The Hungarian government is attempting to introduce incentives to increase the employment rate and help both state and companies save money. Specifically, say some unions, the government wants to cut red tape and the costs of hiring and dismissing workers, thus putting employers’ interests and state budgets before the rights of workers. The government published a new draft of the Hungarian Convergence Széll Kálmán Programme on 15 April 2011, provoking widespread discussion.
The Hungarian FIDESZ-KDNP coalition government’s Széll Kálmán Plan aims to help companies and the state avoid going into debt in times of crisis. Included in the plan are government proposals for changes in the way the country’s employment system works.
The plan proposes that administrative burdens and costs related to employment, for both companies and the state, should be minimised. The government believes that if red tape is reduced, legal employment would increase and become more flexible, equal (in terms of access to employment) and secure – all common goals of EU employment directives.
However, not all social partners agree that the plan would achieve these goals.
The government consulted with employers’ organisations over the planned measures, which are outlined in this update, but there has been no general meeting with all parties and this lack of dialogue has concerned the trade unions.
The unions are demanding social dialogue, a comprehensive and precise impact study and consistent announcements from the government before the measures are introduced.
The Alliance of Autonomous Trade Unions (ASZSZ), the National Association of Hungarian Trade Unions (MSZOSZ), the Trade Unions’ Cooperation Forum (SZEF) and the Confederation of Unions of Professionals (ÉSZT) held a joint forum on 1 May 2011 to emphasise the need for dialogue. They all perceive the new regulations drafted by the government as a threat to employees, the unions and the institution of social dialogue. The unions also believe these measures annul the last 20 years’ achievements in employees’ rights and working conditions.
National Economy Minister György Matolcsy has only presented an outline of the main measures; the details have not been addressed.
Péter Pataky, President of the MSZOSZ union, said it was important that the government consult social partners before introducting the measures. He believes it is still not too late for dialogue, particularly since the details have not been finalised.
The government has so far avoided all consultation with the social partners and no impact studies have been published. Péter Pataky and fellow confederation representative János Borsik, Chair of the ASZSZ, say that if the government does not intend to negotiate this will lead to conflict at both national and local levels.
The proposals aim to make the hiring of new employees easier and more flexible, with less data collection required and the possibility of ending the requirement to provide monthly notification of earnings and additional costs. Probation periods would be raised from the current three months to six months.
Trade unions say they cannot accept this initiative, even if more extensive collective agreements are introduced. There are currently only a few sectoral agreements in existence, such as in the construction industry and the hotels, restaurants and catering (HORECA) sector.
However, employers are already using the maximum probation time currently allowed before they must offer a worker a full contract. Workers will be the ones to suffer if an extended probationary period is introduced, say the unions, because the normal legal guarantees surrounding termination of employment do not apply during a probationary period.
The plan notes that rules concerning working hours are complicated, especially in small businesses that require irregular working hours. It proposes that employment conditions would improve significantly and administrative burdens would decrease if, in micro and small enterprises, workers were bound to 48–60 hours a week and to a maximum of 12 working hours per day; and if at continuous businesses, 5.5 working days per week was possible.
In addition, it is proposed that employers and employees should be able to agree on the total number of hours to be worked in one year, with the following results:
The plan also reviews bonus payments for night and weekend working and severance payments. Employers could benefit at peak times and save at less busy times. However, employee representatives say this would lead employers to abuse workers.
Unions say the introduction of a 40-hour working week has been a great achievement, offering employees a good work–life balance, and they cannot agree to its removal.
The plan declares that 100,000 new jobs could be created by reducing qualification requirements, providing an opportunity for unskilled workers. It is cheaper for employers to fill positions with unskilled labour, as a guaranteed minimum wage has only to be paid to qualified workers. However this would bypass an agreement reached with the social partners from the National Council for the Reconciliation of Interests (OÉT), in December 2010.
Furthermore, it is proposed that unemployment benefit would only be available for three months after a worker was laid off. After that, anyone who hadn’t found a job would have to join the public works programmes. The government also plans to redirect the unemployed under retirement age back into the workforce by deregulating the pension scheme to prevent pensions being paid to younger people, and by restricting all related social allowances.
Trade union representatives say Hungary has had a lot of illegal employment. There have been problems concerning the issue of rest times, paid leave and overtime, which the government now wishes to legalise. Unions believe more flexibility in legislation will lead to the exploitation or abuse of employees. Incentives to tighten the system should be introduced only if there is a good supply of jobs, and at the moment the unemployment rate is about 12%.
The Széll Kálmán Plan is an ambitious programme. However, since its details have not been published, its feasibility is difficult to guage. The government plans to approve its final version in June 2011. Consultation with social partners has not yet been planned.
Zsuzsa Rindt, Solution4.org Bt