Court rules against introducing minimum wage for 13–14-year-olds
In November 2006, the Court of Appeal ruled that 13 and 14-year-olds do not have a right to a statutory minimum wage. Such young people should not be encouraged to work, but rather encouraged to pursue their studies. Thus, the trade unions’ demand was rejected, even though the lower courts had earlier ruled in favour of such a move. The statutory system regulating minimum wages is age-graded: for full entitlement to the minimum wage, an employee must be aged between 23 and 65 years, and be working at least a third of normal hours. However, according to some collective agreements, the entitlements may apply to workers aged 18 years. The Labour Inspectorate monitors compliance in this regard. The most recent survey conducted by the inspectorate in 2004 shows that only a limited number of employees receive wages below the minimum level.
On 10 November 2006, the Dutch Court of Appeal rejected an application by the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV). The unions had demanded a statutory minimum wage for young workers, but the court ruled that adolescents aged 13 or 14 years do not have a right to a statutory minimum wage.
Minimum wage determined by age
The Netherlands is familiar with a statutory minimum wage system. Employees aged 23 years and older have a right to the adult minimum wage. A youth minimum wage applies to younger employees, ranging from 85% of the adult wage for 22-year-olds, to 30% for 15-year-olds.
Following the introduction of a new Working Hours Act (Arbeidstijdenwet, ATW) in 1996, some work opportunities have been created for those aged 13 and 14 years. The trade unions asserted that the scope of the statutory arrangement governing the minimum wage should be expanded accordingly. The courts ruled in their favour in the first and second instance. However, the Supreme Court considered that the statutory rules drew a distinction between 15-year-olds, on the one hand, and 13 and 14-year-olds, on the other. The latter category may only carry out ‘light work’.
The Supreme Court determined that the then Minister of Social Affairs and Employment could reasonably have been expected to be aware of the fact that a statutory minimum wage for 13 and 14-year-olds would only serve to attract them to the labour market – at an age when pursuing an education should be of primary importance. According to the Supreme Court, the minister’s decision was not in conflict with international treaties or EU regulations governing aspects such as equal treatment.
Statutory minimum wage
In a European context, the Netherlands is something of an exception in terms of regulating the minimum wage for young people: the age at which an employee has full entitlement to the minimum wage, set at 23 years old, is the highest in Europe. To a certain extent, the provisions of collective labour agreements keep this in perspective. In roughly half of the collective agreements, the age threshold is lower, ranging from 18 to 22 years old. Moreover, wage scales for young people are on average higher – by some 13% to over 21% – than the statutory minimum wage for young people in the age category concerned.
In principle, the statutory minimum wage is adjusted twice a year: on 1 January and 1 July. With effect from 1 January 2007, the gross minimum wage was increased by 1.26% to €1,300.80 a month (approximately €1,117 net a month). As such, the Netherlands has the second highest minimum wage within the EU.
Minimum wages can be temporarily frozen during a period of economic recession. This happened in 2004 and 2005, based on the social agreement concluded in the autumn of 2003, between the Dutch government and the social partners (NL0310103F).
The Labour Inspectorate, which forms part of the Ministry of Social Affairs and Employment (Ministerie van Soziale Zaken en Werksgelegenheid, SZW) monitors compliance with the obligation to pay at least the statutory minimum wage. Studies to examine rates of compliance are carried out regularly. The most recent study applies to October 2004, and it estimated that at that time 36,000 employees were earning less than the statutory minimum wage. This figure amounted to around 0.6% of the workforce as a whole. This is significant in that it shows a decreasing trend in employees earning less than the statutory minimum wage: in 2001, the figure stood at 1.1%.
On average, the gross wage earned by underpaid employees is approximately 13% lower than the amount they are entitled to receive. The extent to which employees are underpaid differs substantially: more than a quarter of the employees are underpaid by less than 5%; more than half are underpaid by between 5% to 20%; and one fifth are underpaid by as much as 20% or more.
The following groups of workers are particularly over-represented in being underpaid, or in earning a gross wage equal to the statutory minimum: women and young people in part-time positions, employees providing care or services, employees in small-scale businesses, and those working in certain sectors such as retail trade, and hotels and restaurants. The number of marginally paid employees in these categories amounts to approximately 93,000 workers, representing 1.5% of the total workforce; this number has diminished since 2001 (J. Hoeben and A. Faas, Werknemers met een bruto-loon op en onder het wettelijk minimumloon in 2004 [Employees earning a gross income equal to or below the statutory minimum wage in 2004], The Hague, July 2006).
During 2007, the Labour Inspectorate will be given more extensive powers to ensure compliance. This extra cost will be partly funded through the introduction of an administrative fine for any irregularities uncovered. Underlying this measure is the need to strengthen supervision with a view towards protecting workers coming from the new Member States, as well as combating unfair wage competition in relation to the Dutch workforce.
Robert van het Kaar, Hugo Sinzheimer Institute (HSI)