The transit strike began in the Hungarian capital

Well, the strike is not complete because, believe it or not, BKV (Budapest Közlekedési Vállalat/Budapest Transit Authority) has twenty-six unions! Out of these, twelve decided against the strike. Their leaders prefer negotiations because they are convinced that a fair deal can be reached with management.

You might ask how it is possible to have so many trade unions at one company where the total number of employees is apparently 12,000. First, it is hard to tell how many of these employees are working in the field as drivers or mechanics and how many belong to middle management. I heard one bus driver who claimed that there are only 8,000 drivers and mechanics and the rest, that is 4,000, work in administration. Others dispute that figure and estimate that about 1,000 people are sitting in offices. Whatever it is, apparently there are too many of them.

In my opinion, the explosion in the number of trade unions came about as a result of a bad law. I read somewhere that as few as thirty people can form a union. But the real culprit in the proliferation of trade unions in state and municipally owned companies is the provision that the salaries of trade union leaders are paid by the company itself! It sounds ludicrous but that is the case. The trade union leaders whose very handsome salaries come from the company are called "függetlenített szakszervezeti vezetők" (independent trade union leaders). At first I didn't even understand the term. "Independent" of what? Then I read a bit of the history of this phenomenon and came to the conclusion that in the socialist period some trade union leaders were freed of other duties in order to devote themselves to the administration of the trade union. However, in those days there were no strikes, and the main occupation of the trade union leaders was making sure that the employees have a two-week holiday in one of the villas owned by the trade unions or by the company itself. Nowadays trade unions function as real trade unions and the ridiculous situation presents itself that the trade union leaders, paid by the company, are organizing strikes against their own employers.

In the media one often hears that the financial affairs of BKV are inscrutable. However, according to an economist, József Papp, who just joined the company's board as an independent expert, the finances of the company are not that terribly difficult to fathom. According to him, BKV receives 60 billion forints from the sale of tickets and season passes. The Hungarian government gives 32 billion a year in subsidies. In the last few years the City of Budapest also gave BKV 10 billion a year. However, all that money is not enough to maintain service. Every year there is a shortfall of about 30 billion.

A few weeks ago the government and the leaders of the City of Budapest agreed on an additional 28 billion forints to help BKV out in 2010. Thus, while BKV's actual income is 60 billion forints a year, subsidies for 2010 are 70 billion. A ticket today costs 320 forints ($1.75 or €1.20) to the user, but the actual cost of that ticket is 660 Ft ($3.60 or €2.50) which is far too high. I should mention that in New York one can get a subway or bus ticket for $2.25.

According to Papp one problem is the high cost of labor. The entire amount that is received in ticket sales is sufficient to cover only salaries and payroll taxes. Without help, there would be nothing left to run the buses or for capital investment. The national government subsidy in effect relieves the company of its payroll tax burden; the 32 billion BKV receives from the government is the exact amount it owes the government in the form of payroll taxes.

Apparently the average salary at BKV is higher than the average pay in the city in general. Moreover, there are too many richly compensated employees in the administration. That must change because otherwise BKV's financial problems will only perpetuate. Papp recalls that he read an interview with Erik Bogsch, CEO of Richter Gedeon, the pharmaceutical company, that used to be a typical socialist company with a huge staff. Twenty percent of the employees had to let go in order to run the company economically. Something like that would be necessary in the case of BKV.

There was also mention of the entitlement to free use of all sorts of transportation for people over the age of sixty-five. That "gift" to the pensioners came from Gyula Horn's government, and pensioners still gratefully remember their benefactor. However, as it turns out and something that I didn't know, no one reimburses BKV for these free rides. The free use of transportation is really a part of people's pension that shouldn't be borne by BKV or any other transit authority. In a country where 42% of the adult population supports the rest (58%) no such entitlement should exist. Those who need supplemental help should receive it on an individual basis. Apparently in Sweden there is such a system, but there 58% of the population maintains the rest (42%).

According to József Papp, the first step should be a drastic reduction in the administrative staff. Most likely fewer runs could be also considered although I can well imagine the reaction of the inhabitants of Budapest to such a suggestion. As it is, they complain bitterly about the state of the buses which are apparently old and decrepit. Hundreds, if not thousands, of new buses should be purchased. As long as twenty-year-old buses are being used that spend half their lives in the shop the quality of Budapest's transportation will not improve. Perhaps a few more minutes of waiting for the bus is worth having a clean, new, comfortable ride.

In any case, the strike of the fourteen trade unions began at midnight and as far as I know it is still going on. István Gaskó, head of one of the MÁV trade unions, is organizing a sympathy strike. BKV says that they made their last offer and if it is not taken they will have to let people go. We will see what happens in the next few weeks. According to some, the strike doesn't really serve the interests of the members of these fourteen trade unions. It is, some people claim, politically motivated. In other words, the trade union leaders are helping Fidesz just before the elections. Who knows. Fidesz is very quiet about the strike. But it certainly helps their cause.

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Mark
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“A ticket today costs 320 forints ($1.75 or €1.20) to the user, but the actual cost of that ticket is 660 Ft ($3.60 or €2.50) which is far too high. I should mention that in New York one can get a subway or bus ticket for $2.25.” You don’t mention though that the State of New York (and the city) subsidize the MTA – the New York public transit provider, so the fare you quote doesn’t actually reflect the cost of delivering the system. The MTA, I understand, is currently in the midst of a BKV-type financial crisis following cuts in the subsidy from the state … and I gather the MTA is reacting in a very BKV like way, threatening dire consequences for services if Albany carries through its cuts. Actually, if this is the cost of BKV becoming self-financing, the BKV is probably remarkably cheap and efficient compared with many of its western European equivalents. Given that the physical costs of operating the system cannot be so different to those in London or Vienna, I’d suggest that the reason the BKV is relatively cheap is in the lower level of wages it pays compared to workers on those… Read more »
Hank
Guest

It is weird enough that trade union leaders are being paid by their companies. But what I don’t understand is where the strikers live off when not working. Do they get paid by the company, even if they are striking? Do they get paid by their trade union, and who pays for that then?
Obviously, when one doesn’t get paid when on strike, the willingness to join is severly limited. But I do not have the feeling it works like that in this country. There are no strike committees, no meetings of striking workers, no picket lines, no demonstrations, no signs of any activity whatsoever.
Does anybody know?

Mark
Guest
Hank: “It is weird enough that trade union leaders are being paid by their companies. But what I don’t understand is where the strikers live off when not working. Do they get paid by the company, even if they are striking? Do they get paid by their trade union, and who pays for that then?” Yes, normally the ability of a union to sustain a strike depends on whether it can offer a sufficient level of strike pay to the workers. And this depends on whether a strike fund of sufficient size has been built up – this is normally built up from accumulated membership fees over a period of years. If the union cannot offer compensation the issue is then whether the workers are sufficiently angry to forego some or all of their pay (these kinds of strikes are the most dangerous for the employers, because they are the most difficult to settle through compromise). The issue with the BKV strike is who can afford to blink first. Being here in Budapest, I don’t mind the strike because I can walk everywhere, but this is not the case for everyone, nor for most people. And looking around I think… Read more »
Hank
Guest

Thanks Mark,
But I gather from this that you don’t know concretely either how much the BKV (or MÁV)strikers are being paid and by whom?
“It isn’t actually weird that trade union officials receive some support from the employer.”
I think it is. In the Netherlands at least, that doesn’t happen. Yes, companies must make certain facilities available to a recognized trade union (a meeting room, a small office, a certain amount of days a year of paid leave for some trade union members to be able to follow trade union courses/training etc.) and rightly so for the reasons you mention. Also, the chairman of the louber council in medium and big firms is paid by the company, but he/she is not always a trade union member and is chosen by all staff (trade union or not). Also, this is only one person (and not 10-20-30) and the labour council doesn’t call strikes or deal with trade union issues. But the local/company/regional trade union leaders are always paid by the trade union itself. As it should be to keep interests seperate and transparant.

Andras
Guest
The regulation on unions partly heritage of the socialist practices, partly that of the transition period. According to the regulation, 10 persons could form a union. Practically, in Hungary, union means company union. Thus every union is an insider actor, or stakeholder, and sectoral unions are only loose associatons of company unions with no power to shape policies of local actors. Beyond legal regulation, the lack of historical traditions,the lack of uniting political force, existence of internally fragmented company labour markets, and the apparently benevolent management attitudes at public companies are explain the mushrooming of unions. I guess than latter factors are more important than teh peculiarities of the legal regulation itself. One can find only a handful full time union leaders in the country. The most prevailing situation is that unions are too small, membership fee is too low to afford to have full time union leader paid by the union. The Labour Code helps unions in this area by stipulating certain amount of free time after each union member. The union may request the employer instead of giving free hours, pay compenation for the non-used hours for the union, which compansation is used to free union leaders from… Read more »
Mark
Guest

Hank: “But I gather from this that you don’t know concretely either how much the BKV (or MÁV)strikers are being paid and by whom?”
No, I don’t, and if the unions have any sense they won’t disclose this information because that would reveal their hand.
I guess the government will decide how the end it. Having just come home across central Budapest, the combination of the air pollution from increased traffic with the low temperatures is really noticeable.

Sutyi
Guest
Viking
Guest

The Jobbik program. 88 pages.
Posted by: Sutyi | January 16, 2010 at 10:09 AM

And how does Jobbik (and the other parties) position themselves to this BKV-strike?
# Which parties are *for* the strikers demand?
# Which parties are *against* the strikers demand?
Every political party need to chose and I think Jobbik is the party that will chose last, when they now how it went, and then they will criticise the outcome, as the populists they are

How will Jobbik relate to Trade Unions?
Traditional Fascist ideology supports Trade Unions that are vertical in the sense that they represented all employees regardless position.
Vertical Trade Unions had the same role as during the Communist period, more a leisure club, than a fight-machine for workers right.
The traditional Trade Union model is the horizontal, where employees belong more out of position in the company, like
# Blue-collar workers
# White-collar workers
# Middle management
# Higher management (University degree is a must)
Will Jobbik allow horizontal trade unions, like the ones at BKV/MAV/Malev block normal traffic, as it is today?
Or, should we all, in the national spirit for the Nation, all work with a smile?

John T
Guest

That is assuming that there will be jobs / employees for the Unions to recruit members from of course. If investment stagnates or reverses, the quality of the jobs will be poorer too as the key exports are for goods made for foreign (mainly western european / American) firms. Not sure what the likes of China or India would want to invest in Hungary, if it is potentially going to leave or be suspended from the EU.
So, what can domestically, totally Hungarian companies offer – bugger all basically. Exports of meat / grain, while important are simply not enough. And there are only so many jars of gherkins that can be exported! I wonder if Jobbik are banking on exports of Turo rudi picking up dramatically?

Hank
Guest

“No, I don’t, and if the unions have any sense they won’t disclose this information because that would reveal their hand.”
I’m sorry Mark, but I find this curious. We are all for transparancy, but unions are suddenly allowed not to reveal their incomes/financial books/how high the strike fee is they pay? In the Netherlands, this is all public knowledge, of course, just as it is public knowledge what the company concerned earns, looses through a strike etc etc.
And if I understand it well, BKV may be loosing 40 million a day with this strike, but it is saving 80 million a day in salaries, petrol and electricity. Guess who’s gonna last longer if finances are the decisive factor?

Eva S. Balogh
Guest

Hank: “”No, I don’t, and if the unions have any sense they won’t disclose this information because that would reveal their hand.” I’m sorry Mark, but I find this curious. We are all for transparancy, but unions are suddenly allowed not to reveal their incomes/financial books/how high the strike fee is they pay?”
I find it more than curious. It is unacceptable. Moreover, since when does the company pay the salaries of trade union leaders? And all expenses, including secretaries, telephones, computers, etc.

Viking
Guest

Hank, seems like Holland is the odd man out here when it comes to Trade Unions.
As a Swede (living in Hungary) I really do not recognise your description on Trade Unions as being more of a non-members club.
If all employees can choose “the chairman of the louber council” then it is more a totalitarian style of Trade Union (vertical).
In many other countries it is different and being a ‘members-only’ club the Trade Unions are not responsible to any one than their owners, the members.
I agree with you that BKV can let this strike bleed the unions out and BKV will actually earn money on it, but the biggest problem is that BKV as a political enterprise cannot use that tactic.
The City of Budapest cannot allow it too long. The question is just if 7 days will be enough?

John T
Guest

Eva – In the UK “Local” union representatives will more often than not be paid employees of the Company or organisation in which they work. However, the general secretary and full time “national” officials are employeed and paid for by the Union. Don’t know if this is the same in Hungary. What struck me though is the large number of Unions involved in this. In most workplaces here, there are only 1 or 2 unions in a company with collective bargaining rights.

Viking
Guest
Moreover, since when does the company pay the salaries of trade union leaders? And all expenses, including secretaries, telephones, computers, etc. Posted by: Eva S. Balogh | January 17, 2010 at 09:08 AM — That the company pay for employees working for the local trade union is a normal thing in Sweden. The number of man-hours that can be accounted for depends on the size of the work-place. The trade off is of course that the number of trade unions are limited. There exists out-of-scope trade unions like the Syndicalist ones, so it is a type of monopoly. That the company gives an empty office in-house with telephone is also normal, though not secretaries. That is a new one. The Hungarian situation that every small group can form their own union and get their leader paid to work with them sounds like an incentive to start just another union. This is of course very ‘democratic’, but the trade unions really need to unite and get their act together. It is not clever to have 26 different unions, when 3-5 would be sufficient and would be better equipped to serve their members and give enough stability to the Management of BKV… Read more »
Eva S. Balogh
Guest

Viking: “That the company pay for employees working for the local trade union is a normal thing in Sweden.”
It goes against the grain. At least against mine.

Viking
Guest
If look at a way of getting out of this situation the name of the game is – privatisation. Let BKV exists as a politicly controlled business unit with a limited staff working with to check implementation of current agreements and preparing future agreements (procurements). The running of operation, including ownership and maintenance of rolling equipment (buses, trains, etc) and maintenance of track and other fixed equipment/real estate, be done to a fixed price by contractors. BKV decides which ticket vending and control systems are to be used. The contractors gets an agreement to run either the Metro, City-buses, HEV, Trolley-buses (if not included with City-buses), etc. The contractors are responsible for collecting the ticket fees and controlling that people pay the fees and administrate the process of taking free-loaders to court. BKV makes controls that check the % of non-payers and the contractor pays penalties if the % is too low, for whatever reason. The contractor also pays penalties when the vending machines/staff are not available, etc. Some QoS-parameters that BKV checks and then penalties are levied on top of the fixed fee. This is very much the situation in Stockholm, Sweden for the last 10 years at least… Read more »
Viking
Guest

Anyway the strike ended obviously about 2 hours ago and services should return to normal Monday morning.

Mark
Guest
Viking: “This is very much the situation in Stockholm, Sweden for the last 10 years at least and it has improved performance.” However, this experience is not universal, especially on system where the private operator has to deliver substantial investment in infrastructure. In 2002 the London Underground was divided into three units and operational responsibility was transferred to private companies under a thirty year contracts. They were officially called Public Private Partnerships, but don’t differ fundamentally from the model you describe. Of these three contracts two have failed and these parts of the underground have returned to public ownership. The third is in trouble because most independent experts believe that its targets could be delivered more cheaply for the taxpayers if it were in public ownership and it is widely believed that the Conservative mayor (yes, the economically liberal Conservative mayor) is waiting for an opportunity to renationalise the lines. Viking: “Anyway the strike ended obviously about 2 hours ago and services should return to normal Monday morning.” And the most significant point is that the BKV workers won, which is suggestive of the power of key workers in certain positions in the economy. However, I don’t think this means… Read more »
Mark
Guest
Hank: “And if I understand it well, BKV may be loosing 40 million a day with this strike, but it is saving 80 million a day in salaries, petrol and electricity. Guess who’s gonna last longer if finances are the decisive factor?” Yes, but your accounting of the losses is too narrow. Ultimately the government stands behind the BKV, and, furthermore Budapest depends on the functioning of its public transport system. A strike means people who can’t get to work, have to work shorter hours, it means losses due to congestion – and a strike means a fall in economic activity, and thus lost tax revenues. Budapest produces what – 25% of Hungary’s GDP? That is where the power of the union lies. The lesson of UK industrial relations in the 1970s (which Mrs Thatcher and all subsequent governments learned) is not to provoke an all-out indefinite strike in an essential public service, because if those who work there are sufficiently angry to stay out they will win. Anti-union policies can only be pursued if the government and/or the employers can give a sufficient ammount to enough of the workers to undermine the strike (a technique perfected by Mrs Thatcher… Read more »
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