Extension of governmental power in Hungary

Following the election of Hungary’s new government in May 2010, it submitted 70 bills for parliamentary discussion and approval in the autumn session, of which the majority seemed likely to extend the influence of government on civil society and social partners. Such bills include changes to media law, pension schemes and the pay and working conditions of public servants. Social partners and opposition parties have been publicly very critical about these new laws.

Background

In April 2010, the centre-right Hungarian Civic Union (FIDESZ), in alliance with the Christian Democratic People’s Party (KDNP), was elected as the new government of Hungary with a two-thirds majority. The government promised radical changes in policies and economics and dynamic decision-making characterised its work in the first six months.

Instead of the 42 bills planned, parliament approved more than 44 bills from the 70 submitted, while cabinet had passed 80 regulations and made 131 decisions by the end of 2010.

There has been criticism of the government’s rush to pass new laws. Social partners, civil society organisations and opposition parties have argued that rushed law-making could lead to poorer laws, and some have argued that the government is attempting to establish a new method of passing laws. This so-called ‘hectic decision-making’ has been possible because the government has avoided consultation with social partners and previously established consultant committees, or social dialogue. Some examples of the industrial relations implications of these new measures are provided below.

The media

There has been much comment on a new media law, but relatively little on its industrial relations implications. On 20 December 2010, the government approved a law which states that from January 2011 the public institutions Magyar Televízió, Magyar Rádió and Duna Televízió, together with the Hungarian News Agency (MTI), their joint website and about 3,000 employees, would come together under the newly created Civil Service Public Foundation.

The companies will be owned by the Foundation. Most of their media workers will, from 1 January 2011, be employed by the Media Service Supporting and Asset Management Fund, part of the Media Council, which was created by one of the new laws and appointed by a parliamentary committee.

The Media Council, the new authority now supervising all of Hungary’s media, will have wide-ranging powers to apply sanctions, such as imposing fines on publishers and broadcasters for ‘unbalanced coverage’. Newspapers could face fines of up to HUF 25 million (€93,000 as of 17 May 2011) and news websites HUF 10 million (€37,000), whereas TV and radio stations could be fined between HUF 50 million (€187,000) and HUF 200 million (€747,000).

Transferring media workers from their previous companies to the new Public Foundation will involve structural changes in the industry. MTI has been allowed to keep only 180 of its previous 330 employees, while a maximum 49 employees will remain in each of the other three institutions. Questions have been raised – first by the daily newspaper Népszabadság – about whether the number of 49 employees was chosen to avoid the obligation to establish works councils, which applies to companies with 50 or more employees. Workers in companies with 20–49 employees may claim the right to elect a workers’ representative.

These remaining organisations will not produce any programmes, but will procure these from the Fund.

Hungarian rights organisations, such as the Association for Human Rights (TASZ) and the Eötvös Károly Institute, analysed the law and found it highly problematic. A new movement, One Million for the Freedom of Press which has started on Facebook, questions the law. The group had acquired more than 80,000 members by March and has already organised several demonstrations, attended by 5,000 to 30,000 people.

The public service

The government has made several changes to the rights of public servants and the way they are paid. The number of employees has been cut by around 2,500 since 2008 and will be cut again in the coming year. The dismissal of employees without cause will be allowed and in the case of mass redundancy, employers will no longer have to notify the employment authority or consult with employee representatives.

This change is intended to allow the creation of new high-quality professional groups. At the same time, the pay system in the public services will change from the previous strict payment table to a system of remuneration based on individual performance. No objective criteria have yet been set for how this will be judged.

For workers at organisations providing important services, such as public transport and water supplies, the right to strike will be restricted. Employees will be obliged to sign a service agreement guaranteeing that a minimum level of service will be provided in the event of a strike. Previously conciliation was compulsory, but the absence of a service agreement could not prevent a strike. However, the new law states that strike action is not allowed if there is no service agreement or without a decision of the labour court about the level of service that should be provided.

Trade unions achieved only limited results at the National Council for the Reconciliation of Interests (OÉT), such as increasing minimum wages from HUF 73,500 (€267) to HUF 78,000 (€283) per month. When the changes to labour legislation as it applies to civil servants were made, the unions took to the streets to demonstrate for the rights and acknowledgement of public servants. On 5 April 2011, the Constitutional Court ruled that dismissing public servants without cause was against the Constitution and blocked the new law.

The private pension scheme

In Hungary, there have traditionally been four pillars in the pension scheme:

  • state pension;
  • obligatory private pension funds;
  • voluntary pension funds;
  • business pension funds.

The new act affects the second pillar, the obligatory private pension fund, which is going to be merged with the state pension system. Starting in November 2010, the Hungarian Tax and Financial Control Administration (APEH) will not transfer payments to private pension companies until the end of 2011.

The second step in December 2010 not only fostered a return to the state-funded system, but imposed pressure on the members of private pension funds. If they stay in the funds they will lose their right to a public pension and will lose all previous contributions. Leading experts are reticent about the question of how this is going to affect the economy, but ratings institutions such as Standard and Poor’s are threatening to downgrade Hungary's credit rating.

The law affects more than three million people, but was passed without any consultation. It gave members of private pension companies one and a half months (until 31 January 2011) to make their decision. They had to decide without knowing the exact plans of the government regarding the state-funded pension system or knowing the decision of the Constitutional Court about more than 200 submissions made about the law, since the deadline provided was too soon for the Court to make its rulings.

Trade unions, especially the Federation of Trade Unions of the Chemical, Energy and Allied Workers (VDSZ), have taken a number of steps to demonstrate their concern about these reforms of the pension scheme. Immediately after parliament’s decision on the new pension reforms, VDSZ sent a letter to President Pál Schmitt and to the government arguing that the decision had been taken in one day without any consultations. They also claim that the reforms go against constitutional and international rights.

VDSZ has requested that the President should send the law to the Constitutional Court for investigation, has organised demonstrations and has collected 40,000 statements from people who claim they acted under pressure to keep private pension accounts.

The Democratic League of Independent Trade Unions (Liga) has never agreed with the private pension system, but was also openly critical of what it perceived to be the government’s rushed decision making.

Commentary

Concerns have been voiced by social partners, civil society organisations and opposition parties about the restructuring of the Hungarian political scene and the lack of social dialogue. They are also worried about the effects on the possibility of participation in the decision-making process, and the negative impact on trust in democratic and participatory institutions.

Márton Gerő and Zsuzsa Rindt, Solution4.org Bt.

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