Industrial relations in the public sector ─ Hungary

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This report presents an overview of industrial relations in the central government and public sector in Hungary.

1. Structure of the public sector in your country

Please provide:

The definition of the public sector commonly accepted and used in your country. What are the different sectors covered (e.g. central government, local government, health sector, education, others)?

The commonly used Hungarian definition for the ‘public sector’ (‘közszolgálat’ – literally translated: ‘public service’) is based on the funding of the organisations in the sector, as their operational costs are covered by the budget of the central or local governments. These organisations include the central government, local government, as well as health and social work, education and many sorts of cultural activities. The public sector obviously includes the different law enforcement agencies (police, armed forces, border guards, fire fighters, intelligence, custom officers, etc.) too. As far as employment relationship is concerned there are strict legal demarcations between different fields of the public sector. (See 2.1)

The definition of the central government sector commonly accepted and used in your country. What are the different sectors covered?

Yes, it is accepted and used basically in contrast to the local government sector. The central government sector primarily means different offices of public administration (mainly ministries and other government agencies), but also includes law enforcement agencies (run by the central government). Interestingly, in Hungary there is a middle layer of public administration between central and local governments, the so-called ‘decentralised offices’ performing some central governmental functions on territorial basis, especially in the counties.

The following data:

* Companies and institutions employing more than 4; no data by sex available

** Public administration, defence and compulsory social security (thus including civil servants at local governments, too.)

*** 1 January of each year

Estimates on the gender composition of employees can be found in the Labour Force Survey data published by Hungarian Central Statistical Office (Központi Statisztikai Hivatal, HSCO). According to the LFS, the public administration, defence and compulsory social security sector employed 146.3 thousand men and 151.6 thousand women in 2005. The two major public service sectors, education and health care, employed 72.7 and 58.4 thousand men, respectively in 2005, while female employment was considerably higher: 250.7 and 204.3 thousand.

Please clarify whether central government employment includes: a) school teachers; b) NHS employees; c) armed forces and police; other non-ministerial employees. If data include these groups of employees, please indicate their numbers (or estimated share).

No employment data available by types of employment contract. However, HSCO publishes the number of part-time employees in the whole ‘public administration, defence and compulsory social security’ sector. In 2003, 2004 and 2005 their number were 18.1, 19.4 and 19.2 thousand, respectively.

Please indicate whether fixed-term employment and part-time work are typical of certain organisational areas in the central government sector (for instance, top job positions rather than lower-level occupations) or group of workers (such as employees approaching retirement, new recruits, women, technicians, and the like)

No. Top job (political) positions in the ministries are filled by fixed-term appointment, its term usually expires at the end of the electoral cycle.

Please indicate the presence and quantitative relevance of non-standard employment relationships in the central government sector, and especially of temporary agency work and service contracts with individuals or other non-standard contractual relationships that are important in your country.

Service contracts are used for various experts, but their share is modest compared to other sectors.

2. Employment regulation

Public sector vs. private sector.

Do (certain) public sector employees enjoy special status compared with private sector employees?

Following the collapse of the state-socialist system, labour legislation brought about three major laws regulating individual employment relationship and collective representation of workers. The Labour Code (Act XXII of 1992) regulates terms and conditions of employment in the case of the private sector, government-owned enterprises and not for profit organisations. There are separate laws regulating employment in different parts of the public sector. (See 1.2)

Do all public sector employees have the same status or are there differences between different groups of employees, as, for instance, between civil servants, clerical employees and workers?

The four major public sector laws are the following: Act XXXIII. of 1992 on the legal status of public service employees (Kjt.), Act XXXIII. of 1992 on the legal status of civil servants (Ktv.), Act LXIII of 1996 on professional staff’s service at the armed forces (Hszt.) and Act XCV of 2001 on the professional and contractual staff’s service in the army (Hjt.). Basically Kjt. regulates the employment relationship in state run services (such as education, health care and social work), while Ktv. assumed to provide regulation for civil servants at the central and local government. Additionally, there are separate laws for the employment relationship of judges and state attorneys. In 2001 an amendment of the Ktv. affected the status of those employees in public administration, mainly manual workers in government offices, who do not hold public powers. They were deprived of the status of ‘civil servant’ and since then the terms of their employment have been regulated by the Labour Code.

If public sector employees enjoy special status(es), please specify:

The distinctive features of (each) public sector employment status, highlighting the main differences with the status of private sector employees (and, if relevant, among the various public sector statuses). In particular, indicate whether such differences involve the rights: i) of association; ii) to bargaining collectively; iii) to strike.

The intention of the 1992 legislation was to create a more secure, somewhat protected employment status in the public sector through legal regulation, especially for civil servants and for armed force personnel. In turn, the legislation curbed the role of collective bargaining and the collective rights of employees in the public sector. Therefore the laws prescribe fairly detailed rules of terms and conditions of employment, including salary scales, promotion, procedures for hiring and firing. However, there are noteworthy differences between the collective rights of public employees under the different laws. (See table 1. Naturally, under the Labour Code all the enumerated rights and institutions are allowed.)

* It has been legally possible since the amendment of Kjt. in 2004.

Source: Berki, E.: Industrial Relations in the Public Sector. In.: in Fazekas, K. and Koltay, J. (eds) The Hungarian Labour Market – Review and Analysis 2006, Budapest: Institute of Economics, HAS & National Employment Foundation.

The requirements that must be fulfilled to gain (each) such special status(es): i) pass a public examination; ii) achieve a certain tenure in the position; c) in terms of nationality; d) other specific conditions.

The salary scales established by the above-mentioned laws require certain qualification and tenure for each salary bracket.

Central government. Please indicate whether and how this special employment status regulation applies to central government employees.

For civil servants there is an obligation to pass a ‘civil servants’ exam’ (‘köztisztviselői vizsga’) to get a permanent position and promotion. Also, for civil servants Hungarian citizenship is a precondition in all positions.

Please fill in the following table:

*Public administration, defence and compulsory social security (thus including civil servants at local governments, too.), no data by sex available.

Source: Individual Wage Survey, National Employment Office (Foglalkoztatási Hivatal, FH)

N.B.: add further columns if required

Please indicate the elements of the employment relationship of central government employees which are regulated by:

1. Specific legislation.

There are no specific laws for central government employees. It is worth to note, however, that in addition to the mandatory salary scale, according to the law (Kjt.) civil servants are given certain allowance (‘illetménykiegészítés’), which depends on the position of the workplace in the hierarchy of state offices. As a rule such additional pay is higher in central government offices than at lower levels.

Previously certain key officers of ministries were rewarded a special distinguished status, ‘senior civil servant’ (‘főtisztviselő’), but this stipulation of Ktv. has been repelled by the current government.

Beyond laws, each ministry has a Public Service Code (‘Közszolgálati Szabályzat’), in which the minister, following consultations with employee representatives, establishes detailed rules of employment.

2. Collective bargaining.

The law (Ktv.) rules out collective bargaining in public administration in the strict legal sense. However, ad hoc agreements between trade unions and employers, both at central and local level, often prescribe management specific rules or recommendations for implementation of measures amounting to major changes in employment. Exactly this happened to the recent government measure to streamline the organisation and staff of central government. (HU0607039I)

In your answer, please refer specifically to elements such as recruitment procedures, pay (see also below), working time, work organisation, job security and employment protections, social security.

Please, briefly illustrate whether and how reform of employment regulation in the central government sector since the 1990s has affected:

3. The status of workers.

An earlier government measure introduced a special pre-pension scheme, the so-called ’Premium years programme‘, primarily for civil servants. (HU0507102F)

The most recent amendment of the Kjt. made the dismissal and collective redundancies of civil servants easier for the employers, for instance, the amount of severance pay has been decreased substantially.

4. The balance between legislation and collective bargaining in regulating the various dimensions of the employment relationships.

No change since 1992.

5. Other relevant industrial relations dimensions, such as representation, conflict and its regulation.

New rules have been introduced for assessing the representativeness of trade unions in the whole public sector. (HU0502104F) In the lack of collective bargaining, however, in the case of the central government the scope of this legislation is limited to participation in higher consultative bodies. (See 5.2.)

Please, briefly illustrate whether and how reorganisation and restructuring in the central government sector since the 1990s, for instance through the establishment of special agencies or the separation of specific bodies and offices, has affected:

6. The status of significant groups of workers.

Earlier a number of agencies (mainly in the form of public benefit company (Kht.) – a special form of business organisation) were created out of former departments of ministries. The legal status of employees transferred to these units has changed: instead of civil servants, they are ‘ordinary’ employees whose terms of employment are regulated by the Labour Code. However, the tide has turned when the newly elected government came into power; the new policy for streamlining public administration includes the elimination of these units, and a part of their employees will be dismissed, and another part will be transferred back to the public sector. (HU0607059I) The law (Ktv.) contains detailed regulations for such transfers in both directions.

The status of manual workers in government offices changed. (See 2.2)

The balance between legislation and collective bargaining in regulating the various dimensions of the employment relationships.

No considerable change since 1992.

Other relevant industrial relations dimensions, such as representation, conflict and its regulation.

Except for the rules of representativeness, there has been no considerable change since 1992.

3. Pay levels and determination

Please indicate:

The presence and relevance of collective bargaining on pay in the central government sector.

As the wage scale and the budget of the public sector institutions are set by the laws, collective bargaining, in the strict legal sense, is limited to workplace level agreements. Moreover, in government offices even workplace level bargaining is not allowed. In turn, national and sectoral negotiations on the annual wage rises are of paramount importance, which may conclude agreements between the government and trade unions.

The number and scope of bargaining units on pay within the central government sector.

Not applies.

Do minimum wage levels vary across the different bargaining units within the central government sector? Are there common minimum wage levels in the whole public sector?

The lowest brackets in the wage scale defined by the above-mentioned laws serve as minimum wage levels in the public sector. This may vary across different areas of the public sector. However, a uniform minimum wage, the so-called ‘minimum wage for graduated employees’ (‘diplomas minimálbér’), was introduced in 2002. (HU0207102F)

Is there a single job classification system for the whole central government sector?

No, different laws define somewhat different systems.

Wage levels and wage increases in the central government and private sectors since 2000 (table 4). If there are great variations across bargaining units within the central government sector, please briefly illustrate such variations.

* with using a uniform exchange rate: EUR 1=HUF 250

** Civil servants in public administration, defence and compulsory social security. Source: FH.

The presence and relevance of variable performance-related pay in the central government sector. Please indicate whether variable pay is particularly relevant in certain bargaining units or organisational areas (for instance, top job positions, officers, or other occupations).

Since 2001 a compulsory annual evaluation system has been applied in public administration, and individual wage determination, namely a certain degree of deviation from the mandatory wage scales, is allowed based on the evaluation of the given employee. Nonetheless, according to the widely held view of Human Resource Management professionals, evaluation and performance-related pay system only rather formally work in the public administration. The government’s new ‘convergence programme’ also intends to enhance performance-related pay system in the public sector. (HU0609029I)

Are there any form of “benchmarking” of wage dynamics in the central government sector with other public sectors or with the private sector? If yes, are industrial relations actors involved in such benchmarking activity?

Not in a formal way. Nonetheless, the annual bargaining round for the public sector is always based on the national agreement/recommendation for the private sector concluded at the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT). (See: 5.2.)

4. Union Presence and density

Please provide information on:

Trade unions which are present in the various bargaining units of the central government sector, their number, affiliation, representational domain, membership, and the sectoral union density (data by gender). Please fill in the following table:

* based of self-reports of the organisations, partly no data by sex available.

** For the whole public administration, defence and compulsory social security. Source: Labour Force Survey, 2004., HSCO.

N.B.: add further rows if required

Please provide information on the diffusion within the central government sector of craft unions, professional unions, or unions which are not affiliated to peak associations.

Since FRDÉSZ joined LIGA in 2005 (HU0511101N) there are no sizable unions not affiliated to any peak organisation.

Are there any formal procedures or rules which aim to assess the representativeness of the various unions? If yes, please, briefly illustrate the content of such procedures or rules. Do these procedures or rules affect the access of the various unions to trade union prerogatives or to the bargaining table? If yes, please specify such effects and any possible limitations.

In 2005 a new system for assessing the representativeness came into force, which is based on the reported membership data. (HU0502104F.)

5. Employer representation

Please provide information on:

Who does represent the central government at the bargaining table? Are there specific independent bodies, such as agencies, or negotiations are carried out under the responsibility of political actors, such as ministers?

There has been a plethora of national and sectoral consultative bodies in the public sector since the Interest Representation Council of Public Institutions (Közalkalmazotti Érdekegyeztető Tanács, KIÉT) was established in 1992. Currently the main forum for the whole public sector is the National Public Service Interest Reconciliation Council (Országos Közszolgálati Érdekegyeztető Tanács, OKÉT) which provides an institutional framework for concluding agreements covering all public sector employees, while several others have been created to deal with narrower fields of public services. (For the central government sector see Table 7.)

Nonetheless, the operation of these fora has always been characterised by the predominance of consultation. The substance of it is that the government asks for the opinion of its partners in questions concerning the whole or a part of the public sector. However, the nature, intensity, and contents of consultation have always depended on the political-ideological disposition of the government in power and on the state of the actual budget. Consequently, the number of sessions, the contents of the agenda, and the number of agreements have differed from period to period during the one and a half decades of their operation.

Source: Berki, E. : Industrial Relations in the Public Sector. In.: in Fazekas, K. and Koltay, J. (eds) The Hungarian Labour Market – Review and Analysis 2006, Budapest: Institute of Economics, HAS & National Employment Foundation.

If negotiations are carried out by specific independent bodies, please indicate how they are organised. In particular, specify whether there are guidelines or other directives set by political actors and how the tasks of the independent bodies are carried out. For instance, negotiations have to follow specific stages?

The conclusion of annual wage agreements for the whole public sector became a regular practice at KIÉT and OKÉT level. (For instance, in the 2006 bargaining round the agreement was signed 2 weeks after the OÉT agreement on private sector wages. (HU0601101N)) Legislative changes, major governmental measures affecting public employees (such as pre-pension schemes, streamlining the staff, etc.) are also on the agenda of OKÉT. The function of lower (sectoral) level fora is partly to ensure the articulation of the top level agreements (HU0208102F), and also to deal with the government’s proposals affecting a particular field of public administration.

If negotiations are carried under the direct responsibility of political actors, please indicate how they are organised. For instance, do negotiations take place under the responsibility of a single ministry, for instance the Finance Ministry, or are they carried out by a delegation or in a different way?

Officially the government is the negotiating party, however, the composition of the government’s actual representatives depends on the agenda, the government’s delegation often consists of high-rank officers from several ministries.

Do collective agreements in the central government sector have to pass an ex-post “validation” procedure, for instance to certify their compliance with budget constraints? If present, please briefly illustrate such procedure and the consequences of failure to pass it.

No.

6. Collective bargaining and conflict in central government

Please provide information on:

The structure of collective bargaining and, in particular, the number and scope of bargaining units, both at central (national) and decentralised (workplace and territorial) levels.

Not applies.

The duration of agreements and the presence and content of peace obligations.

–The main issues of collective bargaining by referring to the latest renewals.

–Levels and recent trends in conflict.

Registered data on industrial actions show a tendency for the increase of public service employees, whilst the number of actions of civil servants stagnate at a low level. Even among public service employees only a few actions lead to actual strikes – demonstrations and petitions are more typical.

The presence and main features of forms of regulation of labour conflict and collective dispute resolution procedures. Please indicate whether such rules are specific to the central government sector, or apply to the whole public sector, or are general and cover both public and private sectors.

There are no specific legal rules for civil servants. In 1994 an agreement reached at the Interest Reconciliation Forum for Civil Servants (Köztisztviselői Érdekegyeztető Fórum, KÉF), the predecessor of KÉT) is guiding the settling of disputes in the central and local government sphere. This agreement of the parties follows the requirements of the Act VII. of 1989 (Strike Act), saying that disputes have to be settled by negotiation, which also regulates the use of the right to strike.

7. Commentary by the NC

Please:

Specify the main issues on the agenda of industrial relations in the central government sector in your country.

In June 2005 the current government announced severe austerity measures which include streamlining the central government offices and reducing the number of civil servants. (HU0607039I) The government programme was first met with fierce opposition of professional associations, experts on public administration and trade unions, but finally negotiations led to agreements with unions both at national and local levels. Nonetheless, it is expected that the implementation of the measures will result in a series of workplace conflicts. As to the policy implication of the measures, it is a widely held view in Hungary that the government’s conflict with civil servants endangers both the quality of work in public administration and it makes the implementation of further reforms in other areas of public sector (such as heath care and education) more difficult.

Cover any further issues which are relevant in your country but have not been covered by previous questions.

While the 1992 legislation envisaged a ‘beamte-style’ status of public employees, the successive governments failed to provide civil servants and public service employees with appropriate security. Salaries were lagging behind the private sector wages, and governmental reforms undermined job security from time to time. Finally, the government decided to raise the salaries of civil servants in 2001 and in the following year public service employees were given a 50% raise. (HU0207102F) It is important to note, that these raises were initiated be the governments, or followed promises of political parties made in the course of the election campaign and it was not an achievement of trade unions through traditional industrial relations instruments. Despite the existence of the numerous interest reconciliation fora, it is doubtless that the government remained the main player.

Lazlo Neumann and Adrienn Balint, MTA PTI