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Employers criticize plan to set up action groups

Business-sector employers have expressed criticism of the plan of the governing party's parliamentary group to establish action groups to survey the impact of the new 16% flat-rate tax, MTI said.

Prime Minister Viktor Orbán said on Monday that action groups will be set up to see whether or not private sector companies abide by an agreement on the guaranteed minimum wage reached at a meeting of the National Interest Coordination Council late in 2010.

At the meeting, unions insisted a clause be added to the agreement promising employees' “real position” would remain unchanged in light of changes to taxes and contributions.

Orbáan also noted on Monday that the government took steps to top up wages for public-sector workers who would have taken home less pay because of the tax changes and had mandated similar steps at majority state-owned companies and “will make sure that wages will not decrease in the private sector either” as a result of the tax reform.

Speaking to MTI, Ferenc Dávid, head of employers' organization VOSz, said the organization could not understand the legal basis upon which the prime minister expects to make employers observe the wage rise recommendation of the National Interest Coordination Council (OET) when that has no binding force. The agreement also says that competitiveness and income position must also be taken into account when setting wages, he added. The security of employment must also be one of the key criteria in wage negotiations. Companies that cannot afford to raise wages by 4-6% may elect to exempt themselves from the stipulation, Dávid noted.

Dávid said the government had not consulted employers on the wage compensation for any losses in net wages resulting from the new tax system.

He emphasized that, at the time of the wage agreement, it could be seen what the tax system would be like in Hungary from 2011 and that the tax system would have winners and losers. The tax system was passed by parliament and now the government is trying “to shift the responsibility onto the employers of the business sector”.

The government introduced a 16% flat-rate personal income tax and eliminated many tax allowances from the start of 2011. (MTI-Econews)