Social partners welcome coalition government’s agreement

The new government presented its coalition agreement at the beginning of February 2007. The agreement concluded by the Christian Democratic Alliance, the Labour Party and the Christian Union has received a positive response from the social partners. Employer organisations are pleased with the additional resources for stimulating business, while trade unions are enthusiastic about the attention given to the creation of new jobs.

The new three-party coalition government presented its coalition agreement at the beginning of February 2007. For the fourth consecutive term, the coalition includes the Christian Democratic Alliance (Christen Democratisch Appèl, CDA). Both the Labour Party (Partij van de Arbeid, PvdA) and the Christian Union (ChristenUnie, CU) are new. With 41 seats in the Dutch House of Representatives, the CDA represents the biggest party, followed by the PvdA with 33 seats, and the CU with six seats. Jan Peter Balkenende of the CDA will once again serve as Prime Minister (NL0612019I).

Continuity and change

The coalition agreement reflects previous policies and innovations. In terms of continuity, it is important for industrial relations that the relief granted to the business sector so far is continued. For example, as previously planned, corporation tax will be lowered, the administrative financial burden will continue to diminish, and work permits will be granted more swiftly. Employees will continue operating under the current system which regulates occupational disability, healthcare and the life-cycle leave arrangement. This system is set to be expanded further. The innovation platform, initiated by Prime Minister Balkenende, will continue to exist, and will now focus primarily on the healthcare sector, and also on energy and water management.

The coalition agreement is innovative in that it supports additional expenditure on education, healthcare, urban renewal and childcare. More money will be channelled into environmental policy, and environmental targets will also become more stringent. Notably, a decision has been taken not to build any further nuclear power stations, and to resume subsidisation of sustainable energy.

The CDA originally wished to relax certain aspects of the dismissal law, effectively making it easier for employers to lay off employees; this proposal, however, was rejected by the PvdA, and thus at present no changes will be made to this law.

The plan to impose extra state pension contributions on employees who take early retirement, whether voluntarily or not, remains controversial. Another aspect of the agreement that has come as a surprise, but is nonetheless welcome, is that the cabinet plans to elaborate on the coalition agreement in consultation with the social sectors involved.

Social partners mainly positive

Employer organisations including the Confederation of Netherlands Industry and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW) and the Dutch Federation of Small and Medium-sized Enterprises (Midden- en Kleinbedrijf Nederland, MKB-Nederland), as well as both the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) overall responded positively to the agreement.

Employer reaction

VNO-NCW and MKB-Nederland believe the agreement offers hope for stability in terms of social and political relations. Historical achievements have not been bargained away. The plans to further strengthen the economy and business climate have been welcomed. In addition, employer organisations support urban renewal measures, which they believe will bring new opportunities for the construction industry and the retail trade sector. There is also support for the proposed investments in education.

The organisations are less enthusiastic about the relaxation of the Work and Income Act (Wet Inkomen en Arbeid, WIA) (NL0702019I); the fact that the cut off point for job-related medical reassessments will be 45 years of age and not 50 years is seen as a negative aspect. Furthermore, the low level of investment in infrastructure is also regarded as an adverse outcome.

Both employer organisations are keen to cooperate in reaching agreements geared towards creating more employment opportunities, as agreed last year within the Social and Economic Council (Sociaal-Economische Raad, SER). However, this should be paired with the relaxation of the overly bureaucratic and, for companies, costly dismissal law. This precondition is believed to be necessary if agreement is to be reached on the creation of new jobs. According to the employer confederation VNO-NCW, the amendment of the dismissal law and agreements on wage development should be taken up in a social agreement on extra employment opportunities.

Trade union reaction

From the trade union side, FNV is pleased with the additional investments in the environment, education and childcare. The federation considers as a positive step the proposal to consult with the parties involved in the interests of formulating policy. In light of this, the consultation climate could once again improve because wide societal support is being sought to establish policies. FNV has responded positively to the proposal to meet with employers and reach agreement on the creation of new jobs. However, FNV is critical of plans concerning the Work and Income Act, where the ‘sting’ (stringent medical examination standards) has yet to be removed. FNV is also less enthusiastic about cutbacks affecting civil servants, and the insufficient attention given to executive salaries.

The plans surrounding extra state pension contributions for employees who take early retirement have been emphatically rejected since they are not deemed just. It seems that individuals with higher qualifications will be rewarded in this case, since they usually start working at a later age and can work beyond 65 years of age because of the nature of their professions. Conversely, less-educated individuals, who start working at a younger age, but wish to or indeed have to stop working before reaching the age of 65 years, are being penalised with an extra tax assessment. According to FNV, this cannot be the intention of a coalition agreement.

Positive outlook for the future

Even though previous coalitions involving the CDA have failed, there is a renewed hope in the Dutch political sphere and among the general population. It is thought that perhaps with the social liberal party (Democraten 66, D66) out of the picture, this three-party coalition, who have so far demonstrated an ability to work positively and effectively together, could bring stability to a particularly unfavourable social and economic situation.

Marianne Grünell, Hugo Sinzheimer Institute (HSI)