Social dialogue & conflict resolution mechanisms

Workers involved= workers involved in strikes and lock outs, per 1,000 workers
Volume= working days lost because of strikes and lock outs, per 1,000 workers.
Source: Jelle Visser & Anton Hemerijck, A Dutch miracle, Amsterdam University Press, 1997.

2. Mechanisms of conflict resolution

The level of industrial conflict can hardly be explained by the existence of sophisticated conflict resolution mechanisms. In fact, in the Netherlands there is no legislation on industrial action or on labour dispute settlement. In general civil courts have to decide whether or not a strike (and/or a lock out) will be permitted. Since a ruling of the Supreme Court in 1986 such a decision has to be based upon the European Social Charter. This Charter was ratified by the Netherlands in 1980. On the basis of the articles 6 and 31 of the ESC there can be no limitations to the right to strike, with two exceptions which were formulated by the Supreme Court:

• in the first place the parties involved have to respect some ‘rules of the game’ which means that there must have been serious endeavors to negotiate;

• in the second place there can be a ‘test of reason’ which means that there must be a balance between means and objectives in such a sense that unnecessary damage should be avoided.

Also there is no legal system for mediation and arbitration in the private sector. Incidentally there has been some conciliation on a voluntary basis.

The right to strike is not limited to the private sector; the employees in the public sector (with a few exceptions) also have the right to strike. In the public sector exists a formal committee for Advice and Arbitration. Arbitration is only possible at unanimous request. This has never been put into practice because government refused to accept proposals for agreement as binding.

The fact that industrial action in the Netherlands has always been at a low level might seem strange if one takes into account that since 1945 almost without interruption wage moderation has been a central issue in Dutch social and economic policy. Since there are no exceptional mechanisms with respect to conflict resolution this must have to do with other mechanisms. This relates to conflict prevention as one of the main features of the Dutch IR system, more recently known as the so-called ‘poldermodel’.

This ‘poldermodel’ can be described as a mechanism to accomplish in times of recession via negotiations by social partners at a national level a reduction of the wage share in labour costs by wage moderation. At first during the post war period wage coordination by government resulted into a wage level in 1960 which was about 20 to 25% lower than the average wage level in Germany and Belgium and also into a significant employment increase. The period of voluntary wage moderation by the social partners since 1982 has led to similar results in the nineties.

Essential for this model is that central bargaining makes it possible to moderate wages to the extent that it increases investment and employment. This creates win/win situations for both: employers can realize greater labour productivity and more profitability, for the workers short term second best solutions can be best solutions for the longer term in the sense of a greater net income and more job security. In exchange the unions will be reluctant to use industrial action in the bargaining process.

4. Where are the snakes?

The problem in such a model is that it suffers from its own success. Increasing employment will be accompanied with decreasing labour supply. In such circumstances it is difficult for both parties to abstain form free rider behavior: unions can be inclined to bargain higher wage increase starting with the branches that profit most of economic growth; employers in growing industry are often willing to pay more in order to attract necessary staff. It will take some time to acquire a common sense of urgency again in order to restart the moderation cycle.