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Collective Bargaining

Collective bargaining primarily takes place at company/organisational level, despite considerable efforts by both unions and previous governments to encourage industry level bargaining. Around one third of employees are covered by collective bargaining of any sort.

The framework

Despite efforts by the unions and previous governments to strengthen bargaining at industry level, the main level of bargaining is company/organisation level, although it is losing out to a situation where no bargaining takes place at all. Until 2010 national level discussions between unions, employers and government were also very important in setting the framework for bargaining and making recommendations to lower level negotiators.



Figures from the official Centre for Social Dialogue (Társadalmi Párbeszéd Központ) show that in August 2014 there were 2,799 current collective agreements registered.1 These covered 829,000 employees, including the 194,000 employees covered by the three industry agreements which have been extended to cover all the employees in those industries.2 This is equivalent to 31.1% of all employees. However, figures from the 2009 labour force survey which asked employees directly whether their workplace was covered by a collective agreement, produced a much lower figure – only 22% – although a quarter of the respondents said they did not know.



It should be noted, however, that a significant proportion of collective agreements in Hungary do not deal with pay issues, which may be dealt with in separate agreements.



The vast majority of the agreements registered – 2,705 covering 597,000 employees – were for a single employer. Almost two-thirds of these agreements were for employers in the public sector, although in terms of the numbers of employees covered the proportions are reversed. Governments in the past have tried to strengthen industry-level bargaining – there are 23 government-supported sectoral social dialogue committees, known as ÁPBs, made up of employers’ associations and unions. However, these efforts have not been successful. There are only 18 industry-level agreements, signed by employers’ organisations, and there is no indication that the number will increase. Indeed partly because of the new labour code (see below) the number of industry-level agreements has fallen slightly. The prevailing attitude of employers is a reluctance to join employers’ organisations or to authorise them to conclude industry agreements.



The government is able to extend collective agreements to all employees in an industry in certain circumstances – the request must be made by both parties and they must be able to show that the agreement already covers a majority of employees in the industry. However, this power has not been widely used and currently only three agreements, covering electricity, and parts of the construction and catering and tourism industries have been extended in this way. The baking industry was previously also extended but the extension was withdrawn in August 2013.



The result is that most of the 31.1% of the workforce covered by collective agreements, are covered by agreements at company or single organisation level (22.4% of the total workforce). Multi-employer agreements (both industry agreements and other groups of employers) account for 5.2% of the workforce and the three extended agreements account for 7.3%. There is some overlap between the three groups as some workers are covered by both company and industry (or extended) agreements. There are also variations between industries with transport, energy, mining and water having the highest levels of coverage.3



The figures on agreements registered with the Centre for Social Dialogue indicate that collective bargaining coverage fell by 16 percentage points between 2001 and 2014 – from 47% to 31%.



Until 2011, unions were able to influence bargaining developments through a tripartite body called the National Interest Reconciliation Council (OÉT). This was reconstituted by the then socialist-led government in 2002 after being largely dismantled by the previous right-wing government. It provided a forum in which the three parties could agree the national minimum wage for the coming year and set a minimum rate for skilled workers. It also had an important role in making recommendations on the proposed level of pay increases to lower-level negotiators, although these recommendations were not binding. However in 2011, the FIDESZ-led government decided to replace the OÉT with a new body, the National Economic and Social Council, NGTT. This consists of a wider range of organisations, including chambers of commerce, civic organisations and churches, and no longer sets minimum rates. The change was strongly criticised by the unions.



The situation changed again in February 2012, when a new tripartite body, the Standing Consultative Forum (VFK), was set up to discuss employment issues in the private sector. Only three union confederations, LIGA, MOSZ and MSZOSZ, are members of this new body. The others are excluded as they are regarded as primarily representing workers in public services and publicly owned utilities. Its role is also more limited than the former OÉT.



Who negotiates and when?

Negotiations at both company and industry level are in most cases between employers or employers’ associations and the unions. However, in this area, as in others, the labour code, which came into effect in 2012, has introduced changes. Works councils (which cannot organise strikes and have a very limited ability to influence employers – see section on workplace representation), can now negotiate agreements with the employer where there is no union at the workplace and it is not covered by a collective agreement. The one important exception is that these agreements cannot cover pay.4 This is virtually a return to the position under an earlier right-wing government when works councils were given negotiating rights at company level where there were no unions present – something that was reversed by the socialist government in 2002.



Between 1992 and 2012 union rights to bargain – their representativeness – depended on the support for their candidates in works council elections. A union needed to get 10% of the votes in the works council elections to be entitled to negotiate. Local agreements could be signed by a coalition of unions in the workplace, provided that together they had the support (expressed at works council elections) of at least 50% of the workforce – a measure which encouraged the creation of local union coalitions. If a single union had more than 65% support, it could sign the agreements alone. However, the 2012 labour code has made changes, making membership, rather than support in works council elections, the key to representativeness. Trade unions can now only conclude collective agreements at company level if their membership exceeds 10% of those employed at the company. The same 10% rule also applies to industry level agreements, where unions must have 10% of those employed in the industry to be able to reach an agreement.



Collective agreements setting a range of issues normally last for two years, although they are sometimes for an unlimited period. However, agreements on pay increases at company level are usually annual.

The subject of the negotiations

Agreements typically cover pay, working conditions and procedural issues. However, between 2001 and 2012 negotiations concentrated on working time and work organisation as legislative changes made it possible to have greater flexibility in working time arrangements, provided that they were negotiated. This changed following the 2012 labour code, as, in some cases, the code allows employers to introduce greater flexibility without the need to negotiate this with the unions.



The 2012 labour code has introduced significant restrictions on what can be negotiated in companies owned by the state and local government bodies. In many areas, including working time, severance pay and notice periods, it is impossible for a collective agreement for these public bodies to include terms which improve on the minimum set out by law. This limitation also applies to trade union representatives’ rights to time-off and protection against dismissal (see section on workplace representation).



It is too soon to judge how either the abolition of the OÉT (see above), which made recommendations to lower level negotiators on pay increases, or the new labour code, will affect collective bargaining. However, the situation is likely to become more difficult for the unions.5



Following the 2011 abolition of the OÉT, which used to reach a formal tripartite agreement on the minimum wage, Hungary’s national minimum wage is now set by government decree. The government has, however, consulted the NGTT, the consultative body, which also includes churches and other civic bodies, as well as unions and employers (see above).

L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.