No agreement yet on new coalition government

Download article in original language : NL0305101NNL.DOC

Following the breakdown of discussions aimed at the formation of a centre-left coalition government in April 2003, the largest party in the Dutch parliament, the Christian Democrats (CDA), is now trying to put together a centre-right government. The trade unions had been extremely unhappy about a public finances agreement reached during the abortive talks on a centre-left coalition, so they are likely to be even less enthusiastic about the proposals of any centre-right coalition. Employers' representatives, by contrast, are in favour of the formation of a centre-right government.

Following the general elections held in January 2003, coalition discussions between the two largest parties seemed the most logical step (NL0302101N). However, in April, following two and a half months of talks, coalition negotiations between the the Christian Democratic Appeal (Christen Democratisch Appèl, CDA), with 44 seats in the Lower House of parliament, and the social democratic Labour Party (Partij van de Arbeid, PvdA), with 42 seats, broke down. Although the issue had proved a serious stumbling block in the talks, agreement in principle was reached on a public cost-cutting package worth some EUR 20 million. However, after the Central Planning Office (Centraal Planbureau, CPB) calculated that the proposed cuts and increased tax burden would boost both unemployment and inflation, and the CDA began pushing for even greater cuts, the negotiations collapsed.

The other political parties and the social partners were angered by the course of events, referring to the situation as 'embarrassing' and 'bizarre', and accusing the parties concerned and the two politicians responsible for investigating whether the proposed coalition government could succeed of 'amateurism'. In the Lower House, it was proposed that the leader of the CDA should nonetheless draft a coalition agreement for a government including the PvdA. In the end, however, a move towards assessing the possibility of a centre-right government, including the CDA and other parties, emerged. A new government involving the CDA and the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD), which has 28 seats, now appears likely, despite the fact that together the two parties do not hold a majority in the Lower House. Consequently, discussions are currently under way with the social liberal Democraten 66 (D66), which has six seats, and the smaller christian parties. The right-wing populist List Pim Fortuyn (Lijst Pim Fortuyn, LPF), having lost 18 of its 26 seats in the 2003 elections, is being left on the sidelines for the moment.

The social partners hope that a new coalition government will succeed in creating more economic stability in the Netherlands, leading to a new dynamism, and that the impending recession can as far as possible be averted through government policy. The largest employers’ association, the Confederation of Netherlands Industry and Employers (Vereniging Nederlandse Ondernemers-Nederlands Christelijk Werkgeversverbond, VNO-NCW), believes that, following the derailed hopes of a CDA/PvdA formation, a coalition between the CDA and VVD should take shape as soon as possible. The chair of the Dutch Federation of Small and Medium-sized Enterprises (Midden- en KleinBedrijf-Nederland, MKB-Nederland), Hans de Boer, has expressed a preference for a coalition that again includes the LPF alongside the CDA and VVD.

Trade unions take a markedly different view. The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) believes that the failure of the CDA/PvdA coalition talks should lead to early elections. The Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) still hopes that a CDA/PvdA combination will emerge, supported by a third party. Both trade union federations had serious problems with the financial agreement reached by the CDA and PvdA. One proposal related to de-linking increases in unemployment benefits from wage trends in the private sector, and instead linking them to civil servant wage rises, which should not be allowed to exceed inflation. A further assumption in the agreement that wage increases in general should not exceed inflation over the forthcoming four-year period, coupled with increasing the tax burden and cutting civil servants, also found no support at all. Wage moderation is often supported by the trade unions, but they believe that such an approach should be balanced by social and structural investments.