Government launches support scheme for redundant railway employees

In 2003, the Hungarian government approved a 20% reduction in the workforce of Hungarian State Railways (MÁV) to be implemented by the end of 2006. Following trade union petitioning and lengthy negotiations, in 2005 MÁV established the New Chance Foundation to provide counselling and support for employees laid off as a result of the restructuring. So far, some 700 workers have registered for the programme and a third of these have found a new job.

Background on restructuring

On 19 November 2003, the Hungarian government made several decisions concerning the future of Hungarian State Railways (Magyar Államvasutak, MÁV), one of these being a major reduction in MÁV’s workforce. The company’s board decided that, by the end of 2006, the number of employees should be reduced from about 53,000 people to no more than 42,000. Through the mass redundancy, the government expected to save at least HUF 22 billion (€88 million, as at 6 November 2007). The redundancy of around 11,000 employees, representing 20% of the workforce, was the largest lay-off in the history of MÁV.

Trade union reaction

The Trade Union of Railway Workers (Vasutasok Szakszervezete, VSZ) made several unsuccessful attempts to initiate negotiations with the government. Subsequently, VSZ decided to bring the case before the court but the court ruled against the trade union. VSZ then turned to the public, launching a petition which was signed by 20,000 people. The trade union handed this appeal to a representative of the Ministry of Economy and Transport (Gazdasági és Közlekedési Minisztérium, GKM) at a rally held in front of the ministry building with several thousands of people present. In the petition, VSZ demanded that the lays-off due to the outsourcing of different activities be stopped, together with the privatisation of MÁV-related companies and the selling of real estate.

Other representative trade unions at MÁV did not join the VSZ initiatives, as they considered them inadequate. However, negotiations began at the Railway Interest Reconciliation Council (Vasúti Érdekegyeztető Tanács, VÉT), the company’s standing body comprising representatives of the management and each representative trade union at the company. In a company with a multiple union structure, this body is a forum for collective bargaining. At the VÉT, the parties finally concluded an agreement on the treatment of workers who had been made redundant in 2005 – two years after the lay-offs began. The agreement, with a legal status similar to that of a collective agreement, envisaged helping men aged over 50 years and women aged over 45 years to continue their working career or choose early retirement.

New Chance Foundation

MÁV established the New Chance Foundation (MÁV Új Esély Alapítvány) with the aim of supporting older employees affected by the redundancies and assisting them in achieving a long working life. The target profile of the employees concerned included women aged over 45 years and men aged over 50 years. The agreement providing for the establishment of a foundation was collective because all of the representative trade unions, as well as the employer, signed it at the VÉT.

The New Chance Foundation has seven regional offices, with specialists recruited from the labour market who support the company’s former employees nationwide. As part of the service, a personal mentor assists individuals throughout the six to nine-month programme. Services are free of charge and are financed by MÁV and the National Employment Foundation (Országos Foglalkoztatási Közalapítvány, OFA), which is funded by the National Labour Market Fund (Munkaerőpiaci Alap) through compulsory employer and employee contributions.

The foundation’s new chance programme offers a wide range of opportunities for the employees concerned, including:

  • assessment of the employee’s background during an individual interview;
  • labour market training, such as writing a curriculum vitae (CV) and preparing for a job interview;
  • support in searching for a job by means of the internet and newspapers;
  • counselling and exchange of experience and information in job clubs;
  • training.

Results of programme two years later

The programme aims to help redundant employees to find work as soon as possible. Specialists assist in alleviating the psychological effects of becoming redundant and in maintaining contact with former colleagues. Since its establishment in 2005 up to October 2007, more than 700 former MÁV employees have registered with the programme and almost one third of these were able to find a job. OFA and MÁV have supported the foundation to the value of HUF 170 million (€700,000) in the past two years. The success of the project may be measured by the number of registered participants and of those who were able to find further employment.

Foundation representatives found that the biggest problem at the railways was that employees had obsolete qualifications and experience which is not easily transferable. The lack of skills in areas such as information technology and languages – which are required in today’s labour market – also present difficulties for former employees, as well as their deteriorated state of health and often long-serving loyalty to the company.

Máté Komiljovics and László Neumann, Institute of Political Science, Hungarian Academy of Sciences

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