Annual wage agreement in public sector finally reached

On 19 February 2007, major public sector trade unions and the government reached a wage agreement for 2007. Bargaining rounds for the agreement proved to be extremely difficult due to the government’s austere reform measures, which envisage cuts in the budget, services and staff. Tensions were heightened following rallies and calls for strike action by radical trade unions. The impasse in wage bargaining also led to the establishment of a strike committee.

Background

In mid 2006, the government announced its plans to introduce austere reform measures, involving significant cuts in the budget, services and staff of public institutions. The announcement met with strong resistance from the more radical trade unions, which issued a call for strike action, as well as staging rallies in an effort to put pressure on the government; these protests led to considerable street violence (HU0607039I, HU0611029I, HU0609029I, HU0610039I).

In the autumn of 2006, industrial action was organised by public sector trade unions affiliated to the Democratic League of Independent Trade Unions (Független Szakszervezetek Demokratikus Ligája, LIGA) and the National Federation of Workers’ Councils (Munkástanácsok Országos Szövetsége, MOSZ). The other, more left-wing trade union federations refrained from taking part in the industrial action or participating in the demonstrations. On 25 September 2006, the General Secretary of the Trade Union of Hungarian Civil Servants and Public Service Employees (Magyar Köztisztviselők és Közalkalmazottak Szakszervezete, MKKSZ), József Fehér, outlined in an interview that it was not timely to comment on the street violence; he considered the government to be the major negotiating party, although he also expressed his discontent with the austerity measures.

Difficult bargaining rounds

The customary wage bargaining round held at the National Public Service Interest Reconciliation Council (Országos Közszolgálati Érdekegyeztető Tanács, OKÉT) began somewhat later than expected on 26 October 2006. By then, the government’s budget proposal for 2007, which included proposals for public sector salaries, were on the agenda. The government’s initial offer envisaged the virtual freezing of public sector salaries, in line with its austerity package. As this proposal would have meant a substantial drop in the real value of salaries, the negotiating trade unions at OKÉT firmly rejected this offer.

Following the meeting, the president of the Trade Unions’ Cooperation Forum (Szakszervezetek Együttműködési Fóruma, SZEF) announced that the trade unions had hoped for a 6.5% gross increase in salaries. On 9 November, all of the negotiating trade union confederations issued an open letter addressed to the Prime Minister, Ferenc Gyurcsány, in which they jointly condemned the fact that public sector employees would suffer a larger wage decline than other employees due to the government’s austere measures.

Strike committee formed

Until the meeting planned for 26 November took place, the positions of the parties remained virtually unchanged. At the beginning of this meeting, instead of engaging in negotiations, the four trade union confederations involved announced that they had formed a Unified Public Service Strike Committee (Egységes Közszolgálati Sztrájkbizottság). The bargaining subsequently commenced between the government and this strike committee, outside the framework of the OKÉT. The committee finally issued a strike call for 21 February 2007, insisting that the stoppage would go ahead unless the government made a reasonable offer by 31 January to increase salaries.

Consensus reached

However, on 19 February, the government and strike committee concluded an agreement; as a result, the strike action was immediately cancelled. In the final negotiation round, the parties were influenced by the last-minute wage agreement for the business sector, which had been concluded at the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) on 31 January (HU0703019I).

Provisions of agreement

Commenting on the agreement, MKKSZ’s General Secretary, Mr Fehér, outlined that public sector salaries would rise by an overall 6.65% in 2007, which seems to be only slightly lower than the increase of 6.75% in 2006. However, the wording of the 2007 agreement is more complex. On the one hand, the agreement left unchanged the budget’s planned gross salary increase in the public sector, which is as low as 2.5%. On the other hand, between 1 July and 31 December, public employees are to receive an additional 8.3% increase, which virtually amounts to an advance payment of half of the public sector employees’ 13th month salary – originally due in January 2008.

Therefore, in order to avoid a major drop in real wages in 2008, the agreement envisages the extension of such a system of advance payment for the whole year on the payment of the 13th month salary, originally due in January 2009.

The parties will resume wage negotiations in August 2007, when they are to review the possibility of further corrections in light of the actual results of the government’s convergence programme. Moreover, they plan to renegotiate the entire wage tariff system and allowances of public sector employees.

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

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