Representativeness of the European social partner organisations: Footwear industry – Hungary

  • Observatory: EurWORK
  • Topic:
  • Social dialogue,
  • Social partners,
  • Employee representation,
  • Industrial relations,
  • Published on: 18 April 2010



About
Country:
Hungary
Author:
Orsolya Polyacskó
Institution:

The aim of this representativeness study is to identify the respective national and supranational actors (i.e. trade unions and employer organisations) in the field of industrial relations in the footwear industry in Hungary. In order to determine their relative importance in the sector’s industrial relations, this study will, in particular, focus on their representational quality as well as on their role in collective bargaining.

1. Sectoral properties

The weight of the footwear industry in Hungary’s economy has persistently decreased in recent years. A number of enterprises with large workforces have been closed down or have been relocated to Asia. Thus, the number of employees working in companies in the footwear industry is decreasing. Owing to the closure of several large companies, the organisation density of trade unions and employer organisations is declining, together with the coverage of collective bargaining. No multi-employer collective agreement exists in the sector.

Table 1: Profile of footwear industry

Sectoral properties

1996

2007**

Number of employers

242

158

Aggregate employment*

n.a.

n.a.

Male employment*

n.a.

n.a.

Female employment*

n.a.

n.a.

Aggregate employees***

13,865

7,766

Male employees

n.a.

n.a.

Female employees

n.a.

n.a.

Aggregate sectoral employment as % of total employment in economy

n.a.

n.a.

Aggregate sectoral employees as % of total number of employees in economy

n.a.

n.a.

Notes: * Employees plus self-employed persons and temporary agency workers. ** Or most recent data. *** Companies with more than four employees. n.a. = no data available.

2. The sector’s trade unions and employer associations

This section includes the following trade unions and employer organisations:

1. trade unions which are party to sector-related collective bargaining; (In line with the conceptual remarks outlined in the accompanying briefing note, we understand sector-related collective bargaining as any kind of collective bargaining within the sector, i.e. single-employer bargaining as well as multi-employer bargaining. For the definition of single- and multi-employer bargaining, see 4.2)

2. trade unions which are a member of the sector-related European federation, the European Trade Union Federation: Textiles, Clothing and Leather (ETUF:TCL);

The Local Industry and Municipal Workers’ Union 2000 (Helyiipari- és Városgazdálkodási Dolgozók Szakszervezete 2000, HVDSZ 2000) is affiliated to the Public Services International (PSI) and the European Federation of Public Service Unions (EPSU).

3. employer organisations which are a party to sector-related collective bargaining;

4. employer organisations or business associations which are a member of the sector-related European business federation, the European Confederation of the Footwear Industry (Confédération Européenne de l’Industrie de la Chaussure, CEC).

2a Data on the trade unions

Three trade unions are represented in the sector:

  • the Trade Union of Leather Industry Employees (Bőripari Dolgozók Szakszervezete, BDSZ);
  • HVDSZ 2000;
  • the National Trade Union of Prison Workers (Büntetésvégrehajtási Dolgozók Országos Szakszervezeti Szövetsége, BVDOSZSZ).

2a.1 Type of membership (voluntary vs. compulsory)

Voluntary.

2a.2 Formal demarcation of membership domain (e.g. white-collar workers, private-sector workers, footwear manufacturing employees, etc)

BDSZ: Employees of manufacturers of leather goods and gloves, footwear and fur industries.

HVDSZ 2000: Employees of municipal services, light industry, employees with altered working capacity (people with disabilities) and (subsidised) communal workers.

BVDOSZSZ: Prison staff.

2a.3 Number of union members (i.e. the total number of members of the union as a whole)

BDSZ: 833 members.

HVDSZ 2000: 11,640 members.

BVDOSZSZ: 1,300 members.

2a.4 Number of union members in the sector

BDSZ: 330 members.

HVDSZ 2000: 230 members.

BVDOSZSZ: 30 members.

2a.5 Female union members as a percentage of total union membership

BDSZ: 70%–80%.

HVDSZ 2000: No data available.

BVDOSZSZ: 30%.

2a.6 Domain density: total number of members of the union in relation to the number of potential members as demarcated by the union domain (see 2a.2)

BDSZ: 833/10,000 – 8.33%.

HVDSZ 2000: 11,640/150,000 – 7.76%.

BVDOSZSZ: 1,300/6,500 – 20%.

2a.7 Sectoral density: total number of members of the union in the sector in relation to the number of employees in the sector, as demarcated by the NACE definition

BDSZ: 330/7,766 – 4.2%.

HVDSZ 2000: 230/7,766 – 3%.

BVDOSZSZ: 30/7,766 – 0.38%.

2a.8 Sectoral domain density: total number of members of the union in the sector in relation to the number of employees which work in that part of the sector as covered by the union domain

BDSZ: 4.2%.

HVDSZ: No data are available, nor is it possible to estimate the number of workers with altered working capacity in the footwear industry.

BVDOSZSZ: 30/100 – 30%.

2a.9 Does the union conclude sector-related collective agreements?

A valid sectoral collective agreement has been in place since 1998. Apart from this, there are valid local collective agreements in certain workplaces or companies where a trade union operates.

All three of the abovementioned trade unions conclude collective agreements.

2a.10 For each association, list their affiliation to higher-level national, European and international interest associations (including cross-sectoral associations)

BVSZ and HVDSZ 2000 are affiliated to the National Association of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége, MSZOSZ). BVDOSZSZ is a member of the Independent Trade Union Association of Military and Police Employees (Fegyveres és Rendvédelmi Dolgozók Érdekvédelmi Szövetsége, FRDÉSZ) and the Democratic League of Independent Trade Unions (Független Szakszervezetek Demokratikus Ligája, LIGA).

At international level, HVDSZ 2000 is affiliated to PSI and EPSU.

2b Data on the employer associations

One employer association operates in the sector: the Association of the Leather and Shoe Industry (Bőr- és Cipőipari Egyesülés, BCE).

2b.1 Type of membership (voluntary vs. compulsory)

Voluntary.

2b.2 Formal demarcation of membership domain (e.g. SMEs, small-scale crafts/industry, footwear industry enterprises, etc)

Enterprises in leather and footwear manufacturing.

2b.3 Number of member companies (i.e. the total number of members of the association as a whole)

23 companies.

2b.4 Number of member companies in the sector

14 companies.

2b.5 Number of employees working in member companies (i.e. the total number of the association as a whole)

8,200 employees.

2b.6 Number of employees working in member companies in the sector

4,935 employees.

2b.7 Domain density in terms of companies: total number of member companies of the association in relation to the number of potential member companies as demarcated by the association’s domain (see 2b.2)

26.7%.

2b.8 Sectoral density in terms of companies: total number of member companies of the association in the sector in relation to the number of companies in the sector, as demarcated by the NACE definition

8.86%.

2b.9 Sectoral domain density in terms of companies: total number of member companies of the association in the sector in relation to the number of companies which operate in that part of the sector as covered by the association’s domain

8.86%.

2b.10 Domain density in terms of employees represented: total number of employees working in the association’s member companies in relation to the number of employees working in potential member companies, as demarcated by the association’s domain (see 2b.2)

63%.

2b.11 Sectoral density in terms of employees represented: total number of employees working in the association’s member companies in the sector in relation to the number of employees in the sector, as demarcated by the NACE definition

64%.

2b.12 Sectoral domain density in terms of employees represented: total number of employees working in the association’s member companies in the sector in relation to the number of employees working in companies which operate in that part of the sector as covered by the association’s domain

64%.

2b.13 Does the employer association conclude sector-related collective agreements?

Yes, through the Association of Hungarian Light Industry (Magyar Könnyűipari Szövetség, MKSZ).

2b.14 For each association, list their affiliation to higher-level national, European and international interest associations (including the cross-sectoral associations)

MKSZ is affiliated to the Confederation of Hungarian Employers and Industrialists (Munkaadók és Gyáriparosok Országos Szövetsége, MGYOSZ).

At international level, MKSZ is associated to CEC and the Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE).

3. Inter-associational relationships

3.1 Unions whose domains overlap

There is no overlap between domains.

3.2 Do rivalries and competition exist among the trade unions, concerning the right to conclude collective agreements and to be consulted in public policy formulation and implementation?

No.

3.3 If yes, are certain trade unions excluded from these rights?

Not applicable.

3.4 Same question for employer associations as 3.1

N.a.

3.5 Same question for employer associations as 3.2

N.a.

3.6 Same question for employer associations as 3.3

N.a.

3.7 Are there large companies or employer associations which refuse to recognise the trade unions and refuse to enter collective bargaining?

No such companies or associations exist.

4. The system of collective bargaining

4.1 Sector’s rate of collective bargaining coverage

26%.

4.2 Relative importance of multi-employer agreements and of single-employer agreements as a percentage of the total number of employees covered

At present, no multi-employer collective agreement is in force in the sector.

4.2.1 Is there a practice of extending multi-employer agreements to employers who are not affiliated to the signatory employer associations?

No.

4.2.2 If there is a practice of extending collective agreements, is this practice pervasive or rather limited and exceptional?

Not applicable.

4.3 Sector-related multi-employer wage agreements* valid in 2007 (or most recent data)

No multi-employer wage agreements are in force.

* Only wage agreements which are (re)negotiated on a reiterated basis.

4.4 Sector’s four most important collective agreements (single-employer or multi-employer agreements) valid in 2007 (or most recent data)

Table 2: Four most important agreements in terms of employees covered

Bargaining parties

Scope of agreements

 

Sectoral

Type of employees

Territorial

Shoe Fashion Group Kft. – BDSZ

Company

Employees of footwear manufacturers

 

LEGERO-Tisza Cipőgyártó Kft. – BDSZ

Company

Employees of footwear manufacturers

 

KÁLLFO Jóléti Szolgálat Kht. – HVDSZ 2000

Company

Employees of footwear manufacturers, employees with altered working capacity

 

TÚRI Cipő Kft. – BDSZ

Company

Employees of footwear manufacturers

 

5. Formulation and implementation of sector-specific public policies

5.1 Are the sector’s employer associations and trade unions usually consulted by the authorities in sector-specific matters?

No tripartite forum exists. However, consultations on sectoral policy take place in the framework of the bipartite sectoral social dialogue committee.

5.2 Do tripartite bodies dealing with sector-specific issues exist?

Table 3: Sector-specific public policies*

Name of body and scope of activity

Bipartite/tripartite

Origin: agreement/statutory

Trade unions having representatives (reps)

Employer associations having reps

Sectoral Social Dialogue Committee on Light Industries

Bipartite

Agreement of the social partners

BDSZ

HVDSZ 2000

Trade Union of Workers in the Clothing Industry (Ruházatipari Dolgozók Szakszervezete)

Trade Union of Textile Industry Workers (Textilipari Dolgozók Szakszervezete)

National Federation of Workers’ Councils (Munkástanácsok Országos Szövetsége, MOSZ)

BCE

MKSZ

Association of Hungarian Clothes Manufacturers (Magyar Ruhagyártók Egyesülése)

National Association of Entrepreneurs and Employers (Vállalkozók és Munkáltatók Országos Szövetsége, VOSZ)

Hungarian Associations of Craftsperson’s Corporations (Ipartestületek Országos Szövetsége, IPOSZ)

Note: * Sector-specific policies target and affect the sector under consideration.

6. Statutory regulations of representativeness

6.1 In the case of the trade unions, do statutory regulations exist which establish criteria of representativeness which a union must meet, so as to be entitled to conclude collective agreements?

In the context of the pluralistic union structure, Sections 32–33 of the 1992 Labour Code sought to define detailed criteria for collective bargaining entitlement at company level.

  • If only one trade union is active at the employer, and it received 50% of the works council election votes, this trade union has the right to conclude the collective agreement.
  • If more than one trade union is present at the employer, then – as a basic rule – all trade unions jointly have the right to conclude the collective agreement, provided that they received at least 50% of the works council election votes.
  • If the collective agreement cannot be concluded by all of the trade unions, the representative trade unions have the right to conclude the agreement, provided that they received 50% of the works council election votes.
  • In some cases, not even the representative trade unions can conclude the collective agreement, because they did not receive 50% of the votes cast at the works council elections or failed to reach agreement among themselves on the employees’ standpoint. In such instances, the trade union that received 65% of the votes has the right to conclude the collective agreement independently.
  • If the above condition is not met, the negotiations may be conducted with the participation of all of the representative trade unions, which may agree on the wording of the text of the agreement. However, the collective agreement may be concluded only if the employees have voted in favour of it; this outcome will be determined by vote. The voting is not valid unless more than half of the employees take part, and the majority of the voters are in favour of it. In practice, this means that the collective agreement can be concluded with the support of a quarter of the employees (Sections 32–33 of the Code).

The criteria for achieving representation at a company are also prescribed by the law: at least 10% of the votes should be obtained at the works council election. A trade union may also become representative if it achieves an extremely high level of organisation within one occupational group. As a result, such trade unions can also achieve representativeness where a minimum two thirds of the employees belonging to the same occupational group (profession) at the employer are its members (Section 29 of the Code). However, rules are less strict concerning multi-employer agreements.

In contrast to the meticulous company-level rules, the law does not specify any rules of trade union representativeness for collective bargaining at sectoral level.

For the purpose of extending the coverage of the sectoral collective agreement, the law states that trade unions considered to be especially representative are those that are the most significant in terms of the number of their members and the level of employee support. Again, support by the employees should be measured on the basis of the results of the last works council elections held prior to the conclusion of the collective agreement (Section 34 (2) and (3) of the Code).

6.2 In the case of the trade unions, do statutory regulations exist which establish criteria of representativeness which a union must meet, so as to be entitled to be consulted in matters of public policy and to participate in tripartite bodies?

The rules for sectoral and national representation with regard to taking part in consultative bodies were established in a draft bill in February 2006 (HU0602101F), which was passed by the Hungarian parliament on 11 December 2006 but later deferred by László Sólyom, President of Hungary, to the Constitutional Court (Alkotmánybíróság, AB) for a review of constitutionality (HU0701039I). In 2008, the AB in its ruling found that the law is not in line with the Constitution; however, no further amended bill has yet been submitted. Therefore, sectoral representativeness rules are still based on a 2004 national agreement between the social partners, which laid down the criteria and established a special committee – known as the Committee for issuing authorisation for participation (Részvétel Megállapító Bizottság, RMB) – to decide which organisations should be deemed representative (HU0501105F).

The complex criteria for participation in the sectoral social dialogue committees include: appropriate legal foundations of the organisations; the proportion of companies and employees covered by them; affiliation to national and international federations; previous experience in social dialogue and collective bargaining; and results of the latest works council elections (for trade unions only). The committee makes its decisions by using a complicated score system and, in the end, may award a different status for the applicants: consultative, decision-making and representative decision-making.

So far, sectoral social dialogue committees in the footwear industry have not been established; therefore, the above criteria have not been applied.

6.3 Are elections for a certain representational body (e.g. works councils) established as criteria for trade union representativeness?

Yes, see 6.1 for details.

6.4 Same question for employer associations as 6.1

According to the Labour Code, an employer may conclude only one collective agreement with trade unions at a given company or institution. It is also possible to conclude joint (multi-employer) agreements covering several organisations by management and company trade unions.

No legal criterion exists for employer associations to conclude sectoral collective agreements. Consequently, a sort of voluntary collective bargaining takes place at industry (or industrial branch) level, based on the parties’ mutual recognition. In practice, however, the by-laws of employer organisations are supposed to include the authorisation to do so on behalf of the members, or a procedure for ratification (or possible opt-outs) concerning the agreement negotiated by the association.

For the extension procedure, representativeness rules, similar to those for unions (see 6.1), are set by the law. According to these criteria, employer organisations that are considered especially representative are those showing the most significance in terms of their membership number, economic importance and the number of employees.

6.5 Same question for employer associations as 6.2

The same as for trade unions (see 6.2).

6.6 Are elections for a certain representational body established as criteria for the representativeness of employer associations?

No elections take place for representational bodies (see 6.2).

Orsolya Polyacskó, Institute of Political Science, Hungarian Academy of Sciences

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