Hungary: Latest working life developments – Q3 2016

Proposals on how to tackle labour shortages, a strike by municipal employees for higher wages, and mounting tensions around reforms to education and vocational training are the main topics of interest in this article. This country update reports on the latest developments in working life in Hungary in the third quarter of 2016.

Labour shortage a serious challenge

In June, the government and the Permanent Consultative Forum of the Competitive Sector (VKF) discussed the proposals of the Confederation of Hungarian Employers and Industrialists (MGYOSZ) on addressing the labour shortage. MGYOSZ claims that there is a need for 250,000 skilled workers and, as a quick solution, it would not exclude managed migration from outside Europe.

In September, the National Economic and Social Council (NGTT) discussed the same topic based on the findings set out in a government paper. The government states that the shortage of skilled labour is caused mainly by:

  • regional differences in the labour market;
  • poor quality education;
  • skill mismatches;
  • lack of work experience.

Proposals to deal with this include:

  • strengthening regional mobility;
  • launching a job-creation grant programme;
  • redirecting workers engaged in public works to the competitive sector.

The government and employer organisations agreed that the feasibility of reducing employment-related contributions should also be explored. Lower non-wage labour costs could pave the way to wage increases.

Strike by local government employees

Low wages have triggered several strikes and strike announcements in various sectors in 2016. On 14 September, 5,900 civil servants from 168 offices went on a day-long strike. They demanded a 30% increase in their salaries, pointing out that most of them had not received any increase for eight years. As their salaries are on average only slightly above the minimum wage, their pay does not reach the subsistence minimum.

The overall labour shortage means that there are jobs (such as accounting or technical posts) at municipal offices that are almost impossible to fill with skilled people at the current salary level.

Debate over public education and vocational training

In Q3, the debate continued over the transformation of public education. The school year ended with the government accepting some proposed modifications, but the key demands of protesters, education experts and trade unions were not met. The previously fully centralised management system represented by the Klebelsberg Institutional Maintenance Centre (KLIK) has been restructured, with a smaller central function complemented by several district units, while the school directors’ role in the operation of schools has been partially restored. Furthermore, all schools (except private, foundation and religious schools), including their assets, were taken over from local governments and are now managed by KLIK.

The share of general subjects in vocational training schools has been significantly reduced in the overall curriculum. Some experts say this will make it very difficult for children to enter higher education or to change profession if they have opted for vocational training at the age of 14. In August, it was revealed that the teaching materials for these subjects had not yet been developed or sent to schools. The teachers’ trade union therefore asked the government to postpone the changes; the government refused.

The problems of the education system in Hungary have been pointed out in the recent OECD indicators report, Education at a glance 2016, which also highlights that Hungary does not invest enough public resources in education.

Commentary

Tackling the growing labour shortage, low wages and their close links is an urgent task for the social partners and the government. Ongoing, profound restructuring in the education system is the subject of continuous debate due to its poor preparation. These issues are likely to remain for a long time on the agenda.

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