Hungary: Latest working life developments – Q1 2017

A 15% increase in the minimum wage (25% for skilled workers) and the continuing restructuring of education and public works programmes are the main topics of interest in this article. This country update reports on the latest developments in working life in Hungary in the first quarter of 2017.

Impact of wage increases

From 1 January, the statutory minimum wage was increased by 15% with a 25% increase for qualified, skilled workers. This was a result of the multiannual wage agreement signed in December 2016. These unprecedented increases have had a fundamental impact on the overall wage scene and brought about two parallel debates.

In the private sector, a survey – predominantly among small and medium enterprises (SMEs) – by political analysts the Policy Agenda revealed that 43% of managing directors foresee closures due to the wage rises.

In the public sector, although wage negotiations have not yet finished at all the state-owned utility companies, it appears that, based on the government’s announcement, workers at these companies will see their wages rise by 30% on average, in stages, until 2019. Workers and their unions at local government-owned utility services (such as the Budapest City Transport company) are putting forward similar wage claims, arguing that they should be treated the same, regardless of whether the financing is provided by central or decentralised public sources.

Review of public works programmes

On average, public works programmes employed 200,000–220,000 people every month in 2016 (approximately 5% of the total employment). However, the government has announced it will reconsider these programmes, after several complaints by private sector employers that they cannot find workers, partly due to public works.

One plan is to employ workers in public work for only one year, instead of three, reducing the current workforce to 150,000 workers.

Furthermore, young people aged up to 25 would only be eligible for public works if the Youth Guarantee Programme could not offer them suitable job opportunities. Skilled workers with qualifications will have to wait three months before being selected for any public works. Within that period, Labour Offices are expected to do their best to find a job for them. Skilled people will be involved in public work programmes only if all these job search efforts fail.

New national core curriculum

In the past few years, the government has restructured various segments of the education system. It is now planning to lengthen primary education from eight grades to nine. The extra year is meant to bridge the compulsory nursery year and the current first year of the primary school in order to develop the basic skills of children. The overall objective of this measure is to join up all education levels from nursery to university in order to improve effectiveness. The new national core curriculum is being prepared, although there is as yet no consensus within the government on when the nine-grade primary school system will be introduced.

The consultation on the content of the national core curriculum is expected to finish by mid-April and the actual development of the curriculum is expected to be completed by September. Zoltán Balogh, Minister for Human Resources, has announced 2017 as the starting year of the new system. At the same time, László Palkovics, the State Secretary for Education has forecast the launch for 2019, although he also indicated the possibility of introducing the system in several stages.

Outlook

In the next quarter, the regulation of Sunday work in the retail sector will be raised once again. The budget, together with the tax laws, will be submitted to the government between late April and early May, and the debate on tax cuts will be on the agenda again.

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