Labour unions and opposition parties denounced a planned change to the labour code that would increase the overtime threshold from 250 hours a year to 400 hours, local media reported on November 26. Companies hope the measure can help alleviate capacity constraints in the labour market.

The billʼs authors justified the measures by citing the draining effect on the supply side of the labour market, as well as positive economic trends and the needs of the labour market. 

The bill would be especially helpful for branches of the economy in which product cycles are as long as six to seven years for adjusting output to demand, they added.

German companies clearly welcomed the government's proposals that aim to improve the country's competitiveness and address labour shortage problems, Foreign Minister Peter Szijjarto said on Monday in Dusseldorf.

As a result of the challenges caused by low unemployment, companies had long been asking the government to ensure sufficient workforce to carry out their investment projects, he added.

Two Fidesz MPs submitted a similar proposal in April 2017 via an individual motion as in the present case, which gives the cabinet an exemption from holding consultations with social partners prior to adopting legislation. The proposal met stiff opposition even within the ruling party and it was later withdrawn.

Now, however, Hungary’s jobless rate is an all-time low and companies in all sectors of the economy are struggling to find skilled and in many cases unskilled workers. There are some 100,000 unfilled jobs officially, but industry sources say the actual figure is three times higher.

Nine out of ten manufacturing companies said the lack of staff threatens to limit their production. The government eased rules for companies to employ pensioners and overhauled the vocational training system to better suit the need of companies, but analysts say structural changes are needed.  

The Hungarian economy still has a possible pool of 500,000 reserve workers considering the number of inactive people, those involved in public work schemes, people working abroad and the jobless, although there are severe problems concerning skills and qualifications.

The government froze wages for fostered workers and launched programmes for their integration into the primary labour market with little success. Part-time work is spreading slower than expected, as atypical work schemes are far less popular than in Western Europe.

Some companies turn to foreign workers to fill the gaps. There are some 20,000 Ukrainians now working in Hungary, which is far less than the estimated 1mn-2mn in Poland.

A year ago, the government eased rules for the employment of workers from non-EU countries, allowing companies to hire them without work permits for 90 days in areas in areas where the labour crunch is the direst. Businesses say this is a temporary solution as most guest workers move on to Western Europe after a few months in search of higher wages.  

The bill submitted to parliament on Monday would extend the period employers may account overtime for the purpose of calculating wages and rest days from 12 months to three years. It would allow employers to require workers to be on the job from morning till night for periods of up to four weeks, without a day off, trade union association MaSzSz said.

Opposition parties called the legislation anti-family and anti-life. Parliament will start to debate the legislation on Tuesday.