Unions slam new Labour Code

The draft of Hungary’s new Labour Code was approved by the government after negotiations with trade unions and employers’ associations in October 2011. The government said the code would improve Hungary’s competitiveness, help create jobs and increase the flexibility of employees. Unions and opposition parties have managed to gain some amendments to the code, which is scheduled to take effect in mid-2012, and are also lobbying for a referendum on some of its proposals.

Background

The current Hungarian Labour Code came into force in 1992 but has been amended several times. In 2010 the new government, a coalition of the Hungarian Civic Union (FIDESZ) and the Christian Democratic (KDNP) parties, said it wanted to create a new constitution and civil law as well as a new Labour Code. The draft code was published by the Hungarian Government in July 2011. The government did not hide the fact that the new law, with its aim of making labour more ‘flexible’, would reduce workers rights and increase employers’ powers. However it also intended to reduce Hungary's still-high unemployment rate.

Main expected amendments

The main amendments in the draft proposal for the new Labour Code were:

  • reduced allowances for shift work and overtime;
  • fewer holidays;
  • termination of employment protection for mothers on maternity leave and older workers;
  • no need for talks with employees about any changes in their field of work:
  • employees having to pay a security deposit if they handled money at work;
  • employees having to pay the full amount of any damage caused to company property;
  • restrictions on the right to severance pay after dismissal;
  • employers allowed to give employees’ personal data, without their consent, to third parties;
  • a reduction of unions’ rights, lack of time off for union representatives;
  • works councils, rather than trade unions, would have the right of making opinions.

First reactions

This first draft was harshly criticised by trade unions and the opposition parties in parliament. Péter Pataky, President of Federation of Hungarian Trade Unions (MSZOSZ), said the new proposals would benefit employers and be disadvantageous for most Hungarian employees.

János Borsik, President of the Federation of Autonomous Trade Unions (ASZSZ), said the draft added to the legal insecurity of employees by undermining the collective wage bargaining system.

The first draft would hinder interest representation and reconciliation, and create a very difficult situation for employees, said Gábor Vágó, a spokesperson for the green opposition party Politics Can Be Different (LMP). He emphasised that weakening the rights of employees would not result in more jobs. Attila Mesterházy, President of the Socialist party (MSZP), said the draft code set the conditions for a ‘servant’ class, and there was no need to change the current Labour Code. He added that the Socialists would submit to Parliament hundreds of amendments proposed by the unions.

However employers’ representatives welcomed the draft Labour Code, after having met experts from the Ministry of Finance and discussed the draft legislation. Ferenc Dávid, General Secretary of the National Federation of Entrepreneurs and Employers (VOSZ) said that the draft’s implementation would help companies adapt to fast-changing market conditions, increasing their competitiveness and boosting employment.

György Vadász, Co-Chair of the Hungarian Industry Federation (OKISZ), said that the draft would create simpler and more straightforward rules, helping to retain jobs and to increase employment flexibility. Both organisations suggested that consultations should be continued in trilateral frames that involved employee representatives (HU1107021I).

Unions ask EU for support

On 2 September 2011, the presidents of all six Hungarian union confederations, together with ETUC General Secretary Bernadette Ségol, met László Andor, the EU Commissioner for Employment, Social Affairs and Inclusion, to express their serious concerns about the draft Labour Code. The ETUC pointed out that such changes clearly conflict with EU standards for social dialogue and the provisions of the fundamental charter of social rights.

On 12 September 2011, the first day of Parliament’s autumn session, a ‘living chain’ demonstration took place around the Parliament building in Budapest. This was organised by.four trade union confederations; the ASZSZ, the MSZOSZ, the Trade Union Federation of Professionals (ÉSZT), and the Cooperation Forum of Trade Unions (SZEF). They wanted to protest not only about the draft code, but also about government measures already affecting employees. The unions, demanding ‘fair social dialogue’, argued the planned code would increase the vulnerability of employees.

Unions press for changes

Several trade unions and employers’ associations tried to consult the government’s two ruling parties on the draft after it was published but only the KDNP responded.

After talks between Péter Harrach, Parliamentary Group Leader of KDNP, and Imre Palkovics, President of the National Federation of Workers’ Councils (MOSZ), the participants said that the new code should ensure ‘room for manoeuvre’ for employees vis-a-vis their employers, as well as appropriate protection for employees’ privacy. The code should also concentrate on protecting families by giving attention to the needs of parents with small children.

KDNP negotiated through experts with sectoral trade unions such as the Democratic Trade Union of Teachers (PDSZ), the Trade Union of Hungarian Railway workers (VSZ) and the Free Trade Union of Engineers and Technicians (MTSZSZ).

Harrach added that his party would submit some of the matters raised during talks with social partners, as well as union suggestions, to Parliament.

The LMP party has moved one step closer to forcing a referendum on key components of the draft code. The National Election Committee (OVB) has ruled that 10 of 16 proposed questions regarding changes to workers’ collective rights are suitable for a national vote. The referendum would ask voters whether employers should be obliged to give reasons for dismissals, and whether a notice period of at least a month should remain compulsory.

Trade unions are also discussing the possibility of a plebiscite.

Outcome

At the end of October 2011 the draft of the new Labour Code was approved by the government and submitted to Parliament. Sándor Czomba, State Secretary for Employment Affairs said the new draft was 99% in line with the version hammered out at talks during the previous weeks. He said the remaining 1% was about differences with trade unions, but that there was still the chance to make further proposals and express opinions.

Changes made to the first draft, mean that now:

  • the legal minimum of vacation days and the number of supplementary days remain at 20 and ten, respectively;
  • it will be more difficult to lay off employees five years from retirement;
  • annual overtime of 250 hours will be allowed, up from 200 at present;
  • annual overtime can reach 300 hours if the employer and employees agree on the increase in the collective agreement;
  • just one collective agreement will be signed for each employer, thus eliminating protected groups of employees with special benefits in any workplace;
  • collective agreements can be concluded by a works council if there is no trade union entitled to do so;
  • employees’ personal lives may not be scrutinised by their employers.

Parliamentary debate

In a parliamentary debate on the code, the opposition parties criticised the government for having held consultations with only selected organisations.

Attila Mesterházy (MSZP), told Parliament that the draft was an attempt by the government to ‘compensate for the ramifications of its amateurish and detrimental economic policy’. Szilvia Bertha, the spokesperson for the radical nationalist Jobbik party, said the Labour Code favoured employers only and that it was not clear how it would increase jobs.

András Schiffer, Parliamentary Group Leader of LMP, said the new code was tantamount to the exploitation of employees, under which more work will be required for less pay. Schiffer insisted that it was not possible to raise competitiveness by increasing the vulnerability of employees.

However, Sándor Czomba said the Labour Code sought to ensure modern and flexible regulations which would boost employment. He repeated a government pledge to create one million new jobs by 2020, and said the new Labour Code was one of many measures to meet this goal.

Commentary

Hungary’s six trade union confederations have addressed a joint letter to the International Labour Organization (ILO) about the planned code. The ILO, which has criticised several parts of the code, wants the Hungarian government and social partners to engage in constructive dialogue on labour code reforms.

The dispute about the new Labour Code can be seen as a part of the overall conflict between workers’ representatives and the government over the restriction of tripartite social dialogue. Trade unions are trying to regain some ground they have lost in terms of employee representation. The code is expected to come into force on 1 July 2012, but some provisions are going to take effect from 1 January 2012.

Máté Komiljovics, Solution4.org

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

Eurofound welcomes feedback and updates on this regulation

Add new comment