Union anger at top pay increases

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In August 1999, Dutch trade unions were angered by the latest evidence of increases in senior management salaries far above those awarded to employees covered by collective agreements, and the FNV union confederation thus threatened to sabotage the Dutch consensus and consultation system (the "polder model"). A promise by the VNO-NCW employers' association to urge its members to support a moderate wage increase has seemingly warded off the crisis.

On 7 August 1999, the de Volkskrant newspaper reported that senior managers in large Dutch companies received an average 8% pay increase in 1998. This figure is more than 2.5 times as high as the average wage increase for employees covered by a collective agreement.

For years, the relatively high salaries earned by upper-level Dutch managers have been a bitter pill for the two largest Dutch union confederations - the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) - and they reacted vehemently to the latest news of high increases for top staff. They argue that it is becoming more and more difficult to convince union members of the advantages of moderate wage increases based on the Dutch "polder model" of consensus and consultation, and that in 2000, pressure from members will give rise to high wage demands. The union confederations moved to avoid that scenario by demanding that the main employers' association, VNO-NCW, urge its members to implement moderate salary increases for high-level employees. Should the VNO-NCW fail to comply with this demand, FNV has threatened to thwart consultations in the bipartite Labour Foundation (Stichting van de Arbeid) and tripartite Social and Economic Council (Sociaal Economische Raad, SER).

VNO-NCW claimed to understand the uproar about top managers' salaries, but emphasised the need for the general moderate wage increase policy, which it sees as necessary to help people who are not economically active back into work. According to VNO-NCW, exorbitant upper-level salaries result from a scarcity of highly qualified personnel. Furthermore, international salary levels play an important role in determining the salaries of top managers in the Netherlands. VNO-NCW holds that, if foreign pay scales are not taken into consideration, continuity in the corporate sector will be jeopardised. Initially, VNO-NCW viewed threats made by the FNV to sabotage the Dutch "polder model" as "blackmail". VNO-NCW chair NJJ van Kesteren said that "there is a lot more at stake than is justified by the uproar about the amount of salary increase for managers." During consultations with the unions on 19 August, VNO-NCW provided reassurance that it would entreat the Dutch business community to support more "responsible" increases in management salaries, and also for other senior positions not covered by collective agreements. The crisis thus appears to have been averted.

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