Hungary's leaders go to work on unemployment

The Tungsraum Electrical Company Ltd. - one of Hungary's biggest enterprises with a trade name established long before World War II - has just cut its work force by 3,000.

Further economic streamlining may mean another 2,000 of its remaining 23,000 workers will also have to find jobs.

A smaller enterprise, the IGV, was shut down at the same time. IGV, which made typewriters and other office equipment, was closed because it continued to show big losses even after a two-year government-aided rescue operation.

Both cases were bold moves in a country governed by communist ideas that were initially based on such theories that unemployment is endemic to capitalism and impossible under communism.

The government has carried out an exhaustive scrutiny of the prospects lame-duck enterprises have for surviving. This step is part of the government's effort to modernize and streamline the organization and management of enterprise and to eliminate the involvement of the government's Economic Committee and other interested agencies.

For political reasons, the process of liquidation cannot be a quick one. But, according to Hungary's National Bank, at least 100 companies are ''permanently insolvent'' and are the kind of formidable drain on the state budget that the ''new economic mechanism,'' the reform program initiated 16 years ago, was designed to stop.

Indeed, Hungary was the first East-bloc country to subordinate dogma to today's economic realities. But the assurance of ''full employment'' is still written in the Hungarian Constitution. And officials said in recent interviews, ''Every worker in a plant which now will be closed down because of unprofitability will be found another job.''

''At IGV,'' said Gyorgy Szepesi at the National Planning Office, ''1,600 workers were affected. But no one was thrown on the street.''

''We cannot guarantee ... the same kind of job in the same industry as before. But other jobs are still available in the labor situation we have in Hungary today,'' he said. Some displaced IGV and Tungsraum workers apparently opted for an early pension. The rest, Dr. Szepesi said, found employment with enterprises that bought up IGV assets. There are facilities for retraining workers for up to two or three years. During that time, workers draw basic pay.

The government consults trade unions on its decisions related to the streamlining industry.

While officials admitted that the displaced workers at Tungsraum, IGV, and smaller firms have been ''inconvenienced,'' and that workers complained about losing established jobs, there has apparently been no resistance from the unions to the government's plan. In part, officials claim, this is because there will be more vacancies than unemployed workers (at least for the foreseeable future).

And, they say, the lack of resistance is also due to the fact that the Hungarian reform has been accompanied by a painstaking effort to secure public understanding that higher wages and improved living standards depend on raising efficiency and productivity.

''We will have to do still more to make the point in future,'' said Szepesi.

Tungsraum itself is a striking case in the government's argument. Faced with an enormous loss in 1982, top and middle management were overhauled and given greater responsibility. At the same time, excessive labor costs were tackled at their source.

Last year showed a 9 percent rise in productivity, a modest profit (including a boost in hard-currency exports), and a 5 to 7 percent rise in wages for 1983 and 1984 - way above the national average.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.