and different ways of expressing the lack of consent with the new system. However this was less an expressing of neccessity to have social control on the UB, but more about general need to have consultation with the government. There are discussions about the future role of SPs in a system which does not give them the formalised forum of consultation; and there are internal discussions among the SPs to redefine the role of todays’ SP. As far as we are informed this is again less likely to be about the UB involvement of SPs, but in general terms of SPs’ roles.

4.2. Perceived strengths and weaknesses:

The main and only weakness of the SP involvement is the fact that the involvement is being ceased in general and no substitution is being developed at the moment.

  • Adrienne Bálint, director for social dialogue, Confederation of Hungarian Employers and Industrialists (Munkaadók és Gyáriparosok Országos Szövetsége, MGYOSZ)
  • Andrea Nagy-Agócs, National Confederation of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége, MSZOSZ)
  • József Tajti, National Employment Service (Nemzeti Foglalkoztatási szervezet, NFSZ)

Ildikó Krén, Solution4.org

Useful? Interesting? Tell us what you think. Hide comments

Añadir nuevo comentario