Wage and Tax Monitoring Committee set up

In February 2011, the Hungarian government established a Wage and Tax Monitoring Committee, to ensure public and private companies actually pay a 4%–6% gross wage increase agreed by the National Interest Coordination Council at the end of 2010. It believes many workers have not yet received the increase. Social partners agree with the wage increase on principle, but say such government pressure is unnecessary and other factors, such as job security, must be considered.

Background

The Hungarian government announced a fundamental shift in its economic policy in April 2010, which led to parliamentary approval for changes in the taxation system.

These amendments included extra taxes for companies, a flat rate of 16% personal income tax and other changes effective from 2011 that left an overwhelming number of Hungarian low wage earners with less net income than before.

The government agreed with employers and unions, at a meeting of the National Council for the Reconciliation of Interests (OÉT) late in 2010, on a nominal overall 4%–6% gross wage increase to help Hungarian workers keep up with inflation and economic challenges.

According to the agreement, minimum wages were to be increased by 6.1% and guaranteed minimum pay by 5%. At a subsequent OÉT meeting, social partners agreed that employees, whose pay dropped after the introduction of the new flat-rate 16% personal income tax, should be compensated.

Zoltán Zs. Szőke, President of the National Federation of General Consumer and Marketing Co-operatives (ÁFEOSZ), said in February 2011 that its members would implement the nominal 4%–6% gross wage increase agreed with the government by April or July this year.

Deputy Prime Minister Tibor Navracsics said that everyone in the public sector who had been adversely affected by the new tax system would be given compensation and stressed that a HUF 250 billion (€0.9 billion as of 11 May 2011) stability fund recently announced by Prime Minister Viktor Orbán would not lead to dismissals in the public sector.

Checking for compliance

The governing party set up a committee in February 2011 to monitor whether businesses, both public and private, were sticking to the agreement. The Wage and Tax Monitoring Committee primarily monitors public services and state-owned companies, while also checking local governments and private companies.

Antal Rogán, a member of the Hungarian Civic Union (FIDESZ) and Head of the Committee, considered that for reasons of neglect, or to gain time, a large number of employers have not yet implemented the 4%–6% wage increase that should have been achieved by May 2011.

The Committee is asking for information from the counties’ chambers of trade about wage increases; it has set up a free phone line and online service where anyone can declare whether they have had a wage increase since 1 January 2011 and if so, how much.

On the basis of the information gathered, the committee will scan for problems and present a detailed report with recommendations to the government.

For those companies that do not comply with the agreed 4%–6% increase, there is the possibility that any EU grants will be revoked, under a bill due to be introduced in May 2011.

But at this stage the committee is not checking each company, does not punish any of them and the returns are voluntary and anonymous. Mr Rogán said there were other ideas for gathering the required information should the committee not be able to do so.

Dávid Ferenc, General Secretary of the National Association of Entrepreneurs and Employers (VOSZ), István Gaskó, President of the Democratic League of Independent Trade Unions (Liga Szakszervezetek) and László Parragh, President of the Hungarian Chamber of Commerce and Industry (MKIK), all agree that such a bill revoking EU grants would only worsen morale among both employees and employers.

It is agreed that the gross wage increase is necessary, but they say the government should not intervene by law in such affairs as wages. Any measurement of what has so far been paid must also take into account the competitiveness of businesses and their cost and revenue-generating capacity, with special regard to employment security.

Zsuzsa Rindt, Solution4.org Bt

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment