WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

By Sandor Richter

There have been continuous protests in Budapest and in several other cities in Hungary against the controversial labour law changes, which enable employers to raise the threshold of overtime hours from 250 to 400 per year. The time frame for paying out overtime compensation was extended to 36 months. As an alternative to paid compensation employers may opt for providing leave days.

The economic thread

Increasing shortage of labour has become a major obstacle to expansion or even frictionless operation of firms in Hungary. The reasons are manifold: a shrinking share of the working-age population due to relatively low number of births, massive emigration, and skills mismatch. According to calculations of the Budapest-based Policy Agenda, in 2008 the population between 18 years and the legitimate retirement age amounted to 6.3 million, in 2018 only to 6.2 million, although in the meantime the legitimate retirement age has been raised by two years. While wages have been rising rapidly in the last four years, labour market tensions have not eased. One possible remedy, allowing or even encouraging economic immigration from non-EU countries, is a political taboo. An acceleration of productivity growth either through stepped-up investment or increased efficiency is not a short-term solution.

Firms adapted to the situation through the extension of actual working time. Overtime has increased from 1.79% of total working hours in 2014 to 2% by 2018. That increase was particularly strong in public administration, amounting to 47% in the same period.

If spontaneous changes occurred towards the extension of working time, why the uproar now? The answer lies in the detail. For one, the extension is extreme – it potentially allows the re-introduction of the six-day working week. Also, the planned change was not discussed before with the social partners. The parliamentary discussion was scheduled by the government in a way that no time was left for addressing the proposed changes in an appropriate way. After the first wave of protests against the law and the inquiries by the opposition about who had initiated the amendment to the law, the government communicated that the change had been initiated by the business sphere, in fact by the multinational companies. This was however not confirmed by representatives of that sector.

The political thread

The ‘Slave Law’ is extremely unpopular: according to polls 83% of the employees do not agree with the new regulation. Although overtime can be ordered only with the consent of the employees, there is a wide-spread fear that employees are at the mercy of employers in this juncture. While the government argues that the changes allow employees to earn more than before, results of a poll indicate that one of the strongest fears of employees is that of ‘conflicts in family/private life due to too much time spent working’.

The opposition ‘tastes blood’ and initiated protest marches in Budapest and some other cities. Nevertheless, the ‘Slave Law’ was the straw that broke the camel’s back. What comes now to the surface is the accumulated anger caused by the continuous demolition of democratic institutions, by the arrogant and cynical communication of Fidesz politicians as well as by the unscrupulous government propaganda in the public and Orbán loyalists-owned private media, and the perception of all-pervasive corruption tied to Orbán’s clientele. Protests have turned louder and last longer, and the participants are younger than earlier. The opposition parties, preoccupied with fights against one another since the last elections this spring, now seem to have found a common cause. Whether these protests will have the potential to grow into a movement shaking the fundaments of Orbán’s ‘illiberal democracy’, or whether they will die off as they did several times before, remains an open question.

photo credit: 'Ghost rioters: Their horns were black and shiny', by habeebee (CC BY-NC-ND 2.0)