Wage strike at Audi Hungaria, with a few lessons

HUNGARY - In Brief 26 Jan 2019 by Istvan Racz

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We have seen the first serious strike action of recent times in Hungary this week. Despite a series of recent strike threats from major trade unions, it surfaced at just one company, which is Audi Hungaria, the local subsidiary of the German carmaker operating within the broad Volkswagen group. And despite recent signals, it was not started because of the recently introduced 'Slave Act' - a highly controversial amendment to the Labor Code - but it was fully and solely about employee compensations. Audi happens to be one of the biggest domestic companies, with a about 13,000 employees (just over a quarter of a percent of total domestic employment), a contribution of close to 2% to the country's GDP, and about 110,000 workers in the company's domestic supply chain if Audi's own estimate is to be believed.The week-long strike at the whole domestic operation of Audi, which the local trade union says could be extended if necessary, was about the refusal by employees of the company's offer to raise compensations by a total 20% in two years. The trade union is demanding an immediate 18% (or at least HUF75k per month) wage hike. The basis for the claim simply is that according to the trade union, Audi pays about 3.5 times (!) higher compensations in Belgium, 39% more in Poland, 28% more in Slovakia and 25% more in the Czech Republic. I.e. the wages paid in Hungary are unfairly low.Of course, we do not know how this strike will work out (Audi management and the trade union continue wage negotiations). However, there are a few lessons to be drawn, as regards the macro situation:(1) Hungarian wages are still relatively low, even in regional comparison within the CEE. This explain...