Background for Netherlands

From 2012 to 2022, gross domestic product (GDP) per capita in the Netherlands increased by 14.24%, compared with a 15.29% increase in average GDP across the EU27. In 2022, total unemployment in the Netherlands remained significantly below the EU average, at 3.5%, and employment rates for both men and women were also below the EU averages. The largest difference was in the youth unemployment rate, at only 7.6%, compared with 14.5% in the EU27. The employment rate in the Netherlands increased between 2012 and 2022 by 3.2 percentage points, while youth employment increased by 2.6 percentage points.

While unemployment has declined (3.5% in 2022) to below the unemployment level observed during the economic crisis, the Dutch labour market is not without challenges (de Volkskrant, 2018). Characterised by high percentages of flexible contracts and permanent contracts, the labour market is said to lack dynamism.

An added feature of the labour market is the fact that certain sectors in the Netherlands are experiencing or heading towards a labour shortage. These include the health and care sectors, the transport sector and the education sector.

Employment and industrial relations are regulated mainly by law, except industrial action (which is regulated only by case law). Major legislative acts are:

• Book 7 of the Civil Code (regulating individual employment contracts) (in force since 1992)

• the Act on Collective Agreements (in force since 1927)

• the Act on the Extension of Collective Agreements (in force since 1937)

• the Working Hours Act (amended in 2007)

• the Works Council Act (in force since 1950, but in its present form essentially since 1979)

EU directives (for instance, on equal treatment, collective redundancies or the transfer of undertakings) are implemented through acts.

In 2018, a law regarding how to balance the labour market was negotiated and consulted on. This law, the Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, WAB), contains a range of small measures to balance the number of permanent and temporary contracts and to ultimately make the Dutch labour market more dynamic. In January 2020, the various regulations and laws under the WAB began to be implemented. In August 2022, the EU Directive on Transparent and Predictable Working Conditions (Directive (EU) 2019/1152) was implemented. This directive sets out the minimum requirements employers must meet in providing terms and conditions of employment.

Regarding individual and collective employment issues, the legal environment has been fairly stable, with one exception: the 1996 Law on Flexibility and Security. There is no formal legislation on representation and the social partners in sectors. Sectoral social partners exist and establish bipartite collective labour agreements. For these to apply to a whole sector, the Ministry of Social Affairs and Employment (Ministerie van Sociale Zaken en Werkgelegenheid) examines agreements and pronounces them generally binding for the whole sector. With regard to national-level social dialogue, the national cross-sectoral social partners can establish collective agreements through the tripartite body, the Social and Economic Council (Sociaal Economische Raad, SER). This body and its role were established through the Social and Economic Council Act.

Since the Second World War, the national level has become very important in Dutch industrial relations, with the establishment of the tripartite SER and the bipartite Labour Foundation (Stichting van de Arbeid, STVDA).

Since 1982 (when the Wassenaar Agreement was reached between the government and the social partners, in which the employers agreed to working time reductions in exchange for wage moderation by the unions), industrial relations in the Netherlands have generally been fairly stable.

The COVID-19 pandemic affected the labour market in several ways. On the supply side, during the pandemic some workers took early retirement, became permanently unfit for work or even passed away. In addition, due to the lockdowns, many workers in the affected sectors (such as hospitality and culture, sports and recreation) went to work in other sectors. Some of them did not return to their pre-pandemic sector. This may be because their new job offered better working conditions or terms and conditions. Furthermore, the high level of absenteeism (partly due to the after-effects of the COVID-19 pandemic and the high workload due to labour shortages) has also meant a lower supply of labour. On the demand side, several sectors were catching up, resulting in a (temporary) need for more staff. Trade unions responded to this by calling for wage increases right after the pandemic, in particular in sectors with labour shortages.

Unions and employers have a strong presence at national level. The dominant level of collective bargaining is sectoral level. Union presence at company level is (with some exceptions) rather weak.

As in most EU countries, union density based on active employees has decreased in the Netherlands, to around 13%. Collective bargaining coverage remains high (around 73%), and has become somewhat more decentralised, especially with regard to working time issues. Strike levels remain low by international standards.