If there is no change, big problems can ensue in the autumn

"The companies are not in an ideal situation: Europe has not recovered from Covid as it should have, the automotive aspect of the „green deal”, has not worked as well as they would have liked - and that is reflected in the problems we have in the battery industry. The automotive companies are not doing as well as they were supposed to, and Hungary has a lot of exposure in these sectors, even specifically to German industry. Road and rail freight are also performing much lower than they were years ago, and this is also a strong indicator of how much the economy is developing. I am hopeful that the GDP growth of around 4-5% outlined in the plans for this year and next will be achieved and then there might not be a problem," says Róbert Zlati, President of the Hungarian Trade Union Confederation (MASZSZ), a trade union leader.

"If we look at the industry in the light of recent production data, we see that there is a very big problem," adds Tamás Székely, president of the Chemical Workers' Union. The VDSZ leader reminds that the industry is in an 8% recession. As a result, jobs have been put at risk and there have been redundancies in several areas. In the construction industry, the significant drop in housing construction and the halt in public works are causing problems, in the building materials industry the government extra tax is also a problem, but the manufacturing industry is also affected, and in the pharmaceutical industry there are job cuts or a freezes  in the number of employees in several areas.

At the battery factories - where around 800 temporary workers were laid off from the Iváncsa factory in early May -, the downturn in the German car industry is causing problems. According to the president of the VDSZ, instead of layoffs, they are trying to solve the situation by shift changes, shift reductions (which could lead to a reduction in wages for workers) or by putting workers on downtime, which is safer for workers. As it is still summer, the forced stoppage can be linked to the annual maintenance, but we should see soon the possible next steps.

Unfortunately, previous crises have started with similar steps. However, in the autumn, this situation could lead to concrete redundancies. In addition, as summer seasonal work will have ended by then, there will be nothing to absorb the labour released. Sisecam Automotive Hungary Kft. has already announced the closure of the Aszod car glass factory, a process that has already started. The union agreed at the beginning of the year on what benefits the workers to be made redundant will receive, but it is not yet known when the factory will actually close.

Are the numbers nice, or is this just the appearance?

But it's not just the business sector that could be in trouble. Postal workers - in rural areas where post offices are closing down - could well be out on the street. And about the recently announced 5% government spending cut, Róbert Zlati says he hopes it will not lead to job cuts, as there are already so few people working in the public sector that it is very difficult to keep it running. He adds that companies and businesses know that it is very difficult to replace a workforce, so they will invent anything to keep their employees. It is not impossible that there will be a reduction in income, for example, overtime will be cut back, so workers' income may be reduced, but redundancy is the last resort in such a situation. This may have an impact on the rate of unemployment, though in July 2024, the number of registered jobseekers reached a record low, the most favourable July figure since the change of regime, Sándor Czomba, Minister of State for Employment Policy at the Ministry of National Economy, pointed out recently.

Frictions with guest workers 

"We hope that the employment of foreign workers will not become a source of conflict. I have heard some very good examples," adds the president of the Confederation of Hungarian Trade Unions, adding that Hungarian workers and company trade unions are often open to guest workers. They collected for them, organised programmes for them, sometimes they came in sandals in winter because they were not informed about the weather and had no shoes, but they helped them. Of course, there were also negative cases when the conflict escalated - not to the point of violence, but quite a bit - and there was a lot of emotion on the part of the Hungarian workers, who said, "But these workers have their meals and accommodation paid for by their employer, so why not ours?" says the union leader.  He is confident that they can counter the negative sentiments that guest workers will drive down Hungarian wages. They are therefore trying to ensure, as far as they can under the law, that guest workers' wages are not lower than those of other workers. 

How much pay rise is expected? What about the minimum wage? 

"It was the transposition of the minimum wage directive and not the possible minimum wages for next year that was discussed at the VKF (the Consultative Forum of Employers, Government and Trade Unions - editor) meeting in mid-July, although there was a desire for a double-digit wage increase, which led us to give a figure for the increase earlier than usual," said Róbert Zlati. The reason for the increase of the minimum wage by more than 12% to HUF 300,000 from the current gross amount of HUF 266,800 to HUF 300,000, and of the guaranteed minimum wage from HUF 326,000 to HUF 360,000 by 2025, was that this would not bring the two figures closer to each other in nominal terms, unlike in the past two years. "It could well be that the government wants to come up with a big push in 2025, before the 2026 elections, and the trade unions could perhaps be partners in this, as it is clear that the Hungarian minimum wage is very much in last place compared to the region. Romania has already overtaken Hungary in terms of average wages," added Tamás Székely. The VDSZ president said that due to the budget situation, the government is now interested in increasing tax and contribution revenues, which is why the minimum wage increase could be a good thing.

The future of the guaranteed minimum wage is in question

Several trade unions have argued that the guaranteed minimum wage should be abolished and the minimum wage should be raised to a higher level (to 326,000 forints), but there is no consensus among them. According to the president of the VDSZ, if the guaranteed minimum wage is abolished, several sectors could get into trouble, as many people will think it is easier to look for work for the minimum wage than to go on shift work, doing skilled work for the same money. Róbert Zlati said that for some firms, the concern of employers is that they cannot afford such a rise may be true, but there have been many reports in recent years of even higher profit growth in the business sector. Of course, this is perhaps less the case for small businesses, but statistics show that there has been growth in all segments. There is also the big question of whether EU wage expectations should be set at a given level - even 50% - of the average and/or median wage," adds the union leader. He says the question is not whether the level of increase they are calling for is realistic, but whether it is necessary. He believes it is, because the MNB is calculating an average wage increase of 8-9% next year, so minimum wages would have to rise more than that to get closer to average wages because of the EU expectations.

The original of the article in Hungarian can be read here.