European Trade Union Institute, ETUI.

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1 August 2017

Hungary: pensioners’ cooperatives active on the labour market

Based on an Act that was adopted by the Parliament in June 2017, the government wants to initiate the setup of so-called pensioners’ cooperatives of public interest. The aim is to provide active elderly people with the possibility to carry out occasional work. The first cooperatives have started. The trade unions have stark reservations, because of the possible negative effects on wages.

With an Act that was adopted on 26 June 2017, the government aimed to stimulate that retired workers stay active on the labour market. So-called pensioners’ cooperatives should help retired workers with their placement on the labour market with a double purpose: the reduction of labour shortages and the transfer of skills and professional knowhow. At the same time, it could help pensioners to improve their (often poor) wages. However, the payment of the work carried out was questionable. In the political debate on the Act, there was reference to a voucher system or other pay methods facilitated with tax relief. The Act states that a pensioners’ cooperative is an economic enterprise, established by natural persons. The cooperative members must be retired persons (at least 90% of the membership) who personally undertake to participate in the cooperative’s activity by way of a membership agreement. Reference was made to similar initiatives set up by students. The idea behind the cooperative is that it negotiates with employers that are interested to take on board retired workers.

The trade unions reacted very critical. For instance, the trade union of Chemical Energy and General Workers’ Unions (VDSZ) opposed the proposal and criticised the fact that no proper wage system was foreseen. Socio-economic observers questioned whether the initiative could contribute to ease labour shortages. On the other hand, the National Competitiveness Council, a body of business leaders and experts established to make recommendations to the government, has formulated a recommendation to the government to make it possible for individual pensioners to return to work without being members of a cooperative.

Remarkably, the first experiences show that pensioners are very eager to work again, primarily to supplement their poor pensions but also to do something meaningful in their free time. Many pensioners receive pensions far below the subsistence level. One of the biggest advantages of being a cooperative member is that social security contributions don’t have to be paid. This means that pensioners can earn about 20% more. One of the initiatives, the Third Age Public Interest Pensioner Cooperative in the eastern industrial town of Miskolc open since the beginning of August 2017, received within one month around 250 pensioners that joined the cooperative. Another cooperative, the Bizalom Public Interest Pensioner Cooperative ceremonially signed a partnership agreement with retail chain COOP. They will work together in an effort to reintroduce pensioners back on the labour market. By late October 2017, thirty-six pensioners’ cooperatives have been established.

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