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Collective Bargaining

Collective bargaining covers around a fifth of all employees and takes place primarily at company/organisation level, despite considerable efforts by both unions and previous governments to encourage industry level bargaining.  The tripartite discussions on the minimum wage continue to be important to the unions, although they are no longer binding on the government.

The framework

 

There are two sources of statistics on the coverage of collective bargaining: those from the labour force survey; and those from the register of collective agreements collected by the Ministry of National Economy (Nemzetgazdasági

Minisztérium).

 

As a recent study undertaken for the ETUI points out, the figures based on the register of collective agreements may be an over-statement, as negotiators often do not provide up-to-date information, particularly when agreements end.[1] The Ministry of National Economy figures show that in August 2019 there were 2,869 current collective agreements registered.[2] In total these agreements covered 6,023 companies and organisations and 815,000 employees. [3] With the average total number of employees in 2018 at 4,003,900,[4] this produces a collective bargaining coverage rate of 20.4%.

 

The labour force survey figures are very similar, with 20.6% of employees aged 15 to 64 indicating in 2015 that there was a collective agreement at work.[5] However, this figure is unlikely to be precise, as a further 22.1% of those responding indicated that they did not know whether there was a collective agreement at their workplace.

 

Although the exact degree of coverage of collective agreements is uncertain, there is no doubt about the relative importance of industry and company/organisation level bargaining. The register shows that the vast majority of the 2,869 agreements were signed by a single organisation, either a company –1,008 agreements – or a single state institution (budgetary authority, as it is described in the statistics), like a school or a museum – 1,773 agreements. In the non-state sector, there were only 85 multi-employer agreements, most signed by groups of companies but some signed by employers’ associations, like the chemical industry or the water industry. In the state sector, there were only two multi-employer agreements, including one for public hospitals, signed in December 2017.

 

Single employer agreements also dominate in terms of employees covered. In the company sector, single employer agreements covered 449,000 employees compared with 196,000 employees covered by multi-employer agreements. In the state sector, single-employer agreements are even more dominant. The figures from the register show that multi-employer agreements covered only 320 out of the 245,000 employees covered by state-sector collective agreements, although these figures do not include the hospital agreement.

 

The central role of single employer agreements comes despite efforts by past governments to strengthen industry-level bargaining. There are 23 official sectoral social dialogue committees, known as ÁPBs, made up of employers’ associations and unions. However, the FIDESZ-led government has been less supportive of this structure and has significantly reduced funding to the committees leading to their virtual collapse.[6] 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 two agreements, covering the construction industry and hotels and catering are extended in this way. These two extensions together cover 188,000 employees (112,000 construction and 76,000 hotels and catering), 42% of all private sector employees covered by collective bargaining.[7]

 

At national level, until 2011, unions were able to influence bargaining developments through a tripartite body called the National Interest Reconciliation Council (OÉT). Unions, employers and government met in the OÉT to agree the national minimum wage rates for the coming year and the OÉT 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 and against the opposition of the unions, the FIDESZ-led government replaced the OÉT with a new body, the National Economic and Social Council, NGTT, consisting of a much wider range of organisations, including chambers of commerce, civic organisations and churches, alongside the unions and employers.

 

Direct tripartite discussions were to some degree restored with the establishment in 2012 of a new body, the Standing Consultative Forum (VFK), to discuss employment issues in the private sector. All three union confederations with membership in the private sector, MaSZSZ, LIGA and MOSZ, are members. Its role is more limited than the former OÉT, but it provides a forum in which negotiations on the minimum wage can take place, although, if there is no agreement, the final decision is taken by the government (see below). In 2018 a comparable consultative body was established for the state sector (KVFK)

Who negotiates and when?

 

Negotiations at both company and industry level are in most cases between employers or employers’ associations and the unions. However, under the revised Labour Code, introduced in 2012, works councils can 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.[8]

 

The revised Labour Code also altered the rules on which unions have a right to bargaining. It is now union membership, and no longer support in works council elections, that is 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. Where there are several unions with at least 10% membership, they must cooperate to reach a single 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, where these exist, are usually annual.

 

The subject of the negotiations

 

Collective agreements typically cover pay, working conditions and procedural issues. However, a significant proportion of company collective agreements in Hungary do not deal with pay, which may be dealt with through local less formal deals, and is also heavily influenced by increases in the national minimum wage (see below). Many agreements simply reproduce the terms of the Labour Code.

 

One indication of the limited impact of collective agreements is provided by the labour force survey. This asked those covered by a collective agreement whether it had an impact on their pay or their working conditions. In total, just over half (56.8%) stated that collective bargaining affected their pay and almost the same proportion (56.1%) said that it affected their working conditions.[9]

 

The 2012 Labour Code 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).

 

Hungary’s national minimum wage is set by government decree, after formal consultation with the NGTT, the consultative body, which includes churches and other civic bodies, as well as unions and employers. In practice, the key negotiations take place in the VFK, the company-sector tripartite body, which includes representatives of the private sector unions, employers and the government (see above). It there is an agreement on the rate, it is presented to the NGTT for formal consultation, and then implemented by the government. If there is no agreement, the government will make its own proposal to NGTT. In all cases the final decision lies with the government.

 

The minimum wage arrangements in Hungary are unusual because they set both a basis and a higher minimum rate. The higher minimum rate, known as the guaranteed minimum, must be paid to all employees in jobs requiring at least completed secondary education.    

[1] Neglected by the state: the Hungarian experience of collective bargaining by Szilvia Borbély and László Neumann in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[2] Munkaügyi Kapcsolatok Információs Rendszer: Kollektív szerződések elektronikus nyilvántartó könyv  (Labour Relations Information System: Collective agreements electronic register)

http://mkir.gov.hu/ksznyilv.htm (Accessed 09.09.2019)

[3] Munkaügyi Kapcsolatok Információs Rendszer: Kollektív szerződések tartalmára vonatkozó online lekérdezések Nyilvántartásba vett kollektív szerződések  (Labour Relations Information System: Registered collective agreements) http://www.mkir.gov.hu/lcinternet.php (Accessed 19 August 2014)

[4] HCSO Table 2.1. 9 Employed persons by status in employment

[5] This and the subsequent figures are from HCSO, Labour Force Survey 2015. II. quarterly supplementary survey https://www.ksh.hu/stadat_evkozi_9_1 (Accessed 01.08.2019)

[6] Annual Review 2018 of Labour Relations and Social Dialogue: Hungary, by László Neumann, FES 2019 http://library.fes.de/pdf-files/bueros/bratislava/15357.pdf (Accessed 01.08.2019).

[7]  Munkaügyi Kapcsolatok Információs Rendszer: Kollektív szerződések tartalmára vonatkozó online lekérdezések: KSZ lefedettséggel kapcsolatos listák (Labour Relations Information System: Collective agreement coverage lists) http://www.mkir.gov.hu/lcinternet.php (Accessed 19 August 2014)

[8] See The New Hungarian Labour Code - Background, Conflicts, Compromises by András Tóth, Friedrich Ebert Stiftung Budapest, 2012

[9] HCSO, Labour Force Survey 2015. II. quarterly supplementary survey https://www.ksh.hu/stadat_evkozi_9_1 (Accessed 01.08.2019)

L. Fulton (2019) Nationan Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.