Hungary: Ban on Sunday opening in the retail sector repealed

The ban on Sunday opening for shops in Hungary, in effect for one year, was repealed in April 2016. The ban had been opposed by most Hungarians but it caused far fewer economic losses and tensions than anticipated.

Background

Most Hungarians opposed the legislation that banned Sunday opening for shops, but their voices were not considered when the ban was enacted on 15 March 2015. A year later, however, in April 2016, the Act was repealed within just 24 hours. This sudden reversal by the government and the parliament is widely believed to be linked to the fact that some days before, the Hungarian Socialist Party (MSZP) had won the support of Hungary’s highest court for a referendum on the matter. Many retail workers, especially those with families, appreciated having Sunday off, despite losing wage supplements and having to work longer hours on weekdays. It is difficult to forecast if they will look to the Christian Democratic People’s Party (KDNP), the prime advocate of the ban on Sunday working, and the junior partner in the government, to reopen the battle.

Debate around Sunday closure

Prohibiting large stores from opening on Sundays has been a highly controversial issue in Hungary. Before the bill was passed in November 2014, there were repeated debates involving the relevant professional organisations and social partners. The Trade Union of Commercial Employees (KASZ) at first welcomed the initiative, since it had long been calling for work-free Sundays. The employer organisation, the Hungarian Trade Association (OKSZ),  strongly opposed the ban, and the Hungarian Council of Shopping Centres (MBSZ) forecast the loss of 20,000 jobs if shops were closed on Sundays.

It soon became apparent that the lack of weekend working (and the consequent loss of extra pay on Sundays) would mean a cut in shop workers’ monthly pay of about HUF 10,000 to HUF 12,000 (€32–€38 as at 16 May 2017). Modifications (Act CXII of 2014) were made to this bill, which curbed any possibility of wage rises for shop workers, whose wages were already low.

As the price for work-free Sundays thus became far too high, KASZ could no longer support the ban on Sunday trading. Both it and OKSZ asked the President not to sign the law, but he went ahead on 23 December 2014.

Details of the ban

The Act (Act CII of 2014) aimed to protect workers’ physical and mental health by providing them with adequate rest time as well as trying to strike the right balance between the freedom of practising commercial activity and the interests of workers who work on Sundays.

However, the Act only prohibited stores from opening – it allowed employers to call their workers in on Sundays, for instance, to fill up shelves. This was not, however, a widespread practice.

With a few exceptions (such as markets, airport shops and petrol stations), all shops were banned from opening on Sundays. Shops were allowed to open on the four Sundays before Christmas, and one additional Sunday to be selected by the operator. Workers were entitled to a 100% wage supplement if they worked on these Sundays. Additionally, and contrary to the law which the new Act supplanted, the maximum daily opening hours were also set between 04:30 and 22.00 (except on 24 December and 31 December when opening times were extended to 24.00). However, the Act permitted retail units with a retail space of less than 200 square metres to open on Sundays, provided that those working were the owner, the part owner or close relatives.

Effect on retail sector

The economic effects of the Act have turned out to be less dramatic than critics predicted. Overall turnover in the retail sector grew instead of declining. The volume index of turnover for retail shops in January–December 2015 was 105.5. The explanation is rather simple: consumers adjusted their shopping habits, which resulted in shifting the high turnover from Sundays to other days of the week. However, during this time the overall number of workers in the sector fell by 4,000. One reason for this could be that the number of shops fell by more than 3,000 in 2015. Even so, there was an increasing labour shortage, with 3,161 vacancies registered in 2015, a 35% increase from the previous year.

This labour shortage could certainly be related to the low level of wages. Although shop workers saw their monthly gross average wage increase by HUF 5,566 (€18) in 2015 from 2014, this still lagged behind the res of the private sector by more than HUF 27,000 (€87).

It should be noted that all the above figures are from the Central Statistical Office, whose data cover businesses that employ at least five individuals. Additionally, wage data of the retail sector also include vehicle repairs.

No comprehensive assessment has been made of the impact of the Act so far, but cases published show similar impacts on the workers it affected. The Act mainly targeted large, multinational retailers, but most of these had enough resources and room for adjustment. They opted for longer opening hours during the week, employed fewer part-time workers and students with temporary contracts, and reorganised jobs to have more cashiers at the same time. Workers previously employed by large retailers across 24-hour shifts, especially those only on night shifts, clearly took a big hit in earnings, since they lost not only the Sunday wage supplement but also the 15% night supplement.

Small Hungarian-owned shops and retailers catering to tourists seem to be the ones most adversely hit. City centre retailers, in particular, relied on Sunday shopping, and the longer opening hours during the week was not useful, since most tourists visit Budapest during the weekend. However, the Act has had a clear positive effect on online retailers and consequently on logistics businesses.

Lifting of the ban

Although most Hungarians opposed the Act, the ban seemed to be there to stay. MSZP tried to initiate a referendum for lifting the ban, but was prevented on several occasions, sometimes under dubious circumstances.

Eventually, in early April 2016, the Curia, the highest judicial authority, overruling the decision of the National Election Committee (Nemzeti Választási Bizottság), agreed that the question could be placed before the electorate. The MSZP then had 120 days to collect the 200,000 signatures needed to put the matter before parliament, with parliament then expected to announce the referendum within the next 30 days. Getting the necessary support was expected to be easy.

However, the government immediately did a U-turn and on 12 April parliament adopted the government’s proposal to repeal the Act, announced and tabled the previous day. There was no consultation with the social partners or other interested parties and no comprehensive evaluation was given about the possible effects of the Act.

The bill to lift the ban (Act XXIII of 2016) passed easily, with 163 in favour, 2 opposed and 11 abstentions.

With the repeal of the Act the rules prior to 15 March 2015 were simply reinstated. This meant that the Sunday wage supplement of workers was also restored, from the new rate of 100% to the previous 50%. Shops could again open around the clock as well as every Sunday. Not much time was provided for this readjustment: shops could (and had to) open on the Sunday of the same week.

As many retail workers no longer wanted to work again on Sundays, especially those with families, KASZ immediately issued an open letter to the government entitled ‘We are not chessmen on the chessboard of politicians’. Their main claims were to make Sunday working voluntary and to reinstate the 100% Sunday wage supplement (PDF). The trade union has also organised protests and collected a petition.

However, OKSZ said that lifting the ban was a good decision since most customers had been in favour of it. OKSZ also said the 50% Sunday wage supplement was fair and it should be retained.

Conclusion

The Act prohibiting retail stores from opening on Sundays was in effect for around a year. Its introduction provoked fierce debate but, at that time, ‘keeping Sundays a family event’ was more important for the government and parliament than the freedom of commercial activity. The parliament, based on the initiative of the government, repealed the Sunday closure Act suddenly, but not unexpectedly, in April 2016. With this decision, it killed two birds with one stone: it avoided a referendum which was likely to result in a humiliating defeat, and made a decision pleasing to most Hungarians. Nevertheless, it missed the opportunity to introduce fair and balanced working time regulation in the sector.

The sudden shift of the government and the parliament, neither explained to nor discussed with the social partners, did not capture public attention for very long. Retail workers have returned to work on Sundays and, after the immediate drop in their wage supplements, are now hoping for some overall wage increases because of the acute labour shortage in the sector. Customers have quickly resumed their habit of Sunday shopping. What seems to have faded is the political commitment to protect families and to retain family cohesion by providing workers with free Sundays.

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

Eurofound welcomes feedback and updates on this regulation

Add new comment