In November 2004, the Hungarian central social partners agreed to recommend a 6% wage increase in the competitive sector in 2005, and in December a similar deal was reached for public employees.
On 12 November 2004, the social partners represented on the tripartite National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) (HU0209101N) concluded an agreement on wage recommendations for 2005. OÉT recommended a 6% gross average wage increase to enterprises and lower-level collective bargaining parties in the competitive sphere, ie private and state-owned companies. At the meeting, the social partners and the government also agreed to set the national minimum wage at HUF 57,000 (EUR 240) per month as of 1 January 2005.
Following the OÉT recommendation for the competitive sector, preparations commenced to sign a similar agreement for the public sector. On 18 November, the president of the Trade Unions’ Cooperation Forum (Szakszervezetek Együttműködési Fóruma, SZEF) said that he was expecting an agreement whereby neither the gross wage increase nor the real wage increase should be lower in the public sector than in the competitive sector. He also stressed the importance of ensuring that as much of this wage increase as possible would be legally guaranteed. At the same time, the union practically endorsed the government's move to have the '13th month’s wage' payment due in 2004 paid only in mid-January 2005. This delay made it possible to meet budget target figures for 2004.
On 14 December, the National Public Service Interest Reconciliation Council (Országos Közszolgálati Érdekegyeztető Tanács, OKÉT) agreed on the amendment of the legal regulation governing public employee wage schemes. in order to ensure an average 6% wage increase. The agreement’s main provisions are as follows.
- The guaranteed minimum wage of public service employees should increase on average by 7.5% on 1 January 2005 and by an additional 4.5% on 1 September 2005. Also, the lowest basic salary (category 'A1' in the wage scale, which also serves as a basis of calculation for wages in higher categories) should equal the national minimum wage (HUF 57,000 a month). Further, the wage supplements of public service employees should be increased by 4%. It was also agreed to create a reserve fund in order to pay a 2% performance-related wage increase at individual public service institutions.
- As far as public administration employees are concerned, their basic salary should be increased by 6%. Moreover, the margin by which wages may vary based on individual performance evaluation will be increased by 10%.
- Workforce reductions in public services should be implemented in line with a professional evaluation of institutional workload, in order to avoid service deterioration.
- Consultations will begin on the financing mechanism for public institutions owned by local governments and social security funds, with a view to concluding the consultation process not later than 15 September 2005.
The parties agreed to evaluate implementation of the agreement by 15 September 2005. They have expressed their wish that this agreement might serve as a model for an agreement in the health sector, to be negotiated through bipartite talks between the unions and the Ministry of Health (Egészségügyi Minisztérium, EÜM), beginning on 26 November. In these negotiations, the Democratic Union of Healthcare Employees (Egészségügyi és Szociális Ágazatban Dolgozók Demokratikus Szakszervezete, ESZDDSZ) was seeking to increase wages by 50% and to reach the 'European average' wage level within five years.
Through the public sector pay agreement reached in the OKÉT, the parties also ended the negotiations on implementation of the 2004 wage agreement, and a trade union strike committee was wound up (HU0409101F). It should be noted that with this agreement the unions also appear tacitly to have accepted the ongoing staff cuts in the public sector (HU0310101N). In 2004, 6,945 positions were abolished in the state administration. In 2005 an additional 8,000 public sector jobs are expected to be abolished, which means a 10% staff reduction in the public administration and 1.5%-2% in public service institutions.