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Indicator – Economy – We have an exceptional agreement, but something happened in the background regarding wages

Indicator – Economy – We have an exceptional agreement, but something happened in the background regarding wages

On Monday, an agreement to raise the minimum wage and the guaranteed minimum wage was officially signed, as well as a recommendation to increase wages. The minimum wage is already 266,800 forints as of December, and the monthly total amount of the guaranteed minimum wage will rise to 326,000 forints. A total of six players hold a seat in the Permanent Consultation Forum (VKF) for the private sector and government. Three employer and employee organizations are each represented in the negotiations.

Everyone signed the agreement on the employer side, and at the same time, one organization did not do so on the employee side.

Although the National Confederation of Trade Unions and the Democratic Association of Independent Trade Unions signed the agreement, the Hungarian Federation of Trade Unions rejected it. In fact, it doesn’t even appear. Since the establishment of the VKF in February 2012, wage agreements have not been fully signed on three occasions. The National Confederation of Hungarian Trade Unions (MSZOSZ) and its successor, the Confederation of Hungarian Trade Unions (MASZSZ), rejected

  • At the end of 2015 2016;
  • The 2019 Minimum Wage Agreement at the end of 2018;
  • And the minimum wage agreement that will come into effect from February 2021.

The current absence is also interesting because according to the agreement, as a result of the 15 and 10 percent increases, the minimum wage will increase by 34,800 HUF and the guaranteed minimum wage by 29,600 HUF from December. MASZSZ and its predecessor MSZOSZ signed the minimum wage agreement even when the minimum wage was increased by 0 Hungarian forints, for example in 2002. But it did not move away from the agreement even after that, when it was increased by a few thousand forints.

Although the government previously suspected political threads in the background, Index has now asked the parties involved in the signing what could be behind the rejection. Since MASZSZ didn’t even appear at the signing, we couldn’t ask them.

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We have to reach an agreement

Imre Palkovic, president of the National Confederation of Trade Unions, explained to our article that the move of the Hungarian Trade Union League is typical: “There are three national federations of trade unions working in the competition sector. One of them is MASZSZ, which is always playing this. Although they participate, they obstruct Negotiations are ongoing, and they do not even read the text of the agreement, just as they do not do that now.”

According to IMRE PALKOVICS, the other two organizations were classified by MASZZ as “opportunistic workers”.

They know that if the agreement is not reached, the minimum wage will not rise. “If everyone plays this game, next year’s minimum wage will be the same as this year. The government has previously stated – and this is the case in Western Europe – that employers agree with employees, and this is implemented and enshrined in a decree. If there is no “Agreement – which is what MASZSZ really wanted – there will be no increase.”

It is unacceptable that if their will is not fully implemented, the wages of the lowest earners should not rise. But they know that the agreement will be made without them, so they reserve that right. Their current decision can be linked to their political interests. There is rivalry between the guilds, but they don’t want to attack us now

– The head of the National Association of Workers’ Councils told Index, who also highlighted that an increase has now been achieved to the point that a real increase in wages can be recorded. As mentioned, 250,000 people work on the minimum wage, while approximately 250,000 to 800,000 people work on the guaranteed minimum wage.

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Imre Palkovic stated that in a normally functioning economy, the minimum wage amounts to 50 percent of the average wage and 60 percent of the median wage. In Hungary, this is not achieved: the minimum wage is about 43% of the average wage. “The current agreement is a compromise. The objectives set before the trial have been achieved. This year’s annual inflation loss has been largely offset by this agreement.

It was difficult to convince the employer’s side

Since the agreement was also signed by Melinda Meszaros, president of the Democratic Association of Independent Trade Unions, we were able to ask about the background. It was mentioned to the indicator that MASZSZ played the current move many times for many years. “It has been the practice in the past that they participated in the entire negotiations, often agreeing to everything, but rejecting the agreement in their final decision. Previously, they at least knew its content, but now, in the absence of that, they do not sign the agreement. I stress The agreement itself was drafted at a later time.” Melinda Meszaros indicated that she was thinking

It is irresponsible for employees to say no to something when they don’t even know the details of that agreement.

Certain guarantees were requested for members of the collective agreement and the parties subsequently agreed to this. But MASZSZ did not admit it, because they said not earlier, before it was signed. It is important to note that the employer side also rejected a 10 percent minimum wage increase for a long time. Basically, a wage increase of 8 percent or less was considered realistic.

It was difficult for us to convince the employer of the need to show serious social sensitivity to employees in this area, and that an increase of at least 10 percent was actually justified. We would have liked to have been able to agree on another increase, but for now this is a reality

– Melinda Meszaros summed up, then also highlighted that the current agreement represents an important step forward in this economic climate, and that they are satisfied with the final outcome of the negotiations.

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The best possible move for the economy

As we wrote previously, wage growth is important not only because it improves quality of life, but also because companies are eventually forced to become more efficient. Because those firms that have to pay higher wages – and thus develop wage competition – naturally face more costs, they are forced to increase efficiency in order to increase profits.

This is a real but hidden advantage of a high-stress economy. One expert told Index: “In a small, economically open country, there can be no doubt that an export- and investment-oriented economy is necessary.”

In another analysis, we specifically drew attention to the fact that, according to the general idea, there is a level of the unemployment rate below which it can fall only at the expense of higher inflation. If unemployment decreases, wages and thus corporate costs rise faster. This is perhaps the key point, as increasing efficiency is also under pressure through wages:

If firms’ costs increase, they make the same profit only more efficiently.

Those who can’t keep up will go bankrupt or be acquired by a more efficient company. Everyone is forced to be more effective. There is a problem when wages grow faster than the productivity of workers or the company. This is expected to push up consumer prices, which is why what the Prime Minister said earlier, “This year is the year to break inflation,” is important.

(Cover image: Index)