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No agreement was reached on the level of the minimum wage and the guaranteed minimum wage in 2021 at the meeting of the Permanent Consultation Forum of the Competition and Government Sector (VKF) on December 30, which is the last conciliation of this year . However, the government will not act as “arbitrator”, so, as usual in previous years, negotiations could continue in January.
There was no convergence of positions between the employer and the union, so there is no agreement on a minimum wage. By law, in such cases, the government must announce the minimum wage for the following year before December 31 of the current year, but it does not apply now. The last VKF meeting of the year was chaired by László Palkovics, Minister of Innovation and Technology, who said that the government’s goal was to reach an agreement between the social partners, so that the forum negotiations could continue in 2021.
However, the objective is to reach an agreement in the first half of January, since the increased amount should already appear in the accounts of the affected employees in the payment of the February salary, according to our newspaper from Ferenc Rolek, vice president of the National Association of Employers and Manufacturers (MGYOSZ). According to him, there is a possibility that the position of the parties will converge in the coming weeks and that the agreement could be implemented retroactively until the beginning of the year.
During the VKF meetings this year, the government has commented for the first time the position of the participating parties, and has presented its own proposal and has said practically 0 percent for the January salary increase – commented László Kordás. President of the Hungarian Trade Union Confederation (MASZSZ). According to the minister, it is worth postponing the agreement for 2-3 weeks, but there is no retroactive legislation in Hungary. According to the government side, a possible agreement could come into effect as soon as possible the day after it is signed. However, according to Kordás, this could lead to serious legislative problems, which Palkovics promised to solve only later.
The agreement would be technically viable, provided it is reached before January 15. The new minimum wage will be applied for the first time to the calculation of the January payroll, which will take place in late January – early February for companies. From a legal point of view, this means that if an agreement is reached between the parties, it will be promulgated by government decree, but it is not possible under current rules for the promulgation date to precede the effective date. In other words, a law enacted on January 15 cannot be valid as of January 1, as it violates the right of employers to prepare.
How the government will solve this legislative problem is the big question.
– said László Kordás.
At the moment, however, it only seems possible that the minimum wage for 2021 will be announced as of February 1, for example, which, however, could only appear in March wages.
Although the unions would even negotiate on New Year’s Day, the bosses do not want to change their position and do not see the point of more negotiations this year. However, the government side does not present its own proposal, but essentially states that if the necessary conditions are not met, the negotiations should be postponed. With this, he essentially winked at employers, behind the backs of employees, assessed the president of MASZSZ.
At the moment, there is a significant difference between the positions of the three trade union confederations and those of the three employers’ organizations. Employers propose a 3 percent increase, according to which the minimum wage would increase by 5,000 HUF to 166,000 HUF from January, and the guaranteed minimum wage would increase by 6,400 HUF to 217,000 HUF. They are lenient on the fact that if inflation rises a further 3 percent they would return to the negotiating table.
Worker advocates are proposing a 6.5 percent increase, and all three union confederations have decided they don’t want to sideline this proposal. In addition, a guarantee is requested that if next year’s inflation is higher than the 3 percent now forecast by the Cabinet, the amount of minimum wages will be automatically adjusted retroactively by the amount of the deviation in the middle of the year.
The government does not want to resort to tax or contribution cuts
The Cabinet did not respond to interest groups’ suggestion to reduce the public charge on employees, which could lead to a significant increase in the net amount of the minimum wage, even with a smaller gross increase in the minimum wage. The union side is primarily the PIT at 1.5 percentage points, while the employer side is social contribution tax (soco) proposed a reduction of 2 percentage points. It appears that, according to the formula set out in the six-year wage agreement reached in 2016, the condition of a 6 percent increase in real wages is unlikely to be met this year, so the agreement will require a reduction of the soco. (This condition was also not met last year, but the government cut taxes.) According to Ferenc Rolek, the government is not expected to lower the tax rate next year, although employers have pledged to give workers a discount if the soco is reduced.
The union side has also proposed a reduction or temporary exemption of the contribution of 1.5 percent to the labor market, with which, in principle, unemployment benefits are financed. While the government cannot compensate for the loss of income due to the social reduction of EU funds, it works in the case of contributions to the labor market, as EU funds can be used for unemployment benefits, training of adults and funding of benefits in case of crisis management programs. However, the government did not respond to this suggestion either.
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