Constitutional Court ruling paves way for new social dialogue law

Hungary’s parliament has passed several acts that regulate the operation of national tripartite forums and the bipartite sectoral social dialogue committees, reducing their previous functions of public power to consultation. The move followed a Constitutional Court ruling that revoked the co-determination right of social partners on certain issues. With the passing of these acts, the criteria of representativeness have also been enacted.

Background

In 2006, Hungary’s parliament passed, with an overwhelming majority, the draft laws on the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) and the sectoral social dialogue committees (Ágazati Párbeszéd Bizottságok, ÁPB). However, the President of Hungary, László Sólyom, submitted these laws to the Constitutional Court (Alkotmánybíróság, AB) for a review of their constitutionality, claiming that the co-determination right of social partners constitutes public power to which these interest representation organisations are not entitled (HU0701039I).

Details of court ruling

In its decision, adopted in November 2008, the AB deemed certain provisions of the laws to be unconstitutional. The court concluded that the co-determination right granted to OÉT goes beyond the essential and sufficient degree to which social partners are constitutionally entitled to participate in preparing legislation. It attributes this to the fact that OÉT is not among the bodies that are entitled to fully participate in this process. Consequently, all those sections of the law which recorded the co-determination right of OÉT related to legislation have now been found unconstitutional – such as the setting of the minimum wage level or certain questions related to the works council elections. Based on this principle, one section of the law on the ÁPB has also proven to be unconstitutional.

Legislation process amended

In light of the above decision, the parliament had no choice but to ‘weed out’ the references to co-determination rights from the text of the laws and to replace them with consultation rights references. The amended laws were adopted by the parliament on 22 June 2009. Parallel to this, the government indicated to the social partners that, despite the modification of the law, it had no intention of undermining the role of the social partners or of limiting their role in the negotiations. This reassurance enabled both OÉT and the ÁPB to continue their work in accordance with the previously established work plan and methods.

In the autumn of 2009, a host of tasks will need to be performed by the social partners and the government in their effort to implement the laws. The procedural rules of the two laws have been laid down in ministerial decrees; they had previously been discussed between the government and the social partners on several occasions. The decrees have taken effect as of 1 October 2009.

New rules on representativeness

Representativeness committees

According to the relevant law and the ministerial decree, representativeness committees shall be set up at both national and sectoral levels to assess the representativeness of the interest representation organisations. Such committees had already been in place based on the social partners’ agreement to establish representativeness in the case of the ÁPB (HU0810039I). These committees must be tripartite bodies with the task of assessing whether an organisation – either a present, future or prospective member of OÉT and the ÁPB – fulfil the representativeness criteria prescribed by the laws. Essentially, these criteria link national or sectoral representativeness to membership size and other measures showing the economic weight of the organisations, thus making it clear which organisation has the right to participate in OÉT or in some of the ÁPB. Both the national and sectoral representativeness committees were scheduled to begin operations after the ministerial decrees were due to be announced on 30 September 2009.

The national committee will have to decide whether an organisation meets the criteria of participation. At the same time, the sectoral representativeness committee will have to determine the degree to which they are entitled to take part in decision-making, apart from evaluating their representativeness, if requested by the organisation.

Social partner representativeness criteria

As a result of the amended procedures for extending collective agreements, the sectoral committee will have to make a decision about the representativeness of a sectoral trade union, even if the collective agreement was not concluded in the framework of the ÁPB. On the employer side, an interest representation body has to meet one criterion only: the employer organisation that concludes agreements has to employ at least half of all employees in the sector. In the case of the ÁPB, the representativeness of the trade union also depends on how well it did at the works council elections. This rule will have to be applied from 2012, in order to avoid retroactivity, and its implementation should be aligned with the works council elections due to take place every three years. As a consequence, the results of the works council elections will also have to be registered with the sectoral representativeness committee for future reference. In order to ensure clear-cut procedural rules for the data collection, a further decree will have to be passed.

Representativeness evaluation

In the autumn of 2009, the customary wage negotiation and budget consultation between the social partners and the government will still take place under the old framework. The first round of the representativeness reviews of the current members of the national and sectoral interest representation organisations is expected to end in the initial months of 2010. The evaluation of the new candidates is scheduled to take place afterwards.

Commentary

The implementation of the laws is not expected to greatly alter the Hungarian interest representation scene, nor is it likely to bring significant change in the relationship between employer organisations and trade unions. As regards the law on OÉT, the criteria that were established after a lengthy preparatory phase on the basis of tripartite consensus served, among other things, to secure the place of organisations already present in OÉT; they also set adequately high entry standards for new organisations. As a result of this, membership is not among the criteria for the trade union confederations, whereas membership of the European Trade Union Confederation (ETUC) is taken into account. Thus, acceptance to OÉT can easily be vetoed by confederations that are already OÉT members, as candidate organisations are accepted to participate in the employee side of OÉT if there is consensus among the existing members about their acceptance.

Hopefully, however, disputes among the trade unions over mandates will abate and coalition agreements will be concluded in order to ensure compliance with the law. Such coalitions, nevertheless, only prepare the ground for possible mergers between trade unions; by no means do they necessarily result in mergers, which would nonetheless be badly needed in a fragmented trade union structure. Some candidate organisations on the employer side will need to clarify and modify internal regulations and their organisational structure if they want to be able to comply with the criteria of participation in national and sectoral social dialogue.

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

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