Hungary: Latest working life developments Q3 2018

Tensions over impending public sector layoffs, dissatisfaction with public sector wages and conditions, and protests about changes in the taxation of non-wage benefits are the main topics of interest in this article. This country update reports on the latest developments in working life in Hungary in the third quarter of 2018.

Conflict around public sector layoffs

The government announced in mid-August that a mass layoff would be implemented within the governmental bodies from January 2019.[1] Official estimates say that the downsizing will affect 15–20% of central public administration personnel (an estimated 3,000 people). While this is only a fraction of the estimated 700,000 public sector employees (including teachers and health workers), the impending layoff still created considerable tensions.

Trade unions claimed that there are already staff shortages and that any layoffs should follow a reduction of bureaucratic tasks. They also criticised the fact that the layoff was announced without prior notification and called for an emergency meeting of the National Public Service Interest Reconciliation Council (OKÉT), to no avail.[2] Finally, the unions said that the actual objective of the government is not to reduce bureaucracy, but to offset the costs of the upcoming wage rise in public administration (scheduled for 2019) by simultaneously cutting the workforce and increasing the workload for the remaining staff.[3]

The Trade Union of Hungarian Civil Servants and Public Employees (MKKSZ) called for a unified response on the part of the trade unions – with no visible results to date.

Severe personnel shortage in public healthcare

A recent string of resignations drew public attention to the widespread discontent among healthcare professionals about wage levels and excessive workload in the public healthcare sector. In late August, the head of the emergency care unit of Honvéd Hospital in Budapest resigned, saying that the unit lacks the staff and equipment necessary for the provision of adequate care.[4] Also, 45 anaesthetists and cardiologists withdrew their voluntary overtime agreement in the same hospital, after the hospital management reportedly suspended pay for this work.

In a hospital in Ajka, every nurse in the intensive care unit resigned in August due to the excessive workload. When management filled the positions with nurses who were inexperienced in intensive care, the entire intensive care unit staff resigned as well.[5]

None of these resignations were deliberate collective actions and so do not point to an upsurge of industrial action in the healthcare sector. On the contrary, union representatives report a growing fatigue among healthcare professionals, which makes the relaunch of the spring demonstrations unlikely.

Employers maintain that the allegations of severe personnel shortages are greatly exaggerated and that the smooth operation of hospitals and their various units is assured.

In public healthcare, employers depend on overtime work because of staff shortages, while employees rely on it because their basic pay is too low. This situation triggers exhaustion among staff, erosion of the workforce and, reportedly, a deterioration in healthcare quality. According to the unions, only a significant wage increase will end the dependence of the healthcare sector on overtime; however, in the present climate, such an increase is unlikely in the short term.

Private sector employers have not commented on recent events directly. They are focused on the general overhaul and rationalisation of the sector, rather than daily operation costs.

Discontent at changes to tax allowances and exemptions

After the announcement of the 2019 tax bill in June, it became clear that the government intended to eliminate the social tax exemption and social tax allowance for most types of non-wage benefits (e.g. housing rent support and contribution to voluntary pension or health fund).

Trade unions wrote an open letter to the members of parliament[6], imploring them to reconsider the tax bill as they estimated it would decrease the overall net income of roughly two million employees.[7] Later, they asked the parliamentary legislative committee for a hearing, but the motion was voted down by committee members.

Employer organisations argued that they would lose a low-cost motivational tool and that some categories of benefits should get preferential tax treatment (e.g. assistance for mobility and housing, and contributions to pension and healthcare savings).

The new tax bill passed on 20 July despite these protests. In response, the unions pledged to raise the issue during the national-level wage negotiations due to start in November. Whether any demonstrations of strikes will occur is uncertain, as there is an acknowledged apathy among the union membership, weakening their position.

Since the bill was passed, employer organisations have made no public efforts to pursue the issue further.[8]

Commentary

The lull in industrial action continued into the third quarter, with a potential conflict at the Hungarian subsidiary of German firm Creaton GmbH being resolved before any strike action took place. This may change during the national-level wage negotiations because the employers and unions have very different aspirations regarding the 2019 wage increase. There may also be greater unrest among employees in 2019, when the adverse effect of the tax changes regarding non-wage benefits on their net incomes becomes evident.

 

[1] Népszava (2018), Több ezres elbocsátás a közszférában , 15 August.

[3] Szakszervezetek.hu (2018), ’Ne bürokratát csökkentsünk, hanem bürokráciát!’ 22 September.

[4] Népszava (2018), Felmondott Zacher Gábor a Honvédkórházban , 31 August.

[6] Szakszervezetek.hu (2018), Nyílt levelet írt a képviselőknek a MASZSZ , 11 July.

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