Tensions were heightened between trade unions and management at the Budapest Transport Company over a disagreement concerning wage increases. The negotiations took place against a backdrop of ongoing substantial financial losses at the company and a management plan to reorganise working time, combined with government tax increases and higher than expected inflation. The conflict ended with an agreement on additional pay increases for 2007–2008.
Background
Budapest Transport Company (Budapest Közlekedési Vállalat, BKV) is responsible for providing public transport services for Budapest, a city of nearly two million inhabitants, and for a further half a million commuters. BKV employs almost 13,000 people and carries about seven million passengers a day. It operates five branches – including bus, tram, metro and underground, suburban railway and trolley bus – in an integrated network system. The company is 100% owned by the local authority of Budapest.
Since 1990, BKV has undergone several rationalisation campaigns, in the course of which the once 22,000-strong workforce has been reduced to 13,000 persons. Most of the reorganisation was carried out in the mid 1990s, when the company outsourced various non-core functions. Compared with other transport companies in Hungary, BKV is a high wage organisation: a bus driver at BKV earns approximately twice as much as a bus driver employed at another company. The average monthly salary of employees is HUF 220,000 (€870 as at 9 November 2007) and wages have increased by 8%–12% a year, exceeding the rate of inflation since the second half of the 1990s.
The relatively high pay level is mainly due to the strong trade union presence at BKV. Although the multiple union presence at the company is notable – amounting to a total of 28 employee organisations – the three major Hungarian trade unions represent the majority of employees at BKV. In recent years, trade unions have put considerable pressure on management to raise wages and set better working conditions. In 1993, a two-hour warning strike ensured an annual pay increase; since then both parties have maintained a cooperative relationship and no strikes have taken place at the company.
Nonetheless, the company has experienced a financial deficit for a number of years. In 2006, it reported a loss of HUF 15 billion (€59 million), and already in the first half of 2007 BKV had accumulated losses totalling HUF 8 billion (€31 million). In early 2007, the government appointed a new management team to reorganise the company in order to reduce its deficit.
Mid-year wage bargaining
In 2006, the management and trade unions agreed on an approximate 8% pay increase for 2007, which amounts to a monthly HUF 16,000 (€63.25). The agreement stipulated that the parties would review the wage situation in the second half of the year.
On 2 July 2007, trade unions demanded that negotiations over wages should be reopened. Given the higher than expected economic inflation and the impact of tax increases (HU0708029I), they demanded an additional pay increment of 6%, corresponding to about HUF 12,000 (€47.44) a month, backdated from 1 January 2007.
The management, however, rejected this demand and made clear that any pay increase should be at the expense of fringe benefits provided by the collective agreement. As negotiations dragged on, the trade unions established a strike committee and announced a one-day strike for 4 September 2007. They threatened the management that they would call one-day strikes each week if no agreement was reached.
Just three days before the strike, the company made a final offer, involving a 2.5% pay increase of monthly salaries from 1 October 2007, corresponding to HUF 5,600 (€22). At the same time, management would create the conditions for an additional monthly 3% increment, amounting to HUF 7,100 (€28), by 31 December at the expense of fringe benefits. This proposal was contingent on the trade unions’ consent to a reorganisation of working time.
Meanwhile, the Mayor of Budapest, Gábor Demszky, called the attention of the trade unions to the fact that wages at BKV are already substantially higher than at any other publicly-owned transport company. He also warned that any pay raise which would increase the company’s deficit would directly result in job cuts. However, the trade unions – dissatisfied with the offer from management – continued their strike preparation and declared that, according to their opinion poll, two thirds of the employees would participate in the strike.
Last minute agreement
Nevertheless, management and trade unions reached a last minute agreement one day before the planned strike. According to the agreement, employees would receive a 2.5% monthly pay increase from 1 September 2007 and the preconditions for a further 3% raise in monthly salaries would be put in place from 1 January 2008. BKV would also give a one-off payment of HUF 12,000 (€47.44) to each employee. The agreement allowed the company to reorganise working time in order to reduce downtime.
András Tóth, Institute of Political Science, Hungarian Academy of Sciences