Occupational pensions are prominent issue in bargaining

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As the Netherlands' 2003 collective bargaining gets under way, the issue of occupational pensions has been prominent in negotiations, notably in the light engineering industry and at the Philips electronics group.

On 25 March 2003, employers and trade unions reached a new collective agreement for the light engineering industry (kleinmetaal). The agreement, which will run for 25 months, covers 380,000 employees, mainly in small-scale companies in the light engineering industry and technology sector. The agreement provides for an unconsolidated one-off payment worth 1.75% of pay on 1 September 2003. A consolidated 'structural' increase of 2.5% will follow on 1 February 2004 and a further structural increase of 2.2% will take effect on 1 February 2005. Agreement was also reached concerning education and employability, better pay for young workers and students, and leave arrangements.

The prime motivation for the unions to agree to a one-off payment in 2003 was that, failing this, employees' occupational pension contributions would have gone up significantly. The negotiator for the Allied Unions (FNV Bondgenoten), the largest union involved in the negotiations, sees this agreement as a possible example for many other sectors in which pension funds have experienced financial difficulties as a result of ailing share prices (NL0210102F).

In negotiations for a new agreement at the Philips electrical group, the subject of occupational pensions has also been prominent. Amongst other proposals, the group is proposing to raise the retirement age for new employees from 62.5 to 65 years. It would also like to end the automatic indexing of pension payments in line with the rate of inflation. Management's third and by far most radical proposal concerning pensions involves replacing the final-salary scheme (whereby the pension is calculated on the employee's pay at the time of retirement) with an average-salary scheme (whereby the pension is calculated on the employee's average pay over their career) for the 12,000 employees who still fall under the former scheme. A total of 16,000 Philips employees already fall under the average-salary scheme.

Variable pay is another matter of importance in the negotiations at Philips. The unions expect negotiations on this point to be difficult. A spokesperson for the Union of Philips Senior Management (Vereniging voor Hoger Philips Personeel, VHPP) believes that the current variable pay system – introduced as an experiment two years ago – is turning out to be 'discriminatory'. Especially older employees, part-time workers and partially disabled people are more likely to be given a negative assessment in the variable-pay setting process than other employees.