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The government is citing constitutional concerns as a reason for slowing down the downsizing of the ministries. There is as yet no estimate of the total cost of the redundancies.

The government was not prepared to risk violating the constitution by passing a new regulation aimed at making it easier to downsize Hungary's public administration. MPs, clearly ceding to trade union pressure, smuggled a get-out clause into a new law at the last minute.

The clause means that much of the administration reform bill will only come into force at the beginning of next year. Thus, a measure that would have forced civil servants to pay back their redundancy payments if they found a job at another public sector institution during their notice period has been postponed. Another delayed regulation would have specified the timing of redundancy payments. One reason for the sudden change is that certain aspects of the Bokross Package in the 1990s were declared unconstitutional because they did not give the people affected enough time to prepare.

The cuts package is intended to slim down the civil service by around 15,300 people, a 20 per cent cut. Some 2000 people will be made redundant from the ministries in the next two years, local authorities will lose 7000 employees, and other agencies will be employing 5000 fewer people at the end of 2008. Even though introducing competition into the public sector is primarily a Free Democrat enthusiasm, the economics and environment ministries that the party runs are seeing the smallest cuts. The economics ministry is losing 139 staff - 15 per cent of the total - while the environment ministry is losing 46 staff, or 10 per cent. The biggest cuts will take place at newly merged ministries. The Local Government and Regional Development Ministry is bidding farewell to 509 civil servants - or 52 per cent of the total staff of its two predecessor institutions.

The original plan was for the various institutions to shed all the extra fat by the end of this year. However, HVG has learned that there was insufficient money to cover these costs, meaning the redundancies had to be delayed. The delay gives the ministries more time, but also saves them money. The new regulations coming into force on 1 January

2007 will mean that employees will only receive their golden handshake at the end of their notice period.

Despite the government's caution, the new law may well be questioned by the Constitutional Court. The civil servants' trade union has said the new law is discriminatory, since the regulations regarding civil servants' redundancy are now less strict than those specified in the general labour law.

The affected institutions are likely to start by dismissing those employees who can be sacked more cheaply and those who cannot be moved into a different area. According to the Prime Minister's Office, the number of staff to be dismissed is set centrally, but it is up to managers in the various institutions to decide who stays and who goes.

There have been cases, however, where a middle manager has preferred to resign rather than single out his own colleagues for dismissal.

Trade unions have told us that one minister cut this Gordian knot by advising a department head to select every fifth name from the staff register.

Most managers start with voluntary redundancies and then move on to older employees who can go into early retirement. Jozsef Feher of the civil servants' union warned that increased early retirment could end up being a major burden on the state pension fund. Young graduates are sackable most cheaply: civil servants must have been in state employ for three years before they have the right to one month's redundancy payment. Experts estimate that the redundancy programme will cost tens of millions of forints, and will bring annual savings of about HUF20bn.

The redundancies are unlikely to cause major problems on the labour market, since, career consultants say, those departing tend to be multilingual, highly employable fresh graduates.

One jobseeker at an employment centre especially established for redundant bureaucrats, said: "I expect I'll have to make do with a job designed for someone with high school education only." The jobseeker in question at worked for a government agency for seven years. 90 per cent of the people using the centre are graduates.

The pay in the private sector is also frequently worse, with more restrictions and fewer benefits. One recruitment consultant knew of a former civil servant who had not accepted a single job offer in two years because the pay was inadequate.

Things may get worse when longer-serving employees with lower qualification levels find themselves outside the door. Many of these are already talking to recrutment consultants ahead of their dismissal.

hvg.hu English version

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hvg.hu English version

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