How Hungary’s New ‘Slave Law’ Fired Up Orban’s Foes - EcoFinBiz Blog

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How Hungary’s New ‘Slave Law’ Fired Up Orban’s Foes

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(Bloomberg) -- Hungarian Prime Minister Viktor Orban has earned a reputation as a trailblazer for nationalists around the world, in no small part owing to his political adroitness. But months after winning a third term, Orban has stirred up an unusually fierce wave of protests against him, angering many Hungarians with a labor measure that’s been denounced as a “slave law.” The legislation triggered nonstop protests for the past month, galvanized the opposition and prompted unions to threaten the first general strike since the fall of communism.

1. What’s the ‘slave law’?

That’s the popular nickname for a measure that allows employers to ask for 60 percent more overtime annually -- as many as 400 hours, up from 250 currently. That means workers essentially could be asked to work six days a week. The measure would also allow employers to defer payment for overtime for as long as three years. The government argues that overtime is voluntary, but labor unions say workers risk their careers if they refuse.

2. Why did Orban adopt it?

Hungary is suffering from a labor shortage, so companies want to make employees work longer to keep up with orders. The jobless rate has plunged to 3.7 percent, near an all-time low, while the number of unfilled jobs has doubled in three years to a record high.

3. Why did that happen?

Arithmetic. Hungary’s economy is growing, but its workforce is not. That’s partly because of an exodus of talent westward and partly because of an aging population. In many countries, this kind of labor gap is offset by immigration. But in Hungary, Orban and his political allies have treated immigration as a threat to Hungary’s identity and national security.

4. Is the tight labor market a bad thing?

In the short term, it has an upside. The labor shortage has boosted average salaries by a third in three years, and with more cash in their pockets, Hungarians are spending more. That’s helped fuel the country’s fastest economic growth in 13 years. But even Orban has conceded that the country has “run out of workers.” A long-term shortage will limit future economic growth.

5. Who is helped by the law?

The law caters especially to automakers, who often ask employees for overtime when ramping up output. Daimler AG and Volkswagen AG’s Audi businesses employ thousands in the former communist country in car factories while BMW just announced a new plant near the eastern city of Debrecen. The lack of qualified labor is the single biggest risk for investors, followed by the cost of hiring, according to an October report from the German-Hungarian Chamber of Industry and Commerce.

6. What’s Orban’s justification?

In the long run, the challenge is to attract less labor-intensive, more value-added jobs, the premier said in a state radio interview in December. In the meantime, he said those who wanted to work more should be allowed to do so. He’s rejected amending or repealing the overtime law.

7. What’s the political fallout?

The law has helped unite a handful of hitherto weak opposition parties, whose divisions have played a big part in Orban’s success. There’s now talk of running a joint opposition list for European Parliament and municipal elections later this year. But initial polls taken since the start of protests showed the ruling Fidesz party largely preserving its support.

The Reference Shelf

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, John O'Neil

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