President refers draft laws on social dialogue to Constitutional Court

The President of the Hungarian Republic, László Sólyom, has declined to sign two new laws passed by parliament on the National Interest Reconciliation Council (OÉT) and on the sectoral social dialogue committees. Instead, the president has submitted the draft laws to the Constitutional Court for a review of their constitutionality. Among the main concerns of the president is OÉT’s legitimacy to exercise public power functions.

Background

In the autumn of 2006, the Hungarian government re-submitted to the parliament draft laws on the National Interest Reconciliation Council (Országos Érdekegyezteto Tanács, OÉT) and on the sectoral social dialogue committees (Ágazati Párbeszéd Bizottságok, ÁPB). Re-submission was necessary because the new government, formed in June 2006, withdrew all draft laws which had been submitted to the previous parliament but not debated. This enabled the new government to review the two bills and to consult with the social partners.

In the review process, certain sections of the draft law on OÉT were omitted, including the provision entitling the National Election Committee (Országos Választási Bizottság, OVB) to decide on the social partners’ representativeness for participation in OÉT (HU0602101F). This section was deemed controversial, as OVB is responsible for carrying out national parliamentary and local government elections and for safeguarding their legality and fairness; therefore, the procedure described in the draft law would have been unusual to its profile. In relation to the draft law on ÁPB, only minor technical modifications were made in the text.

Support for draft laws overridden by president

On 11 December 2006, the parliament passed the draft law on OÉT, following an overwhelming majority of support, which reflected the general consensus among the political parties. Conversely, the draft law on ÁPB, which was drafted in parallel with the proposed law on OÉT, did not receive the same level of support, although both draft laws enjoyed the full support of both OÉT and the Council of Sectoral Social Dialogue Committees (Ágazati Párbeszéd Bizottságok Tanácsa, ÁPBT). The social partners fully accepted the eligibility criteria for participation in these forums and the rights conferred on them; their advocation of a law on OÉT coincided with Decision No. 40/2005 (X.19) of the Constitutional Court (Alkotmánybíróság, AB), which obliged the Hungarian parliament to introduce such legislation.

At the same time, the law on ÁPB would have created the legal foundation for a set of institutions which have existed in Hungary for the past four years, along with provisions aimed at strengthening sporadic sectoral industrial relations and collective bargaining (HU0212106F). Thus, there seemed to be broad consensus about the need for creating the legal grounds for the operation of national and sectoral social dialogue. In such a context, it was surprising therefore that the President of Hungary, László Sólyom, requested the AB to carry out a review of the constitutionality of the two laws, making his ratification of the laws dependent on the court’s decision.

Constitutional concerns of president

In his petition, President Sólyom, formerly president of the Constitutional Court, outlined the constitutional concerns arising in relation to the two laws. Specifically, one section of the law on ÁPB requires reviewing, as it grants the right of consent to OÉT on a small technical issue: namely, the wording of the ballot paper used in works council elections.

In relation to the law on OÉT, the president has highlighted the problem regarding OÉT’s lack of legitimacy in exercising public power. Decision No. 39/1997 (VII.1) of the AB states that the social partners’ right of consent – that is, through co-determination or the right of veto – in public administration, or in lawmaking and rule-setting, constitutes public power. Consequently, OÉT’s long-time functions – such as setting the national minimum wage, as well as exercising the right of consent in the rules of job assessment – all constitute public power functions. So too does the right granted to OÉT with regard to the content of the ballot papers used in the works council elections, as it is provided for by law. According to President Sólyom’s petition, such functions can only be exercised by a body or person authorised by the Hungarian electorate, either directly by voting or indirectly through delegation by an elected body. In the case of a self-governing body, it is sufficient to ensure suffrage among those who belong to its constituency.

Referring to another decision of the AB, President Sólyom claims in his petition that the precondition of democratic legitimacy means that the election should be targeted at granting authorisation for a given function, rather than using the results of another election for a different purpose. Consequently, interest representation groups, deemed as self-governing bodies, are entitled for delegation; thus, the criterion of democratic legitimisation is met if the overwhelming majority of the ‘subjects of the self-governing body’ are their members and their internal rules automatically ensure direct election. An alternative way of democratic legitimisation is the delegation or election of members by other bodies with democratic legitimacy, which is the case for example when the Hungarian parliament elects the President of the Republic.

In its ruling, the AB stated that the right of delegation does not refer to employees or employers who are not members of organisations present in OÉT. Trade unions and employer organisations are open organisations and, on the basis of the freedom of association, anyone can join or decide not to join these organisations at will. The president argues that non-members ‘conferring’ the possibility to influence the members does not create sufficient basis for legitimisation, referring to the aforementioned AB ruling.

The law prescribes that OÉT members can constitute interest representation organisations with voluntary membership, meeting certain participation criteria – for instance, being present in the majority of the companies in their organisational field. However, President Sólyom has now added a new criterion: namely, that as a precondition to exercising public power and legitimisation, an organisation would need to have as its members the overwhelming majority of the electorate. The president’s petition points out that the majority of Hungarian citizens are not members of either employee or employer organisations and that, therefore, there are no grounds for legitimisation.

Issues raised by legitimisation criteria

Obviously, such legitimacy cannot be guaranteed by law, unless the law makes it compulsory to join these organisations, which would contradict the principle of freedom of association. The only body which meets the above criteria of democratic legitimisation through election is, in fact, the parliament itself; however, the parliament can hardly delegate members to OÉT if its impartiality is to be ensured.

Creating legitimacy through direct elections could be technically feasible; in relation to the employee side, the interested subjects almost make up the entire electorate of Hungary. However, since trade union membership among active employees is only around 17% according to latest statistics, and opinion polls reflect the unpopularity of the trade unions among state and civil organisations, it is unlikely that such an election would ensure majority legitimisation. An election would pose an even more serious dilemma for the employer side. The logic of the president’s line of argument would imply that it is not the employers themselves – in other words, the management or possibly the shareholders of the companies – but the electorate of Hungary who should elect employer representatives. In any case, ensuring OÉT’s legitimacy through elections would prove extremely costly, while the operation of the country or governance would not become more democratic.

The issue of an election also raises a host of technical questions. For example, what exactly should the election address? Should only one or more organisations be elected? How many members should be elected to each side of OÉT (currently, there are six confederations on the employee side and nine employer organisations)? What would constitute an overwhelming majority for ensuring democratic legitimisation? For instance, if a two-thirds majority represented an overwhelming majority, similar to the parliamentary rules on certain key issues, then those organisations which jointly make up two thirds of the votes on each side of OÉT would be elected. This raises questions over whether this would be sufficient for the legitimisation of decisions made at OÉT, or if there should be agreement between these organisations in the case of individual decisions also.

Given these complications, another solution could entail the parliament stripping OÉT of its public power. Nevertheless, this could pose a further problem, as Hungarian legislation leaves the function of public power undefined. Since the government generally consults with the social partners at OÉT, revision of its public power functions could amount to a weakening of the social partners’ rights. This implies that OÉT would be unable to exercise its ‘right of consent’ in terms of co-decision or power of veto with regard to any questions and could not delegate members to a body which exercises such rights. It would also imply numerous amendments to laws as a result of OÉT’s 17-year old history, which – although not technically impossible – would be far more politically contentious.

Commentary

In its 17 years in operation, the composition and work organisation of OÉT has remained unchanged, up until now. The organisation’s public power function, which it has performed alongside its general consultative function, has emerged as a result of political compromises over these 17 years. Such functions were either created by the successive governments and parliaments, with the aim of involving the social partners in the decision-making process, or were the results of the social partners’ struggle to have their say and to assert their interests.

The efforts to involve the social partners also coincide with those of the EU, which, under the Social Policy Protocol, enable the social partners to make decisions and laws in relation to relevant issues; such issues may of course also concern potential employees and employers in the EU as much as those in Hungary. On the other hand, in line with the principle of subsidiarity, it is also stipulated that decisions should be made by those who possess the most information and who are most affected by their implementation. Therefore, the president’s refusal to sign the laws represents a perplexing turn of events, which contradicts not only professional arguments but also Hungary’s policy practices arising from its EU membership.

Looking forward, some experts predict that the AB can reject President Sólyom’s petition; however, others believe that the court will most likely uphold the claim. The government, in the meantime, has so far refrained from making any comment on the issue, until the decision of the court has been made. As it is not customary to criticise the president either as a person or as an institution, the social partners have also remained silent about the issue. Until the decision is made, OÉT is continuing to exercise its rights as before; nonetheless, it is likely that the atmosphere of the ongoing wage negotiations has not benefited from this legally unsettling situation.

Erzsébet Berki and László Neumann, Institute of Political Science, Hungarian Academy of Sciences

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