Hungary: Latest working life developments – Q3 2017

Restructuring of the public works scheme, the launch of the Wage Union initiative which aims to equalise wages across Europe, and strike action by Tesco workers 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 2017.

Government restructures public works scheme

In spring 2017, the Government announced its restructuring of the public works scheme. Its plan is to reduce the monthly average number of people employed in public works from 230,000 to 150,000 by 2020. According to the latest figures (June/July 2017), the monthly average number of people involved in public works has decreased from 225,000 in 2016 to 182,000 in 2017.

The European Commission has repeatedly urged the government to reconsider its mass-scale scheme, warning that it does not improve prospects for the jobless. The government originally said the scheme helped to deal with Hungary’s changed circumstances and labour shortage. However, it now seems to have endorsed the argument of employer organisations who say that the scheme has deepened labour shortages, especially in seasonal work.

The scheme has already caused serious difficulties and social tensions in certain regions. The number of public workers has been reduced mostly in eastern Hungary (with 60% of the total decrease achieved there), which is the least economically and socially advanced region. The government now offers those affected by the scheme the opportunity of joining a social cooperative and has modified the relevant legislation to enable to do this, by:

  • allowing local governments to be members of cooperatives;
  • excluding from the scope of the Labour Code social cooperatives that have local governments among their members.

Former public workers who become members of a cooperative will be counted in statistics as employed in the primary labour market, while continuing to legally earn less than the statutory minimum wage. The government provides financial support to the newly established social cooperatives for a maximum of three years, before they then have to operate independently.

Wage Union initiative

Amid the continuing lengthy campaign for the general election in spring 2018, Jobbik, a right-wing opposition party, has launched the Wage Union initiative which sets out the idea of equalising wages across the European Union. It is based on the basic EU principle of equal pay for equal work, and aims at reconciling wages in ex-socialist countries with those of western Europe. The initiative has gathered enough support from individuals, organisations and parties in the other countries concerned (Bulgaria, Croatia, Estonia, Poland, Romania and Slovakia) for the European Commission to register it as a European citizens’ initiative. Supporters of the initiative have one year to gather one million signatures in order to place the issue on the Commission’s agenda.

Opinions differ on the topic, but wages in Hungary certainly need to be increased. Economist Zoltán Pogátsa says the reasons why the current wage level cannot be sustained are very simple:

  • it is not enough to fund a person’s cost of living;
  • it does not provide sufficient income for the state budget;
  • the economy cannot grow;
  • it hinders the technological and productivity development of Hungary.

At the same time, it is unclear how wages can be equalised in the EU if the level of development varies so greatly in the various Member States.

On 8 September 2017, the parliament building hosted a trade union conference to discuss the European Citizens’ Initiative for a European Wage Union. Some 23 Hungarian trade unions participated at the invitation of the Jobbik party, along with representatives of the movement from Poland and Bulgaria. Jobbik announced that it intends to hand over the initiative to trade unions, in order to lift it out of political infighting.

Strike at Tesco

Trade unions representing workers at the retail giant Tesco, the Trade Union of Commercial Employees (KASZ) and the Independent Trade Union of Commercial Workers (KDFSZ), negotiated a pay rise of HUF 17,000 (€54.50 as at 1 November 2017) after a joint demonstration in July.

However, staff shortages at the company have become so severe over the past few years that workers are struggling to cope with heavy, often unbearable workloads. The management of Tesco was not open to meaningful talks to address this issue and in August 2017 a strike committee was set up with two demands: a 25% wage increase and a 15% increase in staff compared, to 2016.

As the cooling-off period did not bring any agreement, the strike took place on 9 September (from 16:00 to 24:00) and 10 September (from 10:00 to 24:00) with considerable differences in the levels of support of workers across the country. Approximately 4,000–5,000 of the 20,000 Tesco workers went on strike, with 126 stores affected (out of a total of 200). Some 56 stores closed fully or partially during the two days and negotiations are continuing. As a knock-on effect, several other multinational grocery chains have now begun wage negotiations. During the strike period 100 workers joined KASZ.

Commentary

The trade unions and Tesco management are likely to conclude a wage agreement up to the end of the year. At the same time, the National Union of Chimney Sweeps (KOS) announced a demonstration and a trade union at the Hungarian State Opera also announced strike action.

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