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Workers hope for better times in Hungary as it takes over EU presidency

Hungary recently became the third former Eastern-bloc nation to take its six-month turn at the helm of the EU’s Councils of Ministers. Having suffered two major economic crises since the transition from Communism in the early 1990s, there is some hope that the next few years will bring improvements in the lives of working people. We examine existing labour conditions and evaluate the grounds for optimism.
 SOMEWHAT OBSCURED BY A ROW ABOUT A NEW law regulating the Hungarian media, the assumption of the EU presidency shines the  spotlight on the Eastern European nation as it braves the difficult economic weather that has prevailed since 2008. There have been four main phases in the country’s economic development since 1989, two of them involving acute recessions. Between 1990 and 1994 Hungary lost one million jobs, a quarter of all employment, while GDP contracted by 17% and unemployment reached a record 13%. From 1997 economic growth began, driven by foreign investment in industries such as car production and electronic equipment manufacture. Unemployment fell and wages rose in real terms and continued to do so even after outside investment slackened after 2000. However the 2007 government austerity programme, designed to make the country fulfil conditions for adopting the Euro as its currency, was quickly followed by the worldwide financial crash. Real wages fell by 7% in one year and the high debt levels of both the state and individuals led to an attack by financial markets on the Hungarian forint, similar to the situation in Iceland. Hungary became the first recipient of an EU bailout, in conjunction with the International Monetary Fund (IMF), amounting to $25.1 billion. Government measures resulting from this deal pushed unemployment up again until it reached 11.7% last December. Trade unions in Hungary are hampered by low density: about 16% of employees are thought to be members as compared with about 83% at the fall of Communism, and fragmentation. There are no fewer than six confederations, all affiliated to the ETUC and members of the National Interest Reconciliation Council (OET), representing about half a million trade unionists. As there are also nine employers’ organisations who sit down with the government in the same council, the procedure for setting wage increase recommendations is not straightforward. The OET also sets the minimum wage which stood at 65,500 forints per month in 2007, about 34% of average earnings. However most deals are made at workplace-level, covering about 29% of workers in 2008. Sectoral-level collective agreements are important in the still publicly-owned transport,

Orbán, V


energy, water and postal industries. Pay is overwhelmingly the most common subject for negotiation in Hungary, although working time flexibility has been creeping up the agenda, with very little discussion of issues such as training or equal opportunities. The frequency of strikes is much lower than in the EU as a whole, recently occurring in health and social care, railways and airports. Works Councils provide a parallel system of representation and are more widespread than union organisation although a recent survey found that 75% of members were delegated by unions. Both labour courts and the labour inspectorate (OMMF) play a part in industrial relations and the grievances of individual employees can be addressed to either of them.
The Hungarian gender pay gap is near the EU average at 16.3% (2007) but participation in the labour market for both men and women is considerably below the norm.   Figures on part-time working show an even greater disparity, it being over four times less common than in the Community as a whole, though gradually increasing. The government believes that the lack of part-time jobs deters new mothers from returning to work and keeps female participation rates low. It is seeking to address the problem by obliging employers in the public sector to agree part-time hours with women whose child is younger than three. The measure has several loopholes however:  once the child is three years old the employer can insist that the employee returns to the same working hours as before the birth, which will usually be full-time; the private sector is exempted as are management jobs and there are doubts that there are enough nursery places to sustain a large take-up.
Forecasts for the next two years in Hungary take a more optimistic tone than the savage austerity of 2009-2010; the economy is now out of recession and projected to grow by 2.9% in 2011 and foreign investment has returned, especially in the car industry. However, along with tax cuts designed to revive growth the new centre-right government aims to replace the labour code which has alarmed unions.

Hungarian Prime Minister Viktor Orbán and the parliament building in Budapest



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