October 31, 2013

Flexible labour regulations inside the European Union

Flexible labour markets are essential when you seek a location for your new manufacturing plant. This short overview provides an insight to the labour regulations of Hungary, Poland, Slovakia and the Czech Republic.

Need for a flexible labour market in EU
These low-cost Eastern European countries are the member states of the EU, have relatively good infrastructure and last but not least: have pretty good labour market regulations. Lets see some key strengths:

#1 Simple termination of employment contract
Eastern European Labor Codes allow employers to terminate employment contract with notice or immediately, if employee seriously breaches work regulations. In the case of notice of termination, employer has to state the reasons for terminating the contract. Reasons can be related to company's operation (organizational restructuring) or to employee's skills (incapacity for work, unsatisfactory performance etc). The notice periods (when the employee gets his/her full salary) are between some weeks to some months. 

#2 Flexible working hours and overtime work regulations
Multi-shift and uninterrupted work are typically not related to the work schedule of the employee but to the activity of the employer. Overtime work can be ordered by employer, but the total amount of annual overtime work is maximized in 150 hours (excluding Hungary, when the maximum annual overtime work is 250 hours). Overtime work bonuses (the additional wages over the overtime hours worked) are 20-25%. Work can be scheduled for Public Holidays, weekends and nights, with higher (50-100%) bonuses.

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#3 Week trade unions
All Eastern European countries allow the free establishment and competition of trade unions, employers cannot restrict this principle. However, the members of trade unions represents approx. the 10% of all employees (changing country to country) and first of all: Eastern Europe is not the home of large-scale strikes.

#4 Low minimum wages
Eastern Europe has a low wage level. The regulation of minimum wages (you cannot pay wages under this guaranteed level) is also flexible, provides more moderate minimum wages in regions and industries with high unemployment.

Background: a 2-minute video about the need of European labour market reforms:


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