In January 2008, following the third anniversary of the establishment of the Economic and Social Council, a conference reviewed how the council has functioned so far, assessed its merits and demerits, and made recommendations for improving its legal background and policy context. Earlier a smaller international workshop, attended by experts from the International Labour Organization, also discussed the Hungarian social dialogue system in a European perspective.
About the Council
The Hungarian Economic and Social Council (Gazdasági és Szociális Tanács, GSZT) was set up in August 2004 as a consultative forum to discuss major national-level strategic plans and programmes for the medium and long term (HU0501105F). GSZT comprises the social partners, including all employer organisations and trade unions represented in the National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT). The Economic and Social Council also encompasses various business organisations – such as chambers of commerce and industry, associations of foreign-owned companies and commercial banks – as well as experts from the Hungarian Academy of Sciences (Magyar Tudományos Akadémia, MTA), the Monetary Council of the National Bank of Hungary (Magyar Nemzeti Bank, MNB) and various non-governmental organisations (NGOs).
GSZT’s 43 members elect a 12-strong standing committee, as well as a president and a vice-president on a rotation basis. The council has a small secretariat, hosted by MTA, and operational expenses are funded by the state budget. Government representatives are not formal members of GSZT but are invited on a permanent or occasional basis. In the period of 2004–2007, some 14 plenary meetings took place, many of them held with the participation of the prime minister. GSZT has built ties with the Brussels-based European Economic and Social Committee (EESC) and with its counterparts in other countries.
Discussion on structure of social dialogue
An international workshop was one of the events organised to mark the third anniversary of GSZT’s establishment, and was attended by experts from the International Labour Organization (ILO). Participants of the workshop, ‘National social dialogue: Within and beyond tripartism (in Hungarian)’, agreed that three forms of national-level social dialogue could be distinguished in EU Member States:
- bipartite, intersectoral social dialogue involving national-level employer and trade union organisations, where the state is present only indirectly through public policies and as a public sector employer;
- a tripartite model, promoted by the ILO, involving the state and national employer and trade union organisations;
- ‘tripartite-plus’ social dialogue involving employer and trade union organisations, as well as civil society groups such as NGOs or academics – the EESC is an example of this form of dialogue, which the social partners at EU level have defined as tripartite concertation.
Intersectoral agreements have tended to play a minor role in central and eastern Europe (CEE). However, following the democratic transition in the 1990s, the ILO had a strategic role in promoting the tripartite model. Tripartism proved to be successful, and in most countries it continues to work well. In turn, accession to the EU resulted in some institutional changes. Most CEE countries preserved standard tripartite arrangements, while Bulgaria and Hungary introduced EESC-type institutions alongside tripartite bodies. Interestingly, Croatia and Macedonia have created a special channel devoted to civic dialogue in conjunction with the tripartite bodies.
Trends in tripartism
The main founder of GSZT, Lajos Héthy, argued that the emergence of tripartite-plus bodies is a reflection of modern, complex societies where the importance and role of social partners have changed. Tripartism was an effective vehicle in the early 1990s, when recession and deep restructuring of the economy raised issues affecting the world of work. Since then, however, a range of new actors have emerged – such as civil organisations and representatives of powerful segments of the economy – also wishing to partake in social dialogue. With the emergence of complex strategies for economic sectors like healthcare and education, a new set of knowledge is now required, with which various representative organisations and NGOs are better equipped. Finally, the shift in international orientation of these countries towards the adaptation of EU-style institutions made the EESC a role model.
Mr Héthy questioned whether tripartism is still relevant in the context of globalisation, a profoundly changing economy and society, and the changed position of social partners. Although erosion of trade unionism is a universal feature, Hungary witnessed an exceptionally sharp decline: in 1992 2.5 million members paid union dues, while in 2007 their number was just half a million. Furthermore, the coverage and role of employer organisations in regulating the economy are weaker than in the older Member States before EU enlargement in 2004 and 2007.
Developments in EU perspective
ILO experts concluded that widespread misunderstanding arose in CEE countries about the EU model of social dialogue, partly as a result of the perception of the EESC. In relation to Hungary, the EESC was already inviting the social partners which were present at OÉT to its meetings as far back as 1997. The perceived message in CEE countries was the need to bring NGOs on board to have proper dialogue, and to replace government representatives with them.
This perception, however, overlooked developments at EU level, where in fact two major forms of social dialogue coexist: the EESC type involving civil groups and the standard tripartite form – the latter has been substantially reinforced over the last two decades. The social partners’ role was recognised by the Treaty of Maastricht, and recently the Tripartite Social Summit for growth and employment has become a key institution. Moreover, Article 136/A of the new reform treaty provides the summit with a legal basis. This Treaty of Lisbon, signed on 13 December 2007, has clearly reinforced tripartism – particularly in the context of the new European Social Fund – with tripartite committees. Nevertheless, in CEE countries the main institutional arrangement for central-level social dialogue remains tripartism, with the state as a key actor.
Representativeness issue unresolved
Despite the well-known weaknesses of social partners, one reason for maintaining the standard tripartism in many new Member States also relates to the issue of representativeness. In the case of civil organisations, the issue of representativeness is even more complex than for employer and trade union organisations, due to their small membership and lack of clarity concerning the selection criteria.
The source of legitimacy may be different in tripartite and ‘tripartite-plus’ type bodies. In the former type, freedom of association, the tradition of social partnership and the representativeness of trade unions and employer organisations are the prevailing factors. However, in the latter type, these issues do not matter, at least in the case of public bodies such as MTA and of prestigious individuals, who sometimes lack an organisational background. In the absence of internal representativeness, it is important to determine which organisation is considered legitimate by the EU and ILO institutions.
At the GSZT workshop, András Tóth from the Institute for Political Science, MTA, argued that the source of social partners’ legitimacy, to a certain extent, is different in western Europe, where legitimacy is rooted in the historical development. Conversely, in eastern European countries, the social partners, lacking a genuine bargaining function, acquired a kind of ‘secondary’ legitimacy through the process of institution building and emulating the European model. Governments facilitate the legitimisation of social partners by inviting them to tripartite social dialogue and to share decision-making authority with them. Legitimacy is a key issue in the CEE countries, and this is why the President of Hungary, László Sólyom, requested the Constitutional Court (Alkotmánybíróság, AB) to review the constitutionality of social partners exercising public authority through the tripartite machinery (HU0701039I).
Evaluation of GSZT
Achievements and failures
GSZT acquired importance by being consulted on the government’s various policy initiatives, including the strategically important ‘New Hungary programme’ (289Kb PDF), envisaging a roadmap for utilising EU funds. The council also formed various task forces to prepare position papers on its own initiatives. So far, the most important strategic proposals have included national plans on climate change, the human resource aspects of innovation and corporate social responsibility. Regarding the latter, a monitoring group was also established. However, not all strategic issues underwent a process of consultation and in 2006 GSZT remained silent on the convergence programme, and austerity and reform measures (HU0607039I, HU0607049I).
One of GSZT’s own initiatives, the attempt to conclude a Social Pact (Társadalmi Szerződés) on strategic issues, failed after the council’s preparations in February 2005 and subsequent rounds of discussions. The initiative coincided with Prime Minister Ferenc Gyurcsány’s ‘12-point’ proposal of December 2005, and the two initiatives annulled each other. As a rule, both the government and GSZT may present reports at their own initiative, but without any formal obligation of the other parties to respond, which results in functioning based on improvisation.
The general public has remained largely unaware of the council, as it has suffered from a persistent communication deficit.
Legal base
As many commentators pointed out at the anniversary conference (in Hungarian) organised by GSZT, legal underpinning would ensure a sort of stability and guarantee for social dialogue. Although the government prepared a bill on GSZT, it has not been passed by the parliament, as it lacks the support of the Alliance of Free Democrats (Szabad Demokraták Szövetsége, SZDSZ), who shared the constitutional concerns of President Sólyom. However, a more general problem is that the Constitution of Hungary does not endorse social dialogue, and former legal stipulations on public hearings (társadalmi vita) were cancelled during the political transition.
Recommendations
Participants of GSZT and politicians agreed that the most urgent tasks were to settle GSZT’s relationship with the government and parliament. This may include revision of the procedural rules of the government. As to the legal base, it is promising that Hungary has already ratified the Treaty of Lisbon of 2007, which also includes sections on social dialogue; it may thus substitute the lacking constitutional base for legislation on GSZT.
Commentary
The search for a new institutional model led to the parallel existence of OÉT and GSZT with partly overlapping participants and functions. It remains questionable whether such institutional complexity contributes to a more efficient and meaningful dialogue with key organisations of society.
Despite GSZT’s establishment as a forum for discussing strategic issues, OÉT has undoubtedly remained the cornerstone of the Hungarian industrial relations system and consultation with the government. Being an old institution with a certain legitimacy and regular work, OÉT’s authority, tasks and procedural rules are far better defined. The real innovation of GSZT, beyond the involvement of civil, business and academic communities, is its unprecedented autonomy. It works independently of the government, develops its own agenda and makes its own strategic proposals.
This autonomy, however, may mean that initiatives remain ‘dead letters’ due to the lack of response by state authorities, and it may also lead to overlooking important issues, as happened with the convergence programme in 2006. The government typically approaches GSZT with future-oriented positive proposals but does not consult this body on controversial matters. The unresolved issues of legitimacy of participant organisations and legal underpinning, in addition to the lack of proper distribution of tasks between parallel national level forums, lead to uncertainties concerning whether GSZT is becoming a meaningful forum for social dialogue.
László Neumann and András Tóth, Institute for Political Science, Hungarian Academy of Sciences