Mixed reaction among social partners to new government coalition

A new coalition government led by Prime Minister Mark Rutte took office in the Netherlands in October 2010. A major task for the new Cabinet is to identify areas for cutbacks to lower public debt. The proposed cutbacks for the next four-year period, totalling €18 billion, have evoked contrasting responses from the social partners. Business sector enthusiasm is matched by union anger, led by the Dutch Trade Union Federation (FNV) calling the suggested cutbacks ‘antisocial’.

A new Dutch government took up office in October 2010. The cabinet embodies right-wing, liberal and confessional values, with parliamentary support from the Party for Freedom (PVV) led by Geert Wilders. The cabinet is headed by Prime Minister Mark Rutte of the conservative-liberal People’s Party for Freedom and Democracy (VVD), with Maxime Verhagen of the centre-right Christian Democratic Appeal (CDA) serving as Deputy Prime Minister.

CDA lost 10 of its 31 seats in the last election, making the liberal VVD the biggest party with 31 seats, followed by the right-wing PPV with 24 seats. At 76 seats, the three parties hold a narrow majority in the Dutch House of Representatives. VVD and CDA have entered into a coalition agreement, with parliamentary support from PVV. Only in this manner was it possible for a majority (of just one vote) to be formed in the House of Representatives.

One of the new cabinet’s main tasks is to identify areas for cutbacks to lower public debt fuelled by the economic crisis. The cabinet hopes to achieve cutbacks of €18 billion over the next four years.

‘Freedom and responsibility’

Under the motto of ‘freedom and responsibility’, the cabinet faces the challenge of identifying cutbacks to lower public debt, which has been mounting during the economic crisis. So far, the cabinet has arrived at a figure of €18 billion (of a total of €29 billion) in cutbacks over the next four-year period. The cabinet intends to restore government finances and strengthen the economy. The following cost-cutting measures have been proposed within the scope of economic and socioeconomic policy.

  • Corporation tax, currently at 20%–25%, will be lowered by 1%.
  • Subsidies will be scrapped and the number of rules with which entrepreneurs have to deal will be reduced.
  • A single digital point of contact with government will be set up to cut bureaucracy and make regulators more responsive to entrepreneurs’ needs.
  • Self-employed workers will be given more opportunities to tender for public sector contracts.
  • Wages will be frozen in the public sector.
  • The retirement age will be raised to 66 from the current 65 years (for both men and women).
  • Three currently separate schemes (for people on benefits, for those instructed to work in a social placement and for young people with a disability) will be integrated into a single scheme, which will also be cut back on.
  • Only young people with a full, long-term occupational disability will retain the right to benefits under the Disability Insurance (Young Disabled Persons) Act (WAJONG). The situation of young people now receiving such benefits will be re-examined. This measure is intended to achieve cutbacks in WAJONG and reintegration schemes.

The proposed socioeconomic measures have evoked contrasting responses from the social partners. Business sector enthusiasm is matched by anger from employee representatives.

Employers respond favourably

Dutch employers are enthusiastic about the new cabinet’s plans. While the plans focus on achieving cutbacks, other matters will affect employers too. Employer associations including the Confederation of Netherlands Industry and Employers (VNO-NCW), the Dutch Federation of Small and Medium-Sized Enterprises (MKB-Nederland), the Dutch Confederation for Agriculture and Horticulture (LTO-Nederland) and the Union of Independent Entrepreneurs (PZO) are pleased that the choices made by the new cabinet will benefit the business community.

In addition to the promise of a strong Ministry of Economic Affairs, the associations representing large and medium-sized enterprises feel that the cabinet is working on a modern business policy. Self-employed workers united in PZO also believe their dreams will now become reality: a reduced administrative burden, access to government tenders for small companies and the establishment of a single counter for entrepreneurs. A definition will also be formulated for the self-employed person (known in the Netherlands as a ZZP’er); this is important for such individuals to gain access to employee or employer provisions (NL1004019I).

One of the cornerstones of modern business policy is to lower the administrative burden. The coalition agreement envisages reducing ‘red tape’ by 10% in 2012 and by 5% in the years thereafter.

The cabinet wants to make it possible for independent entrepreneurs to compete for assignments by lowering the requisite turnover threshold and no longer requiring businesses to join forces in order to compete.

The Rutte cabinet also plans to cut around €500 million in subsidies to the business community over the next four years. By way of compensation, the cabinet plans to introduce wage subsidies to the tune of €200 million to stimulate research. Corporation tax will be lowered by 1%. As a result, the business community will be €400 million better off until 2015. MKB-Nederland finds these measures ‘very encouraging’.

Employees describe the policy as ‘antisocial’

The Dutch Trade Union Federation (FNV), the biggest in the Netherlands, responded swiftly to the new cabinet’s plans. Its commentary can be summed up in one word, ‘antisocial’; higher wage earners will be spared while lower and middle income groups will have to foot the bill for the cutbacks.

According to FNV, the envisaged cutbacks of €18 billion will damage the economy more than contribute towards recovery. FNV is extremely concerned about growing dissent in society, which it fears will only be amplified by the arrival of the Rutte government. The most vulnerable groups will be hit the hardest. Benefits will be cut while sheltered employment opportunities and provisions under WAJONG are trimmed. Benefit levels will be lowered and the salaries of civil servants frozen. Heavy childcare cuts are also clearly in the pipeline. Parents will have to pay 45% of the costs as opposed to the current level of 30%.

As far as the retirement age is concerned, Prime Minister Rutte asserts that proposals put forward by the social partners are very important, and that the cabinet wants to follow these proposals. Nonetheless, the coalition agreement is unclear in this respect and does not clarify when the retirement age will be raised to 66 years. The government has also failed to indicate when financial reserves will be set aside for retirement benefits in order to keep step with salary rises.

Commentary

For both social partners, a partly new cabinet with a right-wing majority has taken over. It remains to be seen whether this cabinet will assert itself by pressing its ideas through, or by creating broad support and dialogue.

Marianne Grünell, University of Amsterdam, HSI

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