Hungary: Latest working life developments – Q4 2017

Wage competition in the retail sector, tough negotiations for the long-awaited wage increases for state companies, and a pay increase without change in salary for healthcare workers are the main topics of interest in this article. This country update reports on the latest developments in working life in Hungary in the fourth quarter of 2017.

Wage competition in the retail sector

Last year was a tense period for the retail sector with strong wage demands, strike threats and a massive national strike at supermarket chain Tesco in the September of 2017. An agreement was eventually reached at Tesco, with the company agreeing to spend HUF 2.8 billion (€9,000,000 as at 18 January 2018) on wage increases in 2018. This will put the lowest wage at Tesco at a monthly rate of HUF 197,000 (€620) which is considerably higher than the statutory monthly amounts for the national minimum wage and the guaranteed wage minimum for skilled jobs – HUF 138,000 (€446) and HUF 180,500 (€584), respectively.

The increase has meant that other major retail chains have had no option but to also offer higher pay. In October 2017, Auchan increased the wages of its non-managerial workers by an average of 13.6%. At Metro, where only the necessary adjustments to the guaranteed minimum wage have been applied during the past seven-to-eight years, trade unions were also able to secure pay increases of between HUF 15,000 and HUF 22,000 (€48.50 and €71.00) which will be shared (with differentials) between workers and managers. Allowances have also been introduced for managers.

Wage increases at state companies

Wages are due to increase by 10%–12%, on average, at public utility enterprises in 2018, according to the three-year wage agreement signed in 2017. However, further negotiations between employers, unions and the government are expected in these sectors:

  • postal services;
  • MÁV (Hungarian Railways Company);
  • Magyar Államvasutak, VOLÁN (public transport coach companies);
  • water supply.

The agreement provides for a total 30% wage increase, but it does not seem enough to mitigate the labour shortage. The president of the National Federation of Workers’ Councils (MOSZ), Imre Palkovics, said the lack of labour is so severe that company measures alone are not sufficient to solve the problem. Further government support is needed, for example, in case of the VOLÁN companies, where coach drivers are already much in demand internationally, as well as by domestic, private competitors. The president of the Democratic League of Independent Trade Unions (LIGA Szakszervezetek) said that postal workers could expect a total wage increase of 32% during the three-year period. For the time being, no further wage demands and negotiations are expected.

Pay increase in healthcare has no real impact on salary

In November 2017, the government announced a 12% wage increase for skilled healthcare workers – but the salaries for many of them remained unchanged. This echoes the situation when, at the introduction of the minimum wage, healthcare workers received a real salary increase but in practice saw only a modest increase in their basic wages. This is because of the way in which healthcare workers’ salaries are calculated and adjusted to the national guaranteed minimum wage, with the gap between basic wages and the guaranteed minimum wage being bridged by a special wage supplement. Hence, as basic wages were increased by 12%, the special pay supplement was reduced accordingly.

This means that take-home pay remains the same for 18% of healthcare workers (about 15,000 nurses), as their basic wage was below the guaranteed wage minimum. Furthermore, although skilled healthcare workers will receive a further 8% wage increase in 2018 and in 2019, any improvement in their relative wage position still seems to be distant since the guaranteed wage minimum will also be increased year-by-year (by 12% in 2018).

Commentary

Difficult wage negotiations are still pending in some areas. Workers in the Trade Union of Hungarian Civil Servants and Public Service Employees (MKKSZ), who have not had a pay rise in 10 years, have threatened a series of strikes if their demands are not met. At the Budapest public transport company, the employers’ wage offer has been accepted by two trade unions, but the third has refused it, and 1,000 workers have resigned. Nevertheless, the trend of overall wage increases is likely to continue in 2018.

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