Spotlight on four years of sectoral social dialogue

The fourth anniversary of the tripartite agreement establishing the rules of sectoral social dialogue committees was marked this year by a conference and publication outlining the development of these committees. This article provides a synopsis of the committees’ development, including the background to their establishment, their main activities to date and any weaknesses which have been identified. Altogether, some 36 such committees have been established in Hungary to date.

Setting up of sectoral social dialogue committees

An EU PHARE project, launched in June 2002, sought to address one of the biggest shortcomings of the Hungarian industrial relations system: the lack of proper social dialogue at sectoral level. The project aimed to establish bipartite sectoral social dialogue committees (Ágazati Párbeszéd Bizottságok) in 18 industries in Hungary. These committees seek to provide appropriate forums for consultation on sectoral policies, to facilitate collective bargaining and to enable the Hungarian social partners to play an active role in EU-level sectoral social dialogue (HU0212106F).

The National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT), which launched the project, delegated members to the tripartite sectoral council, the implementing body, and then monitored the performance of the project. OÉT concluded that the project was successful at a closing conference in January 2004. According to the requirements of PHARE funding, the government is responsible for implementing the project and for ensuring its sustainability. This includes guaranteeing funding for new committees and creating the framework in which the Hungarian sectoral social partners may apply for community funding. However, the government’s role is also confined to developing the committees’ legal foundation and financial support, while all parties have agreed on the principle of autonomy for the committees in areas such as setting the agenda, inviting government representatives and defining the contents of agreements concluded.

Regulation

The PHARE project mobilised employer organisations and trade unions across industries, which soon established a series of committees based on mutual recognition. Although the Ministry of Social Affairs and Labour (Szociális és Munkaügyi Minisztérium, SZMM) recognised these ‘self-organised’ bodies, it insisted on linking participation in the sectoral social dialogue committees to representativeness criteria to be elaborated jointly with the social partners.

A tripartite ad hoc team, based on OÉT, was established to develop measurable criteria for both employer organisations and trade unions. Finally, the government and peak organisations of the social partners signed an agreement on 22 September 2004 to regulate the operation of these committees, including their representativeness criteria, until the appropriate legal regulation came into force (HU0501105F). Although the relevant law was passed by the parliament, President László Sólyom refused to sign it and submitted it to the Constitutional Court (Alkotmánybíróság, AB) for constitutional review. As AB has not yet ruled on the case, the 2004 social partner agreement continues to regulate the operation of the sectoral social dialogue committees to date (HU0602101F, HU0701039I).

Three sectoral social dialogue committee models

In 2002, the government’s first draft of the rules for these committees envisaged an open-ended structure with three different models. The first model viewed the committee as a consultative forum. The second model assumed voluntary collective bargaining, where agreements may be extended by the minister. The third model would empower the sectoral social dialogue committees to conclude collective agreements with mandatory power in a given industry. Different representativeness criteria were assumed for each of the models: the more power a model had, the stricter the criteria would be. In the end, the third model was rejected due to legal concerns, similar to those later raised by Hungary’s President Sólyom: namely, that the Hungarian social partners’ legitimacy is insufficient to endow them with such a quasi-legislative function.

Finally, the founding document was formulated to allow for two approaches regarding the setting up of sectoral social dialogue committees and in terms of decision making in relation to its own procedures: that is, by mutual agreement and by standard rules based on the measuring of the organisations’ representativeness. The 2004 national agreement laid down the sectoral representativeness criteria and established a special tripartite committee to decide which organisations should be deemed representative. The complex criteria for participation in the sectoral social dialogue committees relate to aspects such as: the appropriate legal foundations of the organisations; the proportion of companies and employees covered by them; affiliation to national and international federations; previous experience in social dialogue and collective bargaining; and the results of the latest work council elections with respect to the trade unions only. The committee decides about representativeness based on a complicated score-system and may award a different status for the applicants – such as a consultative, decision-making or representative decision-making status.

Decision-making forum

In the meantime, the established sectoral social dialogue committees came together to form the Council of Social Dialogue Committees (Ágazati Párbeszéd Bizottságok Tanácsa, ÁPBT), with the participation of a SZMM representative. The ÁPBT became the major decision-making forum in matters concerning the work and finance of these committess. In 2004, the government, with the consent of the social partners, founded the Sectoral Social Dialogue Centre (Ágazati Párbeszéd Központ, ÁPK), comprising 20 staff members, to provide the sectoral social dialogue committees with administrative and financial support. Subsequently, with the reorganisation of the labour administration, the Social Dialogue Centre (Társadalmi Párbeszéd Központ, TPK) was founded as a successor to ÁPK (HU0702019I).

Funding

The budget threshold of the Labour Market Fund (Munkaerőpiaci Alap) for ‘social dialogue programmes’ stood at HUF 1,690 million (€6.3 million as at 21 November 2008) for 2008 and includes the operational costs of the sectoral social dialogue committees. However, the committees will soon be able to apply for even more generous funding for ‘capacity building of the social partners’ in the framework of the New Hungary development plan – an initiative set up to enable the channelling of EU funding.

Scope

Since the beginning of the PHARE programme, a total of 36 bipartite sectoral social dialogue committees have been established. These comprise the 26 social dialogue committees that have been set up for the different sectors, such as mining, food processing, construction, gas and telecommunications, along with the 10 sectoral social dialogue committees representing subsectors within a committee, such as sugar refineries, sweets production, meat processing and bakeries within the food industry. The social partners are free to define the scope of the committees – in other words, they may deviate from the strict definitions of the Statistical Classification of Economic Activities in the European Community (Nomenclature statistique des activités économiques dans la Communauté européenne, NACE). Sectoral social dialogue committees have been established in industries such as private security – probably the fastest growing industry in recent decades – and in sheltered workplaces. However, for various reasons, committees have not yet been founded in important fields such as temporary agency work and rail transport.

Activities

The sectoral social dialogue committees’ main activities have included the following:

• consulting on government bills and other policy papers;
• developing initiatives for the preparation of professional documents;
• issuing recommendations;
• partaking in EU-level social dialogue.

In relation to the latter activity, Hungarian representatives have to date participated in EU-level social dialogue in sectors such as mining, gas, construction, private security, agriculture, hospitality, electricity and chemicals.

Source: Lux, J., ‘Sectoral social dialogue committees after the PHARE programme’, in Berki, E. (ed.), Social dialogue in new frameworks, FSZH-TPK, 2008 (in Hungarian).

Low rate of sectoral collective bargaining

Sectoral collective bargaining is, however, not the strongest activity of the sectoral social dialogue committees. Since 2004, only two new agreements have been concluded: in 2005 for the construction industry and in 2007 for the private security industry. The first agreement was extended by the SZMM to the whole sector (HU0506105F, HU0601102N). In several other economic sectors, such as bus transport, bakeries, electricity, water management and chemicals, sectoral agreements were concluded before 2002 and are now undergoing renegotiation within the committees, together with the supplementing of annual wage agreements (HU0502102N, HU0608019I, HU0701049I).

In 2007, a total of 17 sectoral agreements with national scope, concluded by employer organisations, were in force. These covered some 366,563 employees following their extension – or 19% of competitive (private) sector employment in companies employing more than four employees. Furthermore, a number of sectoral agreements were in force with county or regional scope, covering only about 2,000–3,000 people. The modest increase in the sectoral agreement coverage rate since 2004 is mainly due to the extended construction agreement, as the other extension decrees were either issued earlier or renewed.

Position of social partners

The social partners have had diverging expectations regarding the sectoral social dialogue committees. Trade unions sought to develop the committees into a bargaining forum, while the employers stressed the consultative and lobbying function of these committees. In many sectors, the prospect of collective bargaining remained an element of rhetoric.

Little is known about the social partners’ official positions on the sectoral social dialogue committees. Formally, the TPK annual reports are regularly on the agenda of OÉT, which, as a rule, accepts them, albeit with minor reservations. In April 2007, for instance, the employers’ side called for more concise and concrete reports in the future. The trade unions, however, have been more vociferous in their comments, criticising the predecessor of TPK for the organisational and financial ‘disorders’ which they claimed had absorbed enormous energies at the expense of ‘meaningful work’. They also considered it ‘regrettable’ that the report on sectoral social dialogue committees did not outline future possibilities and tasks.

Commentary

Undoubtedly, the establishment of the sectoral social dialogue committees represents one of the most important initiatives of the decade in terms of reshaping Hungary’s industrial relations system. In recent years, sectoral activities, both within the country and at EU level, have strengthened in the framework of the sectoral social dialogue committees to a degree which had not been previously envisaged.

Nonetheless, government officials have cautiously expressed their dissatisfaction with the committees’ activities. Even the social partners, the beneficiaries of the present system which has put in place abundant resources for them, expressed informal criticisms. Despite the high number of sectoral social dialogue committees, commentators stress that the committees have far from exploited their potential. A major shortcoming has been the committees’ inability to tackle the major reasons why sectoral bargaining remains insignificant in Hungary; this is due to: the lack of will on the part of the employers; the weak bargaining power of the sectoral trade unions; and the mismatch between the domains of sectoral organisations. Besides the country’s poor record in relation to genuine bargaining development, criticisms have also been made of the inefficient use of available funds – for example, the poor quality of expert studies and improper study trips – along with the unresolved or contested representativeness issues which remain in certain sectors.

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