2001 Annual Review for the Netherlands
This record reviews 2001's main developments in industrial relations in the Netherlands.
The present government, consisting of the social democratic Labour Party (Partij van de Arbeid, PvdA), the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) and the social liberalDemocraten 66 (D66), was in 2001 in its last full year in office. General elections will be held in May 2002.
No significant changes took place in 2001 concerning the number of collective agreements and the level at which they were negotiated.
Pay agreements concluded in 2001 provided for an average pay increase of 4.5%. There was a range of increases between sectors, however, with the lowest in commercial services (3.3%) and the highest in services (5.3%) (according to figures from the Labour Inspectorate). The salaries of senior management and executives rose in many cases by at least 14%, attracting criticism not only from the government and trade unions but even from employers' representatives (NL0107137F).
Throughout 2001, both the social partners in the Labour Foundation (Stichting van de Arbeid, STAR) and he government urged wage moderation (NL0101123F). The government offered tax incentives to stimulate flexible payment systems and investment in occupational training, while the social partners agreed to focus on flexible forms of payment, on education, and on how to combine work and care responsibilities (NL0104129F). Union federations explicitly followed these recommendations and criticised the demand for a 6% pay increase made byFNV Bouw, the construction sector union affiliated to the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) (NL0103126N). With inflation in 2001 at 4.5%, the general wage increase for most employees may be seen as modest.
Several weeks after the attacks on the USA on 11 September 2001, Willem Vermeend, the Minister for Social Affairs and Employment, invited the social partners to a meeting (NL0110101N). The minister elaborated on several scenarios in order to clarify the potential consequences of the events for the Dutch economy, based on a number of fundamental economic variables. The most important conclusion drawn by the minister was that the need for wage moderation was now even more urgent than ever. While employers agreed, trade unions saw the appeal as somewhat premature.
The 36-hour working week remained the norm, although there were exceptions in 2001, such as a 38-hour week accepted by care sector unions (NL0104129F).
An evaluation of the 1996 Working Time Act took place in 2000 and the results were published in 2001 (NL0110102F). In the Act, which aimed to protect the health, safety and well-being of employees and promote the balance between working and private life, decision-taking over working time was, with certain conditions, delegated to the social partners at company level. The evaluation showed that employers mainly took the initiative in using the provisions of the Act which permit negotiations at company level. It found that, in many cases, trade unions opposed such initiatives as they believe their countervailing power is too low at company level. Nevertheless, in almost 60% of the enterprises surveyed, mainly companies with works councils, agreements were reached. The other 40% had either a collective agreement which already offered sufficient scope, or had fixed working hours or no need to change working time and rest breaks.
In general, the employers surveyed were more positive (87%) than the employee representatives (74%). The predominant impression is that works councils mainly'follow' in decision-making on working and rest hours. Reacting to the evaluation, the government voiced its concern about the partial failure of the decentralisation of negotiations and hoped to increase the openness and transparency of employer policy by providing better information and training to improve the knowledge of employees.
Although both government and social partners at central level are agreed that pay inequality should not increase, pay differentials remain as a result of factors such as the tight labour market, good company results and employers' focus on performance-based pay.
Job security is currently linked to the issue of'employability' and performance-related pay. Research by the Labour Inspectorate (Arbeidsinspectie) published in 2001 showed that of 125 collective agreements surveyed, 75 included provisions on flexible pay, mostly in the form of an end-of-year bonus. In the case of company collective agreements, 86% included such a provision, compared with 47% in the case of sectoral agreements. In respect of employability (issues related to training and educational leave), 97 of the 125 collective agreements surveyed included these kinds of provisions. Since 1998, the number of agreements relating to employability has hardly grown, with the exception of individual education development plans. Agreements on this latter issue have more than doubled (from 13 in 1998 to 28 in 2000).
From the summer of 2001, job security issues predominated as a result of a slowdown in growth and an increase in redundancies (NL0111103N).
Training and skills development
To compensate for moderate wage developments, the social partners focused strongly on employability and training opportunities in bargaining in 2001. It was therefore agreed that resources should be reserved for training, although it became apparent that only a small amount of money available in 2001 had actually been used.
One of the most striking features in Dutch industrial relations is the close involvement of the social partners in the social security system, in which they play an executive role. One of the pillars of this is the WAO system of benefits for disabled employees. The liberal coalition party, VVD, and employers' representatives judge this system to be too accommodating, while social democratic politicians and unions believe that it offers too little stimulus to encourage employees to re-enter the labour market and to employers to help them. This issue has been under debate for a number of years.
In 2001, the'Donner Committee' recommended a reform of the occupational disability insurance system, with the aim of decreasing the number of disability claimants by urging employees and employers to increase their efforts to reintegrate sick and disabled employees (NL0105131F). Central to the Committee's advice was a proposal to examine the degree of disability of each individual employee, with subsequent consequences for benefits and the assumed ability to work again; employees' protection against dismissal while ill would disappear if they do not cooperate in finding ways to return to work.
At the end of 2001, the Second Chamber of parliament was still awaiting advice on the matter from the social partners (and independent members) in the Social Economic Council (de Sociaal Economische Raad, SER). Although the Council had been studying the advice of the Donner Committee for months, it has not reached a consensus by the end of 2001 (a deal was subsequently reached in January 2002 -NL0201113F). In the meantime, an initiative by the VVD and the opposition Christian Democrats (Christen Democratisch AppÃ¨l, CDA to bring some of the Committee's proposals before parliament failed (NL0108139N).
In the context of a the tight labour market in 2001 and unfilled vacancies in the public sector, its terms of employment and recruitment potential were studied by the'Van Rijn Committee'. The Committee found a wage imbalance for higher positions in the public sector of between 11% and 17% in relation to the private sector, while at lower levels the disadvantage amounted to less than 5% (NL0104129F).
On 22 November 2001, a new Work and Care Act (NL9903128F) passed the First Chamber of parliament and came into force on 1 January 2002. The legislation brings together various existing and new leave provisions and seeks to facilitate the reconciliation of work and family responsibilities (NL0002182F). In addition to the amendment of existing regulations, such as those governing maternity and parental leave, new provisions cover:
- the right to adjust working hours if personal circumstances require;
- two days of paid paternity leave;
- four weeks' leave for couples who adopt a child; and
- two days of paid leave per year for urgent personal reasons, along with 10 days of paid leave a year to care for family members.
In the autumn, the government made proposals on the last component of the new law, long-term leave to care for seriously or terminally ill close relatives, with those taking the leave receiving 70% of the minimum wage.
Other legislative measures proposed or approved in 2001 included:
- transposition of the 1999EU Directive (1999/70/EC) on fixed-term work (EU9901147F) by amending the 1998 Act on Flexibility and Security (NL9901117F). As a result employees on fixed-term contracts have been given additional rights. Equal treatment with workers on open-ended employment contract is more clearly defined, while the Act now explicitly sets out the responsibility of employers to offer vacancies for open-ended positions internally to employees on fixed-term contracts;
- a proposed amendment to the 1996 Working Time Act to give employees the right to refuse to work on Sundays (unadopted at the end of the year); and
- legislation to prevent discrimination on grounds of age and disability, largely in response to the 2000EU Directive (2000/78/EC) establishing a general framework for equal treatment in employment and occupation (EU0102295F).
The organisation and role of the social partners
In 2001, the liberal VVD party, which is part of the governing coalition, raised the issue of trade union representativeness, pointing out the relatively small number of employees represented by unions (NL0103127F). Although union density is well below 30%, unions play an important role in advisory bodies to the government, in public employment organisations and in the administration of social security and training and education funds. Their representativeness was an issue at the beginning of 2001, while their role in the various'social funds' came under the spotlight at the end of the year (NL0112135F). The Lower House of parliament criticised the lack of transparency in fund expenditure and the level of the free'distributable reserves' of the social funds, totalling more than EUR 500 million. These sector-specific funds are jointly administered by employer and employee representatives, and are mainly intended for educational and employment-related projects. Of these funds, more than 10% finds its way back to the employer and union organisations, providing for information and information-related services .
In terms of the organisation of the social partners, recent reorganisations involving more than 300 redundancies within Allied Unions (FNV Bondgenoten)- one of the largest unions affiliated to FNV - demonstrated the difficult financial situation of trade unions (NL0112135F). New recruitment to many unions has slowed down and growing groups of employees such as women and ethnic minorities, and new sectors such as the information technology sector, are not being reached..
Employers' organisations did not join in the discussion inaugurated by the VVD on the representativeness of unions. There are a number of reasons for this. It is possible that this debate could widen to question employers' organisations' own representativeness. The Federation of Small and Medium-Sized Businesses (Midden en Klein Bedrijf, MKB), has openly admitted that not more than 35% of relevant businesses are members. Furthermore, employers' representatives appreciate their counterparts: together they have established a favourable negotiating climate and a high degree of industrial peace.
In 2001, most industrial action took place in the healthcare and education sector, and in the docks and railways. At Rotterdam docks, the employees of the largest container transhipment group,Europe Combined Terminals (ECT), took successful industrial action to retain their unique system of automatic wage compensation for price increases (NL0106134N). In the rail sector, the process of privatisation has resulted in ongoing problems with equipment and employees. A shortage of trains and technical problems have damaged the once punctual service, with some services being cancelled, and the incomplete process of privatisation is held to be responsible. In 2001, drivers, traffic controllers and other staff took strike action in support of their dissatisfaction with new duty rosters (NL0102125F) . Finally, after several attempts at mediation (NL0104128N), the new rosters were accepted, despite rejection by the largest union (NL0107136N).
Employees in both the healthcare and education sectors also expressed their dissatisfaction by means of strikes and other forms of action during 2001. The flourishing economic situation in 2001 and the many unfilled vacancies in the care sector (and in education) seemed to unions the best moment to try to secure better terms of employment. Accordingly, the healthcare unions demanded a 12.8% wage increase over a two-year period, with employers offering a maximum of 9% (NL0104129F). This triggered a series of'relay strikes', resulting in the cancellation of hundreds of operations. After a failed attempt by the Minister of Health to arbitrate, the parties came to an agreement for a period of 16 months, providing for a 7.4% pay rise (NL0106134N)
National Action Plan (NAP) for employment
The National Action Plans (NAPs) for employment, in response to the EU Employment Guidelines, are not a particularly controversial issue in the Netherlands. The social partners are closely involved in the drawing up and implementation of the Plans, although employers' representatives and unions may differ in their view on particular aspects. Employers' representatives, for instance, have criticised subsidised employment schemes, while unions see these as an important means to support efforts to enter the labour market. In general terms, the discussion in this area in the Netherlands was in 2001 focused on the tight labour market.
In the autumn of 2001, the first signs of a slowdown in economic growth became apparent and the first major redundancies were announced. In November 2001, 16,000 redundancies were recorded, although unemployment did not increase. In addition to temporary work agencies (NL0111102F), travel agencies and theKLM airline, the telecommunications groupKPN announced redundancies during the latter part of the year. As a result of declining activity, the temporary work agencies, travel agencies and KLM are trying to restructure, involving cuts in the number of employees. KPN is a special case, the company having built up huge debts through high investment, the purchase of expensive licences and takeovers. The initial 4,800 compulsory redundancies (10% of the total workforce) announced at KPN (NL0111103N) was reduced to 2,800 following consultation with the unions and the works council. All levels of staff will accept lower pay over a two-year period, with management accepting a 15% reduction, while lower-level staff will take a pay cut of between 2.5% and 10%.
In 2001, six years after the introduction of a law on works councils in the government sector, an evaluation was presented to the Second Chamber of parliament. A major topic was the so-called'primacy of politics', an issue which was decided in January 2000 by the Supreme Court (Hoge Raad). The Court's judgment restricted the influence of government sector works councils on all decisions linked to political issues (NL0004189F). In the evaluation presented in 2001, the government supported the verdict of the Supreme Court. On other subjects pertaining to works councils in the government sector, the government saw no reason for amendment of the law.
During 2001, a decision was made to extend the law on works councils to the judiciary. The extension was due tocome into force at the beginning of 2002.
New forms of work
In 1999, the social partners in the temporary agency sector negotiated an accord in conjunction with the new Flexibility and Security Act, which provides that temporary agency employees are entitled to a permanent position with their agency after three successive temporary contracts within three years (NL9906146N). During 2001, temporary agency employers became used to this change and their new responsibilities as employers. However, much remained to be arranged, including the issue of the relationship between specific collective agreements for the temporary agency work sector and the collective agreements applying to the user companies in which agency workers perform their work. In October 2001, the bipartite Labour Foundation agreed a set of recommendations on this issue, providing a more exact definition of when the pay and conditions set by temporary agency work sector agreements apply, and when they are superseded by those in the sectoral agreement covering the user company (NL0111102F). A further issue facing the temporary agency work sector in 2001 was a wave of redundancies in connection with the changing economic climate.
As mentioned above (see under'Legislative developments'), 2001 saw amendments to the Dutch legislation on fixed-term contracts.
Other relevant developments
Pension funds remained a prominent issue during the year and mid-2001 saw considerable activity on the issue of supplementary pension provision. The government proposed to make supplementary pension schemes, where they exist,'generally applicable' to all employees (ie no exclusions from membership would be permitted, except on a limited number of strictly specified grounds). In May, the advisory Social and Economic Council (SER) expressed a negative opinion on this approach. The context is that around 10% of Dutch workers - often women - have no supplementary pensions cover (NL0106135F).
High occupational pension fund yields once again prompted discussions on the allocation of reserves, with a number of cases of surpluses being funnelled back from their pension funds to large companies. Pensioners voiced the loudest opposition to returning fund surpluses to companies at a time when their pensions are lagging behind wage growth. The pensioners also complained about their lack of influence in the management of pension funds, which are traditionally jointly managed by the social partners (NL0108142F).
During the year, the issue of corporate social responsibility figured high on the agenda of Dutch social partners and politicians. In January, the SER published a unanimous recommendation on the issue. The subsequent debate mainly concerned the desirability of legislation compelling companies to report on their policies in areas such as the environment and human rights. The social partners rejected the idea of legislation for the time being (NL0108141F).
There are several issues which have become a permanent feature of Dutch industrial relations in recent years. One major example is the high number of disabled employees and the lack of success of reintegration programmes, linked to the permanent reorganisation of the social security system and the employment services system. Another recurrent issue is that of wage moderation, in the context of high inflation, a tight labour market (notwithstanding a series of recent redundancies) and major salary increases for management.
The major new development which took place during 2001 was the emergence of a debate on the Dutch industrial relations system. The famous'polder model'- the Netherlands' highly developed consultation structure, with a vital role for social partners in the decision-making process, combined with a willingness to make compromises, wage moderation and a high degree of labour peace - was under attack, both from the liberal parties in the government and from Dutch and foreign economists (NL0201113F). More specifically, the representativeness of unions and employers' organisations was questioned, especially at the central level. An interesting feature of the debate is that the dividing line runs not so much between employers and unions, but between the social partners and'outsiders'.