Lajos Héthy SOCIAL DIALOGUE AND THE EXPANDING WORLD The decade of tripartism in Hungary and in Central and Eastern Europe 1988-99 European Trade Union Institute Bruxelles, 2001 The author: Lajos Héthy is one of the architects of social dialogue in Hungary. He holds degrees as an economist and sociologist, academic doctor of sociology and h. professor (Faculty of Economics, Janus Pannonius University, Pecs). As director of the Labour Research Institute, Budapest (1980-99) he headed the government’s Wage Reform Expert Group (1987-88), paving the way for the establishment of the tripartite Interest Reconciliation Council. In 1990-91 he was deputy secretary of state, and in 1994-98 political secretary of state of the Ministry of Labour and the government’s chief negotiator in the tripartite institutions. He has been working as an expert for the International Labour Organization since 1978. In 1994-98 he was Hungary’s government delegate to the ILO’s Governing Body. In 1996-97 he participated in the ILO’s exercise in developing tripartism in Albania. He was the founder and first president of the Hungarian Industrial Relations Association (1991-99). He has published widely on labour relations and labour administration issues in Hungary and abroad. At present he is director for labour and employment, UN Civil Administration, Kosovo. Acknowledgements The author expresses his thanks to his colleagues – Mr. György Kaucsek, Ms. Zsófia Fried and Ms. Edit Lakatos – who helped him in researching and in putting together this book. He extends his thanks to those colleagues and friends who contributed to the improvement of the manuscript by reading it and commenting on it – to Mr. László Herczog, past deputy state secretary of the Ministry of Labour (1990-98), Mr. /DMRV ) F]H 3UHVLGHQW RI WKH $XWRQRPRXV 7UDGH 8QLRQV¶ &RQIHGHUDWLRQ 0U Kálmán Gulyás, Director of the Labour Mediation and Arbitration Service, Mr. Péter Kiss, former Minister of Labour (1995-98) and Mr. Ferenc Rolek, Vice- President of the Hungarian Employers’ Association. He owes special gratitude to Ms. Lilla Garzó, former deputy state secretary, Ministry of Labour (1995-98) and Mr. László Akar, former political state secretary, Ministry of Finance (1994-98), who made written contributions to the Hungarian edition, throwing light on previously unknown aspects of tripartite practices. Last, but not least, the author expresses his thanks to the Friedrich Ebert Stiftung and the European Trade Union Institute for their generous support, which made possible the preparation of the book and the publishing of its English version. D/2001/3163/13 ISBN: 2-930143-85-1 The ETUI is financially supported by the European Commission Contents CHAPTER I: TRIPARTISM: ITS BIRTH AND MISSION IN CENTRAL AND EASTERN EUROPE ............................................................................................................................................................................. 5 1. What is tripartism? ............................................................................................................................................................................................................................. 6 2. The political and economic stage ...................................................................................................................................................................................... 7 3. A tool for alleviating tensions and solving conflicts ................................................................................................................................... 8 4. The source of mutual legitimation ................................................................................................................................................................................ 10 5. “Corporatist” traditions and international influence ................................................................................................................................ 11 6. Differing national approaches ........................................................................................................................................................................................... 12 7. Functions and activities ............................................................................................................................................................................................................. 13 8. National level wage bargaining ....................................................................................................................................................................................... 14 9. Reconstruction of labour law and labour relations .................................................................................................................................... 15 10. The hot issue of income policies ................................................................................................................................................................................. 16 11. Conflict prevention and settlement .......................................................................................................................................................................... 17 13. The expanding world ................................................................................................................................................................................................................ 18 CHAPTER II: INSTITUTIONS AND PROCEDURES .................................................................................................................. 21 1. The system of tripartite institutions. ........................................................................................................................................................................... 21 2. The Interest Reconciliation Council ........................................................................................................................................................................... 22 3. Tripartism in public services ............................................................................................................................................................................................... 26 4. Rules and procedures ................................................................................................................................................................................................................... 29 5. Employment related cooperation ................................................................................................................................................................................... 35 6. Connections to social insurance ...................................................................................................................................................................................... 37 7. The need for reconstruction ................................................................................................................................................................................................. 39 CHAPTER III: TRADE UNIONS AND EMPLOYERS ................................................................................................................. 41 1. Unions: “big” and “small” ones ...................................................................................................................................................................................... 41 2. Conflicts around and among unions ........................................................................................................................................................................... 45 3. The colourful cavalcade of employers ..................................................................................................................................................................... 47 4. “Small” employers’ rule ........................................................................................................................................................................................................... 48 5. Parallel lines without intersection ................................................................................................................................................................................. 52 6. Bipartite labour relations ......................................................................................................................................................................................................... 55 7. The actors’ misery ........................................................................................................................................................................................................................... 57 CHAPTER IV: NEGOTIATED WAGE POLICIES ........................................................................................................................... 63 2. The deregulation of wage determination .............................................................................................................................................................. 65 3. Negotiated wage policies in the business sector .......................................................................................................................................... 67 4. The process