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Hungary's new 'slave law' risks first general strike since the fall of communism

CNBC International 2019-01-11 18:46:03
Omar Marques | SOPA Images | LightRocket via Getty Images Demonstrators seen holding their smartphone lights during a protest in Heroes Square against the enactment of a recent labor law, also called the 'Slave Law' as it allows employers to increase workers' duty time.

Hungary's Prime Minister Viktor Orban is facing an unusually fierce wave of protests, after his nationalist administration pushed through harsh new labor measures that could require workers to put in up to 400 hours overtime a year.

The legislation, dubbed by critics as "slave law," has sparked intense disapproval from opposition groups, with non-stop protests taking place in the Hungarian capital as well as other cities for the past month.

Passed in December, the modification of the country's labor code could add two extra hours to an average work day. That's the equivalent of an extra working day per week.

It comes at a time when opposition groups are increasingly concerned about what they say is the authoritarian rule of a conservative government.

What is 'slave law'?

Hungary's latest labor reform allows companies to ask for 60 percent more overtime annually — as many as 400 hours, up from the previous cap of 250 hours.

"The government argues the latest labor laws is just a voluntary scheme. But, everybody knows that, in reality, you can hardly say no if the choice is work overtime or you're fired," Andras Biro-Nagy, political analyst at Policy Solutions, a Hungarian think tank, told CNBC via telephone on Friday.

The measure has also attracted criticism because it could allow employers to defer payment of overtime for up to three years.

In response, thousands of Hungarian citizens have braved snowfall and freezing cold temperatures to rally against the bill, with labor unions threatening to hold the country's first general strike since the fall of communism.

Why was the bill passed?

The government says the labor reforms are necessary to provide much-needed support for businesses struggling to cope with a shortage of workers.

The jobless rate in Hungary has dropped to a near all-time low of 3.7 percent, while the number of unfilled jobs has reportedly doubled to a record high in the last three years.

ATTILA KISBENEDEK | AFP | Getty Images Hungarian Prime Minister Viktor Orban speaks during the first regular government press conference of the year on January 10, 2019 in Budapest.

An aging population and an exodus of talent to other European countries has also exacerbated the labor gap. In fact, the problem was deemed serious enough to prompt the government to try to encourage young people to return home, offering a program of housing and employment benefits in 2015.

Typically, this type of labor gap is partially offset by immigration but Orban and his political allies secured a parliamentary "supermajority" last year by running on a ticket that firmly opposes mass immigration.

"I believe the situation is quite extraordinary. We are seeing how it is uniting the opposition — everybody from the Liberals, Greens, Socials and even the radical right is on the same page when it comes to the protests," Brio-Nagy said.

Why does this matter?

Since re-entering office in 2010, Orban has frequently sought to wrest control of previously independent institutions; curbing judicial independence, restricting news media freedom and plurality and attacking academic organizations.

Last year, the European Parliament voted to bring disciplinary proceedings against Hungary for putting the rule of law at risk.

"The protests matter to Hungary, and to Europe, because so far Orban's government has been going virtually unchallenged," Constantine Fraser, European political research analyst at TS Lombard, told CNBC via email on Thursday.

"Despite occasional waves of protest in Budapest, the Hungarian opposition has been in disarray for years and Fidesz (Orban's party) has been able to gradually tighten its grip on the country and suborn its institutions," Fraser said.

What happens next?

Opposition groups and unions are preparing for more nationwide demonstrations on Saturday January 19.

"If these protests lead to the opposition starting to work together more effectively, that will at least be a first step in providing some sort of check on Orban's ability to run the country as a sort of fiefdom," TS Lombard's Fraser said.