Why Hungary’s new “slave law” pushes workers to the brink

Photo: Margittai Péter / Facebook

Hungary’s “slave law” is the government’s attempt to remedy existing labour shortage in the country for the benefit of multinational companies and to the detriment of workers. Industrial workers in general have not mobilized yet, but the trade unions announced and started preparation for strike actions.

This article was first published in Italian by ADL Cobas

On 12 December, the Hungarian Parliament amended the Labour Code of 2012 to dramatically increase the number of overtime hours employers can require of workers and relax the rules for paying compensation. This means that from 1 January 2019, overtime work can be demanded up to 250 hours per annum or up to 300 hours with a collective agreement and an additional 150 hours per annum with an agreement between employee and employer – and all this in a reference period of 3 years in which employers can delay the calculation and payment of this overtime with no guarantee that it will in fact be paid as overtime at all.

The net effect of these complex measures is a combination of lowered wages, increased precarity, and heightened dependence of workers on employers, or what large companies promote as worker “flexibility.”

Both the bill and the amendment that eventually passed were controversial from the very start, both procedurally and content-wise. Most strikingly, there was no consultation or even information sharing with social partners (representatives of employers and unions) or the general public. The bill was submitted suddenly by two MPs of the governing right-wing FIDESZ party. The reasoning given for the bill and the new amendment was either very vague or downright arrogant. In defending the bill, MPs from the governing coalition typically either tried to change the subject by attacking the record of the parties now in opposition, or claimed that workers want to work and earn more and this piece of legislation allows them to do so. The bill was passed in the Parliament in a situation in which MPs from the opposition parties declared the vote illegal, as the voting system was allowing votes without the usual procedure of MP cards being inserted to show full attendance. The attempt by opposition MPs to disrupt the voting did not succeed, but it gave an additional injection to the protest movement which was already in formation.

Content-wise there were major problems with the new legislation. Union representatives were quick to calculate that in practice the new regulation means that an employee can legally work 48 hours per week on average, without being compensated at the end of the month or year for overtime work: the final payment for overtime could be due only at the end of the third year, and then there was no guarantee that extra hours would even be counted as overtime when spread over these three years. Not surprisingly, trade unions were quick to dub the new piece of legislation the “slave law”; together with other social groups, they mobilized a protest movement that is still active on the streets as of this writing. Unions voiced their strong opinion that workers needed higher wages and not more overtime. The already existing flexibilization of working time, allowing 250 hours overtime per annum, has already seriously affected workers’ work-family balance and led to increased health problems and accidents at work.

In other words, workers are already being squeezed by regulations that followed a liberal ideology of labour market governance. The Labour Code of 2012 increased employees’ exposure to raw market forces by giving especially large employers, or those at the top of production chains, greater freedom in regulating their own labour market. A cornerstone of the 2012 Labour Code was the principle that an individual employees and employers are equal parties, thus hiding the power asymmetry and upper hand of the employer. In a situation where wages, especially base wages of employees are comparatively low, employees felt forced to take up overtime work, thus practically cementing the unquestioned dominance of the employer.

Using instrumentally workers’ short-term interests in earning extra money, employers were thus able to jeopardize the long term interests of contracted workers, starting with the very reproduction of labour power of their own employees. Whereas the sustainability of the labour force was already fragile and problematic, the current new law created a situation in which it seemed as if the productive forces of society are being systematically pushed off a cliff into an abyss, and the very existence of the whole society is in danger. Critical labour law specialists added their remarks, pointing to the legal insecurities already present in the application of flexible working time arrangements, that the new legislation not only does not remedy but even brings to a new critically low level. Last but not least, the administration of justice in the world of work has become more difficult and costly, which especially affects employees. The icing on the cake is the recent centralization of the courts, under which a specialised court for labour issues would also cease to exist.

Economic background to the new amendment

Since 2016 the Hungarian labour market has already been struggling with an acute shortage of workers. And going back to the global financial crisis, a general pattern of work time flexibilization has been gaining momentum, led by the oscillating labor needs of large multinationals in the automotive and electronics industries whose production cycles move in peaks and downturns. These multinational companies and their subcontractors, particularly in automotives, increasingly appeared in Hungary in this period hoping to take advantage of the supply of low cost semi-skilled production workers.

Workers, however, were increasingly attracted to the higher wages and better working conditions available in other EU countries(especially Austria and Germany) and began to emigrate in large numbers, Unable to employ sufficient number of local workers, these companies subsequently turned to employing third country nationals, especially Ukrainians, often via the extreme flexibility of labor hired through temporary work agencies. Even so, there was still a labour force shortage, which is why a radical increase in overtime hours appeared as a viable remedy from the perspective of these large employers.

Mobilisation 

Trade unions organized the first protest on December 8 in Budapest, only days after the first version of the bill appeared on the website of the parliament. The protest occurred in a situation of growing fear and discontent due to the government’s authoritative measures against universities, the Hungarian Academy of Sciences, courts, the media, and other public institutions. A powerful contribution to the success of the first protest came from critical student groups, associations and concerned citizens: after a 10,000 strong gathering, with vivid public speeches by participants, a festive march made its way through central Pest, and ended in speeches by union officials in front of the parliament. Somewhat surprisingly, opposition party representatives also appeared in the crowd.

The unsuccessful efforts by opposition representatives in the parliament to block the amendment and its very acceptance on 12 December then created the next stage in which opposition MPs tried to take the lead of the protest movement. Opposition party members also tried to get access to the public TV station to read their demands. When they were forcefully expelled by the TV station security guards, this created another scandal and gave another push to the parties but also to the movement. In the following next three days, a growing crowd was protesting in front of the parliament, adding new demands to the list – not only the abolition of the “slave law” but also free courts, free media, and also compensation for the overtime being put in by police officers who had been called to defending some contested spaces from the crowd of demonstrators.

On 16 December, trade unions mobilized again: however their flags were hidden behind those of the opposition parties. Within the movement there are increasing voices for autonomy from these opposition parties due to a growing fear that the parties are stifling further development of the movement. In the meantime, the protest has also spread to other Hungarian towns, and most recently also to European capitals where Hungarians have emigrated. In general, trade unions have been at the forefront in the protest movement in towns outside of Budapest: metal workers have been especially active, slowing down traffic on many roads in more than ten provincial cities. Smaller but increasing number of protests occurred also in other places in Europe, where they have garnered attention with creative tactics for expressing opposition.

Future prospects

The protest movement in Hungary is still in formation. The response of the government and the official, government-controlled media has been dismissive and hostile. Whereas there were only minor clashes with police, dozens of protesters were arrested and fined, and some are still awaiting relatively harsh sentences.

Industrial workers in general have not mobilized yet, but the trade unions announced and started preparation for strike actions. These actions are expected to happen in January. While there is great potential for this movement, some risks and problems are also visible: the mobilizing channels of trade unions seem to be rusty, lacking in energy, agitating power, or sparks that might bring in those who have been the most and most systematically oppressed in the last 30 years of Hungarian transformation to capitalism – the workers themselves. Should this come to be, the protest movement could potentially lead to changes in some of the paradigmatic assumptions of Hungarian political life, including a redefinition of the role of the working people in society.

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