The regime of Viktor Orbán in Hungary had looked impregnable. But protests against the ‘slave-labour law’ encapsulated growing social alienation, with a wider European resonance.
Hungarian politics entered a new stage in December 2018, rather unexpectedly. Following the April general elections, which produced the third consecutive constitutional majority for Viktor Orbán and his Fidesz party, expectations of an upheaval were low. But a series of demonstrations and some very unusual forms of protest at the end of the year suggested political opposition and social resistance were coming back.
Two important laws pushed through parliament in December by Fidesz acted as if a pair of defibrillators. One is the now famous ‘slave-labour law’, an amendment of the labour code to allow extreme flexibility in employment—up to 400 hours of compulsory overtime per year and up to three years to pay for it. The second is the establishment of so-called administrative courts, which would have practically the same competence as normal courts but would function under the supervision of the minister of justice.
From the point of view of dismantling the rule of law in Hungary, the second is probably more important. It was the slave-labour law, however, which within the space of a few days energised society into action.
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It is widely assumed that the law was requested by multinational companies, or at least some of them, especially in the car industry. It was sponsored by Lajos Kósa, an MP from Debrecen, the eastern-Hungarian site of a prospective greenfield investment by BMW, which was announced in the course of 2018. Investors, including other German producers in the sector, may find the overall environment favourable but the shortage of skilled labour has increasingly caused a headache for them and for the government.
While a labour shortage could be attributed to strong growth and low unemployment, it has been exacerbated by the policies Orbán has pursued in the last eight years. Five stand out:
- the 2012 labour code, which weakened the position of labour vis-à-vis employers, facilitated wage stagnation and boosted emigration;
- inflated ’workfare’ schemes which kept long-term unemployed people in dead-end activities away from the primary labour market or proper training;
- allowing early retirement for women with 40 years employment, which facilitated the withdrawal of thousands of women from the workforce;
- lowering schooling requirements for young people, favouring early school-leaving and facilitating disinvestment from secondary and tertiary education;
- reluctance to facilitate inward labour mobility, according to the needs of the economy, and to build an adequate infrastructure for labour-market matching.
In the last two years, the government has shown some awareness of the shortage of labour becoming a bottleneck for growth. But orchestrating a U-turn on these counter-productive policies has been beyond it: it has been ideologically attached to some, while dropping others would have been just too inconvenient before the elections.
With other remedies closed off, the government is trying to make the available workforce work more. This is aggravated by a strong bias in Fidesz economic policy towards car and other vehicle production, and other labour-intensive manufacturing, in the absence of a strategy for diversified, innovation-driven development.
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The brutality of the slave-labour law, and the manner of its adoption, may be a shock for some. But Hungary has been on a course since 2010, when Fidesz came to power, of a gradual but sustained deviation from the European social model.
It was not at all obvious that Orbán would drive the country in this direction, since he achieved a landslide against the backdrop of the austerity policies—including wage and pension cuts—of the crisis years and, at least initially, attracted many former Socialist voters who expected better material conditions. But the mask slipped very quickly after 2010.
Hungary today is the only EU country without a ministry for labour or social affairs. Even the UK has maintained ‘work and pensions’ at cabinet level. Social dialogue in Hungary is one of the weakest in the EU, since the tripartite formats of the previous 20 years were abolished in 2010. Dismissals became easy and cheap in both public and private sectors.
Hungary also stands out as having the shortest duration of unemployment benefit in the EU, at 90 days. All other countries have at least six months eligibility for laid-off employees, most over one year. The social safety net for the poor has meanwhile weakened dramatically, for example by not increasing even the nominal value of child benefit for eight years, thereby increasing the risk of poverty for larger families, especially in rural environments. Homelessness has effectively been criminalised.
For Orbán, social policy has always been a threat to economic competitiveness. No wonder he was the most reluctant head of state or government to sign up to the European Pillar of Social Rights (EPSR) in 2017. Since that document became a non-binding declaration of principles only, he came on board in the end but feels no obligation to follow through. Much responsibility for welfare has been shifted to local government, where the distribution of benefits also became a tool for building political support for the ruling party.
On working time, however, EU hard law exists. Those affected or just outraged by the slave-labour law can expect EU intervention to scrutinise whether it is in comformity with the Working Time Directive. Some experts believe it is not but it is for the European Commission to assess and indicate. If there is no agreement between the Commission and the member state, the dispute may end up at the European Court of Justice.
An ECJ case could take a very long time. But for trade-union members in Hungary, together with many resentful others, this is not purely a legal issue and not a stand-alone case. For many, this was the last straw, which is why the anti-Orbán protests erupted so spectacularly in December.
The road to riot
The outrage would not have broken out with so much anger and political inflammation without the post-election developments being in sharp contrast with the pre-election Fidesz slogan: ‘Hungary performs better’. Before the April elections, the impression had been created that the Hungarian economy was performing better than many others: 4 per cent annual growth and one-off wage increases were supposed to prove that Orbán’s policy was working. Since last spring, however, it has become obvious that the opposition’s critique was well founded and Fidesz’s economic policy was not sustainable.
After the elections, Fidesz began an adjustment policy which has left working people paying for the stabilisation and local communities losing investment opportunities. Staff have been cut from public administration, in-work benefits and housing subsidies have been withdrawn and pre-financing for planned EU investment projects has been recalled from municipalities.
The public mood was additionally soured by further revelations about corruption on an industrial scale—including embezzlement of EU funds—and news of Romania surpassing Hungary in terms of domestic consumption, suggesting continued relative decline in the EU economic league table. Orbán has meanwhile been pouring taxpayers’ money into low-quality football in Hungary and abroad and prepared a costly official move to Buda castle—while the Central European University has been forced to move to Vienna. Workers and students thus all had reasons to demonstrate against the oppressive regime.
Unity and unions
The novelty in the current situation is the unity created among actors and across issues. First, a unity emerged among political parties: left-wing, centrist and moderate right (the latter today including the formerly extremist Jobbik, which in recent years has switched places with Fidesz on the political spectrum). Secondly, a unity has emerged between politicians and civil-society activists. Thirdly, and perhaps most importantly, demands for defending the rule of law have merged with demands for protecting social standards.
Of the five key demands of the December protests, two were related to working time (withdrawing the slave-labour law and reducing working hours for the police). The other three were to drop the administrative courts, to sign up to the EU prosecutor (and thus be able to protect the integrity of EU funds) and to guarantee the political neutrality of the state media. Opposition parties have comitted to fight for all five claims.
The nationwide outrage, together with the understanding that in an autocratic system the political parties have limited capacity to challenge the ruling elite, is generating a new interest in trade-union membership, potentially reversing a downward trend persistent since the early 1990s. This is an entirely new phenomenon, which has significance beyond the borders of Hungary.
Convergence or divergence?
As in politics, the decline of social standards in Hungary has serious implications for the rest of east-central Europe, as does the new wave of protest and unionisation. There is no ’iron curtain’ any more but there remains an income gap separating east from west. If prosperity is shared, however, the underdeveloped east can converge on western models, in terms of working conditions as well as welfare states. This may take more than just a few years—but there is a big difference between converging slowly and taking an entirely different direction.
In recent years, Hungary-watchers have focused on the decline of democracy and the rule of law but the social divergence is as important as the political one. This justifies the commitment of the European Commission that the EPSR, even if non-binding, cover all member states, including those in the east. On the other hand, regarding the democratic backsliding, in the last four years the commission has focused only on Poland, disappointing those in Hungary who believed the EU would help defend democratic institutions and the rule of law. Such expectations about jointly defending social standards are much lower, but the forthcoming European Parliament elections offer an opportunity to refocus and to bring back social standards and their enforcement to the heart of the European debate.
In recent years, liberal and centre-left politicians in western Europe have been talking the talk, sometimes very intensely, about the deviant political development of Hungary. Those Hungarian workers and students who have decided to walk the walk are doing it not only for themselves and their country, but also for Europe, and they deserve solidarity.