Social dialogue on National Development Plan

As part of its preparations for joining the European Union in 2004, Hungary delivered its first National Development Plan, covering the period 2004-6, in spring 2003. This article examines the partnership approach pursued by the government in drawing up the Plan and the positions and input of trade unions and employers' organisations.

Hungary, with an average per capita GDP of less than 75% of the EU average, expects to use approximately HUF 1,100 billion to HUF 1,600 billion (EUR 4.4 billion to EUR 6.4 billion) of money from the Community Structural and Cohesion Funds – Hungarian co-financing included – over the period between its accession to the Union on 1 May 2004 and the end of 2006. Pursuant to EU Council Regulation (EC) No. 1260/1999 laying down general provisions on the Structural Funds, eligible countries are expected to prepare their development objectives and priorities in the framework of National Development Plans (NDPs) and submit them to the European Commission. These NDPs will be the basis for discussions with the Commission which will produce Community Support Frameworks (CSFs) containing the financial commitments of the EU and the government of the recipient country concerning spending on jointly financed development areas. According to Article 8 of the Council Regulation, partnership between the national government and social as well as civil actors is a key component of the Plans. The application of the principle of partnership should be extended to the preparation, financing, monitoring and evaluation of Community grants.

Contents of the plan

As the main role of Hungary’s National Development Plan (Nemzeti Fejlesztési Terv, NFT) is to enable the government technically to utilise the EU Structural and Cohesion Funds, it proved impossible to draw up an overall development strategy to embrace all sectors. Nevertheless a long-term objective has been defined - to improve living conditions in the country in general and, regarding the given finance period, 'to decrease the territorial differences in the degree of development compared to the EU as well as across regions of the country'. The Plan is divided into five policy areas:

  1. the Human Resources Development Operational Programme;
  2. the Economic Competitiveness Operational Programme;
  3. the Agricultural and Regional Development Operational Programme;
  4. the Regional Operational Programme; and
  5. the Environmental Protection and Infrastructure Operational Programme

Preparations commenced with an analysis of the current situation of the economy and society, and then the main objectives and the sectoral and regional operational programmes were identified. Each operational programme consists of a detailed enumeration of measures and indicative methods for assessing the expected results, and outlines the institutional capacity to implement the programme. For instance, the Human Resources Development Operational Programme, which is the main area of concern for trade unions, aims to increase the employment level, help disadvantaged groups (re)enter the labour market and promote social inclusion. Furthermore, the programme seeks to strengthen employability through improving vocational training and the public employment service - in these fields, infrastructure development seems to be the preferred measure.

Broad-based consultation with social and civil partners

In September 2002, the Office for the National Development Plan and EU Support (Nemzeti Fejlesztési Terv és EU Támogatások Hivatala, NFH), the government department in charge, launched an unprecedented and massive information and consultation campaign to reach all possible partners among local governments, business organisations, professional associations and non-governmental organisations (NGOs). In order to extend the scope of existing social and civil dialogue fora, the NFH used various methods, signing cooperation framework agreements with different organisations, holding a series of meetings with sectoral or regional partners and also relying on personal communication. In an effort to disseminate information to the general public, NFH invited comments via the internet, resulting in over 3,000 comments on its interactive webpage.

However, the National Regional Development Council (Országos and Területfejlesztési Tanács, OTT), the associations of local government bodies and various regional partners continued to be the major consultation partners, as local authorities will be the main beneficiaries of EU assistance and responsible for the utilisation of the funds. The social partners represented on the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) (HU0209101N) were the second major group of consultation partners. In addition to three OÉT plenary meetings with an agenda discussing the NDP, a permanent subcommittee was set up for expert discussions on the Plan. Furthermore, sectoral social dialogue on each Operational Programme was ensured through discussions in at least at one consultative forum working with the ministry in charge of the relevant programme. For instance, the Human Resources Development Operational Programme was subject to consultation with the Labour Market Committee (Munkaerőpiaci Bizottság) of the OÉT. To provide technical assistance underpinning the consultation process, prior to actual discussions the National Employment Foundation (Országos Foglalkoztatási Közalapítvány, OFA) launched a special education programme to train experts on the procedures related to EU funding for employers' organisations and trade unions.

Civil and social dialogue on the NDP took place in three phases: situation analysis and the overall strategy were discussed in October and November 2002; operational programmes were subject to public debate in November 2002; and debate on the final form of the whole document was held from December 2002 to March 2003. The OÉT plenary session gave its final approval on 24 March, and then the final version of the NDP was submitted to the European Commission. In a joint declaration agreed at the plenary session, the social partners recognised that 'the Hungarian government met the partnership principle required by the European Union’s Structural and Cohesion Fund regulations and expressed its readiness for further cooperation.' In fact, participation by representatives of employers’ organisations and trade unions will also continue following the end of the planning phase. The social and other partners will be involved in the preparation of 'programme complements' (Programkiegészítő Dokumentumok) – the documents finalising and elaborating the different measures under each operational programme – as well as in monitoring committees.

Input of the social partners

Both employers and trade unions urged the government to take measures that restore the participation of the social partners in national and lower-level Regional Development Councils (Regionális Fejlesztési Tanácsok), which had been abolished by legislation adopted under the previous right-wing government in 1999 (HU0206101F).

Employers stressed primarily the importance of the small and medium-sized enterprises (SMEs) sector in economic development, and expressed their concerns that the 'one-to-one' adoption of the EU classification system of SMEs excludes many enterprises from support schemes. They also pressed for measures to facilitate the inflow of venture capital in innovative areas and public-private partnership in public services. In order to enhance economic competitiveness, the employers stressed, the demands of businesses need to be matched with vocational training curricula. Moreover, more favourable taxation conditions for research and development activities are required. In connection with the operational programmes, the representatives of agricultural producers demanded reasonable treatment of agriculture, and especially schemes for family farms. Representatives of SMEs demanded a new targeted employment subsidy scheme for the inclusion of unemployed women and groups of older workers.

Trade unions principally focused on improving the standard of living and quality of life, especially in terms of EU levels. They stressed the need for the modernisation of public education and healthcare systems, including an adequate wage policy to retain professionals in public administration, education and healthcare. The reform of the education system should be the key to the implementation of life-long learning and encouraging social inclusion (in relation to the scope of job creation), and as such it should feature more centrally in the NDP, according to the unions. In relation to the Human Resources Development Operational Programme, the unions proposed incentive measures to allow part-time employment better to include women. As for life-long learning objectives, trade unions criticised the government's proposals for being limited to unemployed people, while neglecting the (re)training needs of the whole population in employment. According to the unions, social inclusion measures should be comprehensive in the NDP, and not applicable only to members of the Roma minority. Unions also demanded that health and safety issues should be dealt with in the NDP.

Overall, in the course of consultations during the preparatory phase, the main objective of the social partners was to ensure their appropriate involvement in the implementation of the NDP, along with the re-establishment of their role in Regional Development Councils. In a joint position issued at the 24 March 2003 meeting of the OÉT, the government promised that the partnership approach would continue 'with a distinguished role for the social partners'. Furthermore, a month later the government issued a 'regulation concept' (a Green Paper-level document) on the amendment of the Act on Regional Development, in which it also confirmed its intention to restore the social partners’ seats in Regional Development Councils.

By contrast to the successful negotiations on procedural issues, consultations were less fruitful on the substantive matters, according to the social partners. Admittedly, the social partners on the OÉT and its subcommittee could not cope with the enormous amount of documents and with the accelerated process due to the pressure of deadlines imposed by the government in order to be able to submit the final version of the NDP to the European Commission. Some representatives of the social partners found the objectives of the NDP too general, such that they could not be discussed without knowing the details of implementation. Thus so far hardly any meaningful consultation has developed on the actual content of the NDP. Significant negotiations have been postponed until forthcoming meetings in the course of the implementation and monitoring of the NDP. Furthermore, according to the government, the social partners’ proposals have not yet been included in NDP, and other newly emerging needs will be considered only in 2003, when the Comprehensive Development Plan (CDP) for the next budgetary period will be prepared.

Commentary

EU regulations demand a strong partnership between the government and social as well as civic actors which further upgrades the role of Hungarian social and civil partners beyond their traditional role shaped by domestic written rules and code of conducts. The broad-based approach, successfully developed by the NFH, involves a wide range of civic actors and regional partners. Interestingly, this has not resulted in the dilution of existing social dialogue institutions working in the framework of the OÉT. To the contrary, the OÉT has remained the main forum of discussions with the social partners over the NDP. Moreover, a special training project and a permanent subcommittee of the OÉT facilitated the meaningful contribution of employers and unions to the preparatory phase process and helped them to feel that they remained the key actors in the consultation process.

The content of the discussions between the government and social partners, however, revealed the need for further reinforcement of the expert capacity of the social partners in order to be able to contribute more significantly. The growing number of subcommittees might lead to a situation in which the same set of available experts wear different 'hats' in various fora. One also can hope that, after closing the current debates on the roles and responsibilities of the social partners in various bodies related to the NDP, the implementation phase will concentrate more on substantive issues.

The NDP's Human Resources Development Operational Programme was the major concern for trade unions, while employers’ organisations gave particular attention to the Economic Competitiveness Operational Programme. The proposals of the social partners occasionally went beyond making detailed comments on the various components of the NDP. Employers’ organisations mainly focused on creating a macroeconomic environment which could enhance the chances of domestic firms, especially of SMEs, and wanted consultations on government development subsidies apart from those matching the European Funds. On the other hand, the trade union side may claim it as a victory that the focus of the overall objectives has shifted towards living and working conditions and that, instead of only targeting a reduction of disparities across regions, the need to decrease differences in levels between Hungary and the EU is now equally stressed. Although this sounds like the unions’ populist slogan 'catching up with European wages', it now appears to be nothing more than government rhetoric as currently nobody knows how these goals would be translated into concrete projects funded by the EU Structural and Cohesion Funds. Yet, one can say that trade union objectives to widen the agenda of negotiations are already marking the way for further national tripartite negotiations in which the parties could develop a consensus. Once comprehensive talks on the development of the economy over the coming three- to five-year period are on the agenda – with a view to enhancing competitiveness, raising employment levels, regulating wage increases and meeting the macroeconomic criteria for joining EU Economic and Monetary Union – the issue of EU Structural and Cohesion Funds should also be a crucial 'bargaining chip' in the talks between the government and social partners. (László Neumann and András Tóth, Institute of Political Science, Hungarian Academy of Science)

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