Privatisation of Dutch Sickness Benefits Act said to conflict with European Social Charter

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The privatisation of the Sickness Benefits Act in the Netherlands is in conflict with the European Social Charter. This was the conclusion reached in July 1998 by the Committee of Independent Experts of the Council of Europe responsible for ensuring compliance with the Charter. The FNV trade union confederation has proposed that the Dutch parliament investigate the matter further.

In July 1998, the Committee of Independent Experts of the Council of Europe concluded that the privatisation of the Sickness Benefits Act (Ziektewet, ZW) in the Netherlands conflicted with the provisions of the European Social Charter (NL9804171F). The Act has been "privatised" in that there has been a new allocation of responsibilities and risks between the government, employers and employees, and the Act's financing and administration has been transferred from the public to the private sector. Most recently, since 1996, employers must pay the salaries of employees who are sick for a year, rather than the previous two or six weeks (NL9710138F).

Once every four years, the Committee of Independent Experts issues a report regarding whether and to what extent each Council of Europe member state has complied with the European Social Charter in its social security legislation. The Committee feels that the reasons given for abolishing the previous Sickness Benefits Act by the Dutch cabinet, namely the need to reduce financial burdens and illness-related absence, are insufficient.

The Committee considers the privatisation of the Sickness Benefits Act fundamentally to violate Article 12, Paragraph 3 of the European Social Charter, which commits participating countries to "endeavour to raise progressively the system of social security to a higher level". Abolishing the collective Sickness Benefits Act, the Committee feels, can in no way be interpreted as doing this. Now that employers bear the risks for their employees' health for the first year, the very "foundation and spirit" of the Dutch system has been called into question. Every social security system should be based on collective solidarity, and unilaterally burdening individual companies with the responsibility contravenes this principle. This also does little to guarantee protection against discrimination for less healthy employees. Moreover, the Committee considers the exclusion of the social partners from the supervision of the administration of the Sickness Benefits Act to be contrary to both the letter and spirit of the Charter.

The Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV) views the ruling as sufficient reason to request a parliamentary inquiry, particularly as it follows a negative assessment by the International Labour Organisation (ILO) in spring 1998 about the amendments to the Sickness Benefits Act. The small left-wing party, Groenlinks, supports this initiative, but the large parties do not. The Labour Party (PvdA) deems the inquiry to be unnecessary since the Government has already promised the Second Chamber that it will conduct assessments of the privatisation. The opposition Christian Democrats (CDA) consider a parliamentary inquiry too severe. Nevertheless, a majority in the Second Chamber is in favour of having an independent organisation investigate the effects of the privatisation of the Sickness Benefits Act.

The employers' organisation, VNO/NCW, maintains that the FNV's request has come too late. It points to the fact that even the employee representatives on the Social and Economic Council (Sociaal Economische Raad, SER) agreed with the Council's advice to privatise the Sickness Benefits Act. The Ministry of Social Affairs and Employment maintains that while the Charter does establish a principle of solidarity, it does not specify how this should be achieved. A spokesperson for the Ministry argued that solidarity was guaranteed because the level of benefit payments is established in the Sickness Benefits Act.