Questionnaire for EIRO thematic feature on National Action Plans for employment 2004 - case of Hungary

Since the early nineties Hungary has built a plethora of social dialogue institutions addressing labour market policy issues. When the Ministry of Employment and Labour completed the draft version of the NAP in June 2004, it could rely on the routine of a well-established institutional background. The NAP was sent to the 9 employers’ associations and the 6 trade union confederations sitting in the National Interest Reconciliation Council, to the bipartite Sectoral Social Dialogue Committees as well as to the 20 county Labour Councils. In the final text the Ministry incorporated those comments of the social partners which were relevant from the point of view of the guidelines of the European Employment Strategy. All other comments were summarised in the 6th Annex of the NAP. None the less, 'reform partnerships', in the strict sense of the call of the European Council, are rudimentary in the country.

Question 1. Procedural aspects

Since the early nineties Hungary has built a plethora of social dialogue institutions addressing labour market policy issues. At the national level the agenda of the major tripartite forum, National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) and those of its predecessors have regularly included the government’s employment policy. Furthermore, OÉT has a specialised permanent body named Labour Market Committee (Munkaerőpiaci Bizottság) for expert consultations and preparatory talks on labour market policy issues to be negotiated at plenary sessions. Also at national level, the social partners have a distinguished 'co-management' position in the Steering Committee of the Labour Market Fund (Munkaerőpiaci Alap Irányítótestülete), which makes the major decisions on the utilisation of the Labour Market Fund funded from the compulsory contribution of employers and employees, and they have a similar role in the National Employment Foundation (Országos Foglalkoztatási Közalapítvány, OFA), a channel for public financing of various employment policy projects. At the county level, the tripartite County Labour Councils (Megyei Munkügyi Tanácsok) have a say in the work and expenditures of the Public Employment Service (Állami Foglalkoztatási Szolgálat, ÁFSZ).

Like the other 'new' member states, Hungary is submitting its first NAP in 2004, but the co-ordination process on employment policy began earlier. The 'Joint Assessment of the Employment Policy Priorities of Hungary' (JAP) was signed by the Commission and the Hungarian Government in 2001, aimed to adjust institutions and policies to allow them to fully participate in the EU-wide 'open co-ordination mechanism' (OMC) by the time of accession. Social partners were also informed about and consulted on the JAP and its follow-ups in 2002 and 2003 through the above-mentioned regular forums. Furthermore, the preparation of the National Development Plan (Nemzeti Fejlesztési Terv, NFT), which made the Hungarian government technically able to utilise the EU Structural and Cohesion Funds and included an operational programme on human resources development too, also involved a well-elaborated social and civil dialogue process in 2002-2003 that certainly serves as a model for consultations on the NAP. (HU0306103F)

Prior to the discussion on the NAP, in April 2004 the social partners were consulted about the government’s strategy on 'Life Long Learning'. Moreover, in January 2004 the Hungarian Government presented its mid-term Employment Strategy for 2003-4 in OÉT. Although both the employers’ and the employees’ side brought up many reservations, the document was basically welcomed by the social partners, especially because it envisaged sectoral policies and outlined a possible amendment of the Act on Employment Promotion. This bill was supposed to ensure that the Labour Market Fund is used exclusively for active and passive labour market policies, i.e. to impose a ban on spending for other governmental tasks. None the less the government withdrew this proposal, and promised not to implement it until after 2006 - arguably for mere financial reasons.

1.1 Which organisations did the government consult on the preparation of the 2004 NAP and at what level (national, regional, local etc)? Were these organisations informed in time and did they have enough time to react? To what extent have national 'reform partnerships' been set up in your country in response to the call made at the spring 2004 European Council (see Introduction)?

When the Ministry of Employment and Labour (Foglalkoztatáspolitikai és Munkaügyi Minisztérium, FMM) completed the draft version of the NAP in June 2004, it was sent to the 9 employers’ associations and the 6 trade union confederations sitting in the OÉT, to the bipartite Sectoral Social Dialogue Committees as well as to the 20 county Labour Councils. In July the draft was on the agendas of the Labour Market Committee and of the plenary session of OÉT, and in September the revised, almost complete version was discussed in these bodies again. Additionally, almost 100 NGOs were invited to give their opinion on the draft version.

In order to facilitate a meaningful debate and highlight the main issues, the Ministry asked three questions when first sent the inquiry to the social partners:

Can flexibility and security of employment be combined in a balanced way? How can employment become more flexible without significantly reducing the security of workers? What are the ways to enhance flexibility?

How can a balanced and employment-friendly wage development be ensured? Considering the recommendations of the Council, what are the prospects of a multi-annual wage agreement?

How can investment in human capital be increased? What are the roles of the employers, employees and the Government in enhancing lifelong learning of workers?

The social and civil partners were given 2 weeks in June and one month in September to react, and meanwhile the Ministry received some written comments in July, too. Social partners confirmed they had had enough time to comment on the NAP. Written contributions came mainly from trade unions, especially from the National Association of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége, MSZOSZ), which runs an internal task force to elaborate employment policy proposals; also, some employer organisations (for instance the National Federation of Agricultural Cooperatives and Producers (Mezőgazdasági Szövetkezők és Termelők Országos Szövetsége, MOSZ)) submitted their comments. None the less, 'reform partnerships', in the strict sense of the call of the European Council, are rudimentary in the country.

1.2 If the social partners have submitted their views, are these represented in the NAP? Please give brief details.

In the final text the Ministry incorporated those comments of the social partners which were relevant from the point of view of the guidelines of the European Employment Strategy. All other comments were summarised in the 6th Annex of the NAP. This document includes both the detailed answers to the above mentioned three questions of the Ministry and the comments to each guideline, separately for employers’ organisations and trade unions.

1.3 Does the NAP include a chapter/part written by social partners? Is the NAP a joint text? Did the social partners sign the NAP?

Although the Ministry offered the possibility, the social partners failed to write any part, and neither the employers nor the trade unions provided the summary of their positions. Basically, the text was produced by the Ministry, and the social partners’ role was only commenting, but their comments were also reviewed by the staff of the Ministry.

While the social partners did not sign the Hungarian NAP, the 17 September meeting of OÉT formally approved the final text.

1.4 What was the degree of consultation of the social partners? Was the consultation important in substance or were social partners asked to say just 'yes' or 'no'?

See 1.1.

1.5 Overall, what is the assessment of the social partners of the current process of drawing up NAPs in your country?

The overall assessment of the process is positive as it was in line with the established national practice, and the Ministry made use of all available institutional channels.

Question 2. Matters of policy content

2.1 Please give a brief description of any significant tripartite arrangements in your country for implementing some or all of the current EU employment guidelines (if there are none, please provide some explanation).

So far tripartite agreements have not been concluded for implementing the EU employment guidelines. Given the decentralised nature of collective bargaining in the country, such national or sectoral agreements would assume an innovative break with national practices. At national level, binding tripartite agreements are rare (only the outcome of negotiations on the national minimum wage is compulsory for all employers), while the coverage of sectoral collective agreements is limited and their content has hardly any serious impact on the labour market. That is why all the EU directives have so far been transposed by legislation (instead of agreements), and even the EU level telework framework agreement was incorporated into the Hungarian labour law instead of relying on the bipartite action of the social partners. (HU0410101F)

2.2 Please outline (with examples) how the social partners at various levels have contributed - ie through collective bargaining, consultations, joint or unilateral actions etc - to the implementation of:

  • the current employment guidelines, and especially those entitled 'Address change and promote adaptability and mobility in the labour market', 'Promote development of human capital and lifelong learning', 'Increase labour supply and promote active ageing' and 'Gender equality'; and
  • the specific employment recommendations to your country (known as 'priorities' in the case of the new Member States) made by the Council in June 2004 (see attached document recs 2004.pdf, under the 'Country specific recommendations' starting on page 6, and 'Priorities for new Member States' beginning on p.26).

In sectoral collective bargaining, there are signs of moving towards new agreements to ensure the trade-off between flexibility and security. For instance, the agricultural sectoral agreement concluded in 2003 introduced the six-month reference period (working time account), which might stabilize the employment of former seasonal workers. In the same sector the major employer organisation and trade union federation together with the Minister of Employment and Labour issued a call urging local actors in the labour market to elaborate joint initiatives to improve the employment situation at the regional level. (HU0406102N) Furthermore, the Agricultural Sectoral Social Dialogue Committee reviewed labour market developments in the sector, and apart from this analysis an agreement is underway between the social partners and the Ministry of Agriculture and Regional Development (Földművelési és Vidékfejlesztési Minisztérium, FVM) on the first Sectoral Employment Policy Action Plan.

2.3 What is the social partners’ assessment of the employment policy of the government?

The social partners assess the employment policy mostly in terms of the failure to implement the government’s Employment Strategy, which had been submitted to and accepted by the OÉT in the beginning of the year. Many view the NAP as a good summary document of possible measures in line with the employment policy, which, however, lacks an overarching vision because of the harsh financial reality. Generally, employer representatives point out that while the government engages in 'fire-fighter style actions' to show how hard it tries to meet the European policy objectives, in reality the perceived financial constrains are basically stemming from the persistent postponement of major reforms in state budget expenditures and in the different state-run welfare systems.

2.4 Are there any gaps or any insufficiencies identified by the social partners in the NAP?

The social partners’ major reservations are limited to the field of sectoral policies. According to them even the Ministry of Economy and Transport (Gazdasági és Közlekedési Minisztérium, GKM) was unable to present industrial policies for the different branches on which to base their forecasts of labour market needs and the necessary employment policy measures. Another line of critics say that the NAP insists overly and somewhat mechanically on the European guidelines and objectives while it fails to address the problems within the special Hungarian context. According to some representatives of the social partners, mitigating regional differences should have been more emphatic.

Question 3. BEPGs

Have the social partners been informed or consulted over, or involved in the implementation in your country of, the EU’s broad economic policy guidelines (BEPGs) for 2004? (the BEPGs document is attached)

The BEPGs themselves were not on the consultative agenda, but the government’s so-called 'convergence programme', the major policy document concerning the macroeconomic policy aiming to approximation to the Maastricht criteria for entering the Euro-zone, is an annually recurring issue.

One item of the BEPGs, the negotiations for multi-annual wage agreement was an integrated part of the Commission’s country specific employment policy recommendation too. This issue was also highlighted by the government in the above-mentioned three questions for the social partners. With preparatory works for a comprehensive 'social pact' style agreement currently missing, however, the social partners set aside this call soon. The employers’ organisations consider a national level multi-annual wage agreement unfeasible unless economic growth is sustainable and the government assures predictable tax and social security regimes for a similar multi-annual period. Some employer confederations can envisage such sectoral wage agreements with a mandatory national wage-tariff regime while others oppose multi-annual agreement as such because in their view wage developments should be based on the actual growth and performance of the economy. Trade unions also view stable and predictable economic and regulatory environment as a prerequisite, but they are basically in favour of a medium-term indicative agreement on the approximation of wages to the EU average.

Question 4. Comments

Please add here any other comments on the procedures, contents and implementation of the NAP.

As to the procedure, no doubt the routine of a well-established institutional background has its own merits, but at the same time the institutions’ inertia hinders to renew the existing practices therefore reform partnerships and a more active role of the social partners cannot be developed. National and sectoral collective bargaining for implementation is practically ruled out by the decentralised structure of bargaining. The newly established Sectoral Social Dialogue Committees are not yet in the position to initiate meaningful actions for furthering the aims of the NAP in all sectors concerned.

The lack of bipartite agreements or of unilateral initiatives either on the part of employers’ organisations or of trade unions is in conjunction with their limited experts’ capacity. Despite the plethora of the forums and government subsidies earmarked for certain functions of the social partner organisations, the same few experts take part in the various committees, and the smaller confederations can not cope with the enlarged tasks stemming from the EU membership. They cannot afford to employ experts appropriately trained and specialized in employment policy issues. In the field of employment policy, there are no joint actions by the confederations on either side, and they were unable to produce common position papers on the NAP. The same holds for macroeconomic topics, thus one cannot expect real meaningful debates on the BEPGs either. All this explains why the government has to undertake the lion’s share of preparing the policy documents to be discussed at the tripartite forums and submitted to the Commission.

As far as the contents of the debate are concerned, reiteration of certain points of earlier debates seems to be dominant. One such claim is that that the Labour Market Fund should allocate funding only for employment purposes. The elimination of the flat rate part of social security contribution is not only a recurring demand but for the employers it is also the evidence of the government’s unreliability for it has withdrawn its own promise to phase out this sort of wage levy by 2005. Similarly, employers have long demanded a vocational training curriculum that meets the current demand of the labour market as well as a comprehensive revision of the Labour Code in order to limit mandatory regulations setting the minimum standards and give sectoral and local agreements a greater role in regulating working conditions. There are repeated claims on the trade union side, too: approximate Hungarian wages to the European average, to shorten the weekly working hours and to increase the employment rate faster than planned by the NAP. While these 'extreme', sometimes unrealistic, claims of the social partners were neutralized by the opposite side, less attention was paid to the actual policy contents of the NAP. By and large, the preparation of the first NAP of the country failed to become an outstanding historical event in the series of tripartite negotiations.

As it was stated at the 17 September session of OÉT, the adequate implementation of the NAP and coordinating it with the Government agenda is a priority for the social partners. Social partners emphasised their commitment to implement the NAP and participate in the Monitoring Committee. They also supported the establishment of the inter-ministerial Employment Policy Committee which includes the social partners. It was also agreed that the government should submit to OÉT a comprehensive review of the labour market situation and the implementation of the NAP twice a year. (ကLászló Neumann and András Tóth)

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