Trade union membership and workplace presence continue to shrink

Trade union membership and workplace presence, along with collective bargaining coverage, have diminished continuously in Hungary in recent years. The 2004 Labour Force Survey indicates that union density stood at 16.9%, down from 19.7% in 2001, while 33% of respondents reported a trade union presence at their workplace, compared with 37% in 2001. However, the reported presence of works councils was up from 32% in 2001 to 36% in 2004.

In Hungary, two official sources supply data on trade union membership: the Labour Force Survey of the Central Statistical Office (Központi Statisztikai Hivatal, KSH) has included a separate section on unionisation every third year since 2001 (HU0206102N) and the Tax and Financial Control Administration (Adó- és Pénzügyi Ellenőrzési Hivatal, APEH) publishes annually information on how many people are taking advantage of a scheme whereby trade union membership fees are tax deductible. Although these sources differ in nature - the KSH figures constitute a relatively subjective assessment, while the APEH figures cover the whole population - they present basically the same picture of trade union membership in Hungary. The KSH Labour Force Survey carried out in the second quarter of 2004 was based on a fairly large sample (almost 30,000 employees). However, the data are distorted by the fact that in the absence of the designated respondent the questionnaire could be answered by an adult relative. This may also explain the large number of 'don't knows'. The questionnaire included a number of questions about employee representation, as follows:

  • trade union membership;
  • presence of unions and works councils in the workplace;
  • workplace coverage by a collective agreement; and
  • influence of collective agreements on wages and working conditions.

The KSH survey also contains some personal data (gender, age, educational attainment etc).

Trade union membership

According to the Labour Force Survey, in 2004 union density was 16.9%, a 2.8 percentage point drop compared with 2001 - see table 1 below. In absolute terms this means that in 2004 there were 550,000 trade union members. The APEH figures confirm both the absolute figures and the trend: the number of employees claiming a tax deduction for union membership fees was 775,000 in 1999, 700,000 in 2000, 654,000 in 2001, 574,000 in 2002, and 600,000 in 2003. Prior to Hungary's political transition in 1990, APEH data indicate that 3.9 million - 83% of the 4.8 million employees - paid union dues.

Table 1. Trade union density by industry and sex, 2001-4 (%)
Sector 2001 2004 Change 2001-4
Male Female Both Male Female Both
Agriculture 5.4 7.9 6.0 9.4 12.5 10.1 4.1
Mining and quarrying 30.2 28.4 29.9 34.6 49.9 37.6 7.7
Manufacturing 16.5 14.9 15.8 14.6 14.6 14.6 -1.2
Electricity, water, gas and steam 28 36.8 30 32 30.5 31.5 1.5
Construction 3.4 3.5 3.4 3.2 9.1 3.8 0.4
Trade and repairs 5.9 8.2 7.1 4.2 6.2 5.3 -1.8
Hotels and restaurants 2.6 6.0 4.4 3.2 4.6 4.1 -0.3
Transport, storage 39.5 41.6 40.1 33.1 37.4 34.3 -5.8
Financial intermediation 12.2 18.0 16.3 10.2 13.2 12.3 -4
Real estate, renting 6.9 7.1 7.0 4.5 6.6 5.5 -1.5
Public administration, defence 25.4 33.5 29.3 26.8 25.4 26.1 -3.2
Education 37.9 40.1 39.6 27.2 30.0 29.4 -10.2
Healthcare and social work 33.2 34.0 33.8 26.9 26.1 26.3 -7.5
Other services 12.2 13.2 12.7 12.1 16.1 14.1 1.4
Total 17.3 22.4 19.7 15.3 18.7 16.9 -2.8

Source: KSH Labour Force Survey.

As far as the different sectors are concerned, in both surveys electricity, water, gas and steam, mining, transport and storage, education, healthcare and social work, and public administration and defence are trade union strongholds. Union density is fairly modest - slightly higher than 10% - in agriculture, manufacturing, finance and services. The lowest unionisation rates are in construction, hotels and restaurants, trade, and real estate and renting. Between 2001 and 2004 only two sectors - agriculture and mining - seem to have increased their union density, although this was mainly due to their contraction: absolute membership shrank here too. The most significant decline was recorded in the public sector: union density fell by 10.2 points in education and by 7.5 points in healthcare and social work

Looking at membership by sex, 18.7% of women are unionised compared with 15.3% of men. However, the difference is smaller than it was three years ago, when the figures were 22.4% and 17.3% respectively. By sector, union density among women is higher than among men in almost every case: the statistics thus do not appear to verify the common belief that women’s higher unionisation rate is due to their higher employment share in heavily unionised sectors such as education, health care and social work, and public administration - the gender gap is similar, or even the opposite, in these sectors.

The KSH survey also clearly shows a tendency towards membership ageing: similar to the previous survey, in 2004 the highest density (22.0%) was in the 55-59 age group, while the unionisation of employees aged 25-29 was only 9.2%. The survey also finds that the density rates of manual and of white-collar employees are disproportionate at 23% and 13%, respectively.

Trade union presence in the workplace

Only 33% of respondents in the KSH Labour Force Survey stated that a union was operating at their workplace; another 54.3% replied that no union was operating, with 12.7% answering 'don't know'. The positive response represents a 4.3 percentage point decrease compared with 2001, when 37.3% of employees signalled a trade union presence at their workplace - see table 2 below. By sector, in both surveys trade unions have an above-average presence in mining, electricity, water, gas and steam, transport and storage, education, healthcare and social work, in contrast to agriculture and services in which the unionisation rate barely exceeds 10%. The lowest rates of presence are in construction, hotels and restaurants, and trade.

Table 2. Trade union workplace presence, by industry, 2001-4 (%)
. 2001 2004 Change 2001-2004
Agriculture 12.9 13.4 0.5
Mining and quarrying 59.3 52.8 -6.5
Manufacturing 33.8 30.9 -2.9
Electricity, water, gas and steam 60.0 59.9 -0.1
Construction 8.3 5.8 -2.5
Trade and repairs 14.3 8.0 -6.3
Hotels and restaurants 8.7 6.2 -2.5
Transport, storage 63.2 53.9 -9.3
Financial intermediation 33.2 26.8 -6.4
Real estate, renting 15.2 11.7 -3.5
Public administration, defence 54.9 51.1 -3.8
Education 68.9 62.9 -6.0
Healthcare and social work 65.5 55.6 -9.9
Other services 26.6 21.6 -5.0
Total (both sexes) 37.3 33.0 -4.3
Males total 33.5 29.4 -4.1
Females total 41.6 37.1 -4.5

Source: KSH Labour Force Survey.

The share of women giving a positive answer on union presence in the workplace is greater (37.1%) than that of men (29.4%), and the gender gap is greater than in relation to union density. As for the main occupational groups, 44.4% of manual workers answered that a trade union operated at their workplace, compared with 24.5% of white-collar workers. In 2004, the occupational groups with the highest workplace trade union presence were the armed forces (68.8%) and professionals (52.4%), while among craft and related workers (23.8%), plant and machine operators and assemblers (30.8%) and 'elementary' occupations (21.3%) the figures were more modest.

Works council representation increases slightly

The situation is similar in the case of works councils, although it is important to note that almost one-quarter of Labour Force Survey respondents were unsure whether a works council operated at their workplace. In 2004 works councils were present at the workplace of only 22.3% of all employees, a 2 percentage point increase since 2001. Hungarian labour law stipulates that works councils (and public sector employee councils) should be elected at establishments employing more than 50, while at those employing between 15 and 49 a single employee representative should be elected. It therefore makes sense to measure their presence at workplaces separately. As far as workplaces with more than 50 employees are concerned, a positive answer was given by 36% of respondents, a 4-point increase compared with 2001 (HU0401106F). At establishments with between 15 and 49 employees, the 'coverage' of elected employee representatives was only 18% in both 2001 and 2004.

Collective agreement coverage and impact on wages

The Labour Force Survey also asked whether the respondent's workplace was covered by a collective agreement concluded by the trade union(s) and the employer(s) or an employers' organisation. This methodology obviously results in a lower coverage rate than institutional statistics based on the registration of collective agreements of the Ministry of Employment and Labour (Foglalkoztatáspolitikai és Munkaügyi Minisztérium, FMM). According to the latter, the overall coverage rate (including extension procedures) was 46.7% in 2001 and 41.1% in 2002 (HU0401103F).

According to the KSH survey, similar to the question on works councils, in 2004 only 73% of respondents were sure of the existence/lack of a valid collective agreement at their workplace - see table 3 below. The share of definitely positive answers was 25.2%, which falls short of the one-third trade union presence. Not surprisingly the sectors with the highest coverage were electricity, gas and steam (47.8%), transport and storage (47.2%) and education (43.5%), while the lowest rates were recorded in hotels and catering (7.9%), trade and repairs (8.8%) and construction (5.6%). The coverage figures by main occupational groups were 33.9% for non-manual workers and 18.5% for manual workers. The highest coverage rate was again for the armed forces, at 40.3%.

Table 3. Coverage of the respondent's workplace by a collective agreement, by industry, 2004
. Yes No Don't know
Agriculture 13.0 62.3 24.7
Mining, quarrying 39.7 37.3 23.0
Manufacture 23.8 45.0 31.2
Electricity, gas, steam 47.8 25.8 26.4
Construction 5.6 74.6 19.8
Trade and repairs 8.8 69.0 22.2
Hotels and restaurant 7.9 72.6 19.5
Transport storage 47.2 29.5 23.3
Financial intermediation 24.1 47.8 28.1
Real estate, renting 11.7 67.4 20.9
Public administration, defence 32.3 35.6 32.1
Education 43.5 30.5 26.0
Healthcare and social work 40.1 28.6 31.3
Other services 19.8 54.3 25.9
Total 25.2 48.2 26.6

Source: KSH Labour Force Survey.

The survey included two more questions about the respondent’s view of the impact of collective agreements on their wages and working conditions. To the question of whether their remuneration was influenced by a collective agreement, 59% of employees at workplaces covered by a collective agreement replied affirmatively. Given the 25.2% of respondents who gave a positive answer to the question on bargaining coverage, this figure means that only 14.8% of respondents registered the influence of a collective agreement on their remuneration. Survey figures on the impact of collective agreements on working conditions are very similar.

Commentary

The trend of a continuous decrease in unionisation started in the early 1990s, when the political changes and the transition to a free market economy were getting under way. Turning to the most recent period covered by the two rounds of the Labour Force Survey, union density was 19.7% in 2001 and 16.9% in 2004, which means a 2.8-point decrease over three years. The APEH data, however, suggest a more dramatic fall: the number of fee-paying trade union members fell by 25% between 1999 and 2003. This tendency reflects a radical change in the trade unions’ position. One of the most significant characteristics of the Hungarian economy is the dominance of small and medium-sized enterprises. In common with many other countries, the larger a Hungarian company is, the more likely it is to be unionised. The decline in unionisation is made worse in Hungary by two other factors. First, the trade union presence at workplaces is very low and the undeveloped state of sectoral bargaining and the lack of extension procedures result in low collective agreement coverage. Second, the presence of works councils is similarly weak, depriving employees at non-unionised workplaces of representation. One of the major merits of the recent survey results from a research standpoint is that they clearly show that union density, trade union presence, collective bargaining coverage and even works council representation go hand in hand, and thus the cleavages between workers at unionised workplaces (and therefore possessing other representation channels) and completely unprotected workers at non-unionised firms are becoming deeper.

The other well-known factor affecting union activity is differences across economic sectors. The survey evidence basically confirms earlier findings that the public sector and public utilities (including transport) are union strongholds. In view of this, it is surprising that education, and healthcare and social service unions lost most members in the recent three-year period, with trade union density falling by 10 and 7.5 points respectively. Interestingly, these were the sectors which enjoyed the highest wage increases due to government measures between 2001 and 2004 (HU0207102F and HU0208102F). Another alarming fact is ageing trade union membership: many young people work for multinational firms in the most dynamic manufacturing and service sectors, where trade union membership and presence are fairly low. Nevertheless, the slight increase in works council presence might be a positive sign of developing workplace representation structures in Hungary. (Eszter Balogh and László Neumann, Institute of Political Science, Hungarian Academy of Sciences)

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