Does Decentralized Collective Bargaining Have an Impact on the Labour Market in Hungary?

Abstract

Previous institutional analysis of collective bargaining in Hungary found that an extremely decentralized wage-determination system was created after the change of the regime. Statistical sources show a fairly high coverage of company agreements, but case studies reveal that only a small proportion function as in developed market economies. This article uses a cross-sectional survey to provide a quantitative evaluation of the outcome of company-level bargaining. It analyses the wage gap between union and non-union settings, and differences regarding wage dispersion, productivity and other labour market dimensions. Compared to other countries with decentralized bargaining systems, Hungarian unions have almost negligible achievements in terms of the average union wage gap, and wage agreements do not have a strong regulatory effect. Unions do not represent any substantial barrier to increased productivity, but they do reduce earning inequalities.