Rise in ‘mutual agreements’ between the social partners

The signing of mutual agreements between employers’ groups and unions in Hungary is commonplace. They are often signed by the country’s largest union and the largest employers’ organisation. Now, for the first time, a deal has been struck between the Confederation of Hungarian Employers and Industrialists, and the fast-growing Democratic League of Independent Trade Unions. The two organisations have agreed to work closely in the future for ‘mutual interests’.

Growth in mutual agreements

Mutual agreements between trade unions and employer groups in Hungary are fairly common. They have traditionally been agreed between the country’s largest employers’ confederation, the Confederation of Hungarian Employers and Industrialists (MGYOSZ) and the largest union group, the National Association of Hungarian Trade Unions (MSZOSZ).

These ‘strategic alliances’ are intended to provide a co-operative system where each member hopes that the benefits from the alliance will outweigh the cost of individual efforts.

While Hungary lacks substantial collective agreements on sectoral and cross sectoral levels, there is a tradition of framework agreements. These are general summaries of trust and confidence. Hungary’s first such agreement dates back to 1999 when MGYOSZ concluded agreements with MSZOSZ, and with the Alliance of Autonomous Trade Unions (ASZSZ).

There has been a strong growth in this type of strategic alliance in Hungary.

The Government of Hungary recently concluded its 39th agreement with Knorr-Bremse AG, the leading manufacturer of braking systems for rail and commercial vehicles. Since 2012, the government has signed strategic partnership agreements with the local units of such multinational companies as Coca-Cola, Daimler, Suzuki, tyre manufacturer Hankook and Bridgestone, General Electric, Microsoft, Audi, Lego and Siemens.

Mihály Varga, Minister for National Economy, emphasised the importance of having these companies in Hungary. He said these firms had invested about HUF 650 billion (€2.1 billion as at 15 May 2014) and created as many as 6,000 jobs (HU1308011I).

Cooperation between employers and trade unions

The signing of mutual agreements now appears to be extending even further. The fast-growing Democratic League of Independent Trade Unions (LIGA), which celebrated its 25th anniversary in December 2013, signed a deal in February 2013 with MGYOSZ. The main points of the agreement affect wage increases, collective agreements, right of access to workplaces, and the joint submission of EU projects.

LIGA had already concluded a similar agreement with the National Association of Entrepreneurs and Employers (VOSZ),

When the agreement was signed with VOSZ, the two sides stressed the importance of good industrial relations and harmony in the workplace. Both organisations criticised the government for not doing more to improve industrial relations.

LIGA has been known as a more ‘grass roots’ employee association than the others. Since the beginning of the 1990s, it has concentrated on fundamental company-level interest representation and political protests.

Istvan Gasko, President of LIGA, said the group’s aim was to cooperate with as many employers’ associations as possible because the government was not supportive enough of social and trade union organisations.

Ferenc Dávid, General Secretary of VOSZ, said ‘employers, entrepreneurs and the investors of capital’ are interested in ‘correct and permanent industrial relations where the social partners consult and hold talks frequently in order to conclude good agreements’.

When LIGA and MGYOSZ signed their agreement, the parties acknowledged the roles of employee and employer associations in industrial relations and the importance of peace at work.

The employers said they accepted and supported the fact that LIGA may enter into the territory of a company or factory affiliated to MGYOSZ in order to organise meetings and assemblies for recruiting new members.

LIGA has signed similar agreements with the Hungarian Associations of Craftsmen’s Corporations (IPOSZ) and the National Association of Strategic and Public Utility Companies (STRATOSZ).

Working together

MSZOSZ recently renewed its partnership with MGYOSZ, emphasising that both parties strongly value collective bargaining. Both sides were analysing sectoral and corporate collective agreements in order to improve or renew them.

As a further part of the agreement, the parties will hold preparatory talks on important legislation affecting tax, employment and the labour market.

MSZOSZ and MGYOSZ agreed the previous years’ cooperation had been useful because they had worked together in the interests of their members. The two organisations had gone on to publish joint recommendations for wage bargaining, held talks on several major issues and submitted joint proposals in order to get funds and resources for different activities.

As an example of the co-operative nature of the agreement, Adrienn Bálint, Project Coordinator of MGYOSZ, talked about the Norway Grants, given to support social dialogue, which MGYOSZ and MSZOSZ had worked on together. She added the aim of the project had been to strengthen industrial relations and social dialogue at the regional level.

Commentary

It is clear employers and employees have different interests. Employers focus on profit and development, while employees see job security, working and living conditions and salaries as the key issues. Both, however, are interested in a good economic environment and ultimately they are dependent on each other and must work together for their goals to be reached.

Since the global financial and economic crisis, there have been some difficulties in social partnership and dialogue.

A significant number of companies have lost revenues and had to impose cost-cutting measures. Many decided to cut the cost of information and consultation process, as well as negotiating cuts through collective agreements in order to survive.

Unions and employers in Hungary have understood that this was not the best way to proceed. They understood that cooperation between social partners with different interests could help the parties search jointly for solutions, and to improve both working conditions and productivity. On the other hand, agreements only make sense if they are significant.

The recent sharp increase in signed agreements in Hungary has not led to significant positive change so far. No sectoral or multi-employer collective agreements have been signed in the past 18 months. The so-called ‘agreements’ are in reality only ‘letters of intent’ that have no binding outcomes.

Máté Komiljovics, Solution4.org

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