Hungary: CSR in the spotlight

Corporate social responsibility is an increasingly high-profile topic in Hungary, with the government recently issuing a decree aimed at promoting CSR practices, companies adopting various initiatives and the social partners discussing the issue.

The issue of corporate social responsibility (CSR) - defined by the European Commission as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis" - has emerged relatively recently in Hungary. Under the previous political system, the only remotely related issue was a statutory obligation on employers to include "social spending" in their expenditure plans. However, during the major economic reforms of the early 1990s, the idea that employers should bear some social responsibility started to appear on the agenda - although it was not defined as such. In a context of radical restructuring of employment, a legal and financial framework for employers' responsibilities in the event of redundancies and privatisation was established, principally by the 1992 Labour Code and Act IV/1991 on the facilitation of employment and provision of social benefits to the unemployed.

The socially responsible restructuring of companies played a prominent role in debate among trade unions, employers' organisations and the government in the tripartite National Interest Reconciliation Council (OÉT) throughout the 1990s, as the majority of state-owned companies underwent privatisation. Sector-level social dialogue committees started to operate in 2004 (EER 363 p.9), offering another possibility for communication between employers and unions on issues related to employers' social responsibility.

More recently, CSR in a wider sense has attracted greater interest. In the late 1990s, a number of large companies, mostly foreign-based multinationals, launched CSR projects (EER 366 p.9), while the government started to devote attention to the issue. The ministry of employment and labour took several initiatives to promote employers' social responsibility in areas such as job creation, the improvement of working conditions, adult education, occupational healthcare and occupational rehabilitation. The ministry of youth, family, social affairs and equal opportunity also sought to strengthen employers' social responsibility in the areas of: social inclusion; gender equality; equal opportunities for people with disabilities; the social integration of people from the Roma minority; the labour market rehabilitation of recovering addicts; and consumer protection. An example of a specific initiative is a "family-friendly workplace" award launched in 2000, which recognises companies that provide flexible working arrangements, take account of workers' family commitments and create settled employment relationships.

This government involvement culminated in the adoption of a decree on "strengthening employers' social responsibility and related incentive measures" in March 2006.

CSR decree

The decree states that the Hungarian government attributes great economic and social significance to the social responsibility that companies assume in the course of their business activities, as regards sustainable development, social cohesion and environmental protection. The government is thus in favour of a greater dissemination of responsible business and employer behaviour. In line with the CSR approach currently being promoted by the EU (European Commission: CSR alliance launched), the government regards employers' voluntary social responsibility as a new element in progress - an innovation that, on the basis of the dialogue between social partners, integrates social and environmental aspects of sustainable development into business. The decree's stated goal is to encourage private and public sector organisations to take measures to reinforce all these aspects (economic, social and environmental) of sustainable development.

The decree calls on the various ministries - such as those for the economy, transport, health, the environment, education, agriculture and information technology - to initiate dialogue with employers in their fields and to draw up ways of promoting and acknowledging CSR. Ministries should draw up criteria, in the form of standards and indicators, that can measure socially responsible behaviour by private sector, public and not-for-profit organisations, and recognise responsible employers.

Through the decree, the government launched a taskforce responsible for working out the criteria - beyond the employment responsibilities stipulated by the relevant legislation - that will enable employers to be designated as a "socially responsible enterprise". Further, the various ministries should draw up the eligibility criteria to enable organisations that have created an accessible working environment and employ workers with disabilities to qualify to use a logo designating them as an "accessible workplace". The various sections of the public administration are to introduce a labelling scheme for products and services, certifying that they have been designed to ensure that disabled people can use them.

The government calls on the social partners to discuss in the various social dialogue forums, and in the tripartite OÉT, how CSR good practice can be disseminated and support the competitiveness of the economy and social cohesion, and improve the position of employees and jobseekers. In general terms, the decree expresses the government's readiness to cooperate with the private sector, non-governmental organisations, professional associations, trade unions, consumer protection organisations and other stakeholders to reinforce CSR.

Expectations

According to the government, strengthening CSR will help to implement the EU's Lisbon jobs and growth strategy. The cooperation over CSR launched by the decree should deepen social dialogue and could also serve as a way of strengthening the industrial relations system.

The government believes that CSR will enhance economic competitiveness by promoting the creation of better and higher-performance jobs and encouraging greater adaptability on the part of employers and employees. If employment is restructured in a socially responsible manner, using methods that improve the employability of employees and jobseekers, human resources will be enriched and better able to contribute to economic growth. Social solidarity and inclusion will, the government hopes, be improved by CSR initiatives, such as voluntary involvement in community initiatives by businesses. Further, employees' satisfaction and welfare will be boosted by CSR-related improvements in working conditions and the wider social and environmental context of their jobs.

Recent developments

In June 2006, shortly after the decree was issued, the responsibilities of ministries were changed when the socialist-liberal government won a second term in office in the general election. A new integrated ministry of social affairs and labour was created and is now responsible for the promotion of CSR policies.

Since the decree's adoption, a number of CSR conferences and awareness-raising events have been organised, with government participation. An important event was the launch in Hungary of the United Nations Global Compact, a scheme whereby companies sign up to a number of human rights, labour rights and environmental commitments. Another was a CSR Hungary fair in October 2006, at which major companies presented their CSR experience and heard presentations by government representatives and international experts. Braun & Partners, a consultancy firm specialising in the field, has launched a newsletter providing information on Hungarian and international CSR developments. Braun & Partners has also produced an "accountability rating" (as part of an international scheme), measuring the extent to which leading Hungarian companies incorporate "responsible practices" in their business. The highest ratings in the first assessment, completed in late 2006, were achieved by Hungarian Telekom, MOL Hungarian Oil and Gas, Hungarian Power Companies and Tisza Chemical Group.

At national tripartite level, an OÉT working group on social policy has discussed CSR. Trade union representatives have stressed their view that CSR initiatives should not replace labour rights and employment law guarantees, and the government has agreed that CSR initiatives cannot justify poor labour relations. The ministry of social affairs and labour has set up an online "name and shame" system, which highlights firms with irregularities in employment practices and unresolved labour disputes. Those employers found to be in breach of their employment law obligations will be at a disadvantage in bidding for public contracts or applying for public subsidies.

Finally, although the 2006 decree underlines that CSR is much wider than occasional charity work, such charitable initiatives exist and are in some cases being incorporated in wider public social welfare programmes. For example, several voluntary company initiatives have been integrated into an anti-child-poverty programme.

European Employment Review 397 (EER 397): contents