Employers seek to restructure collective agreements

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Autumn 1998 has seen a new development in Dutch industrial relations, with employers from other sectors - such as banking and healthcare - seeking to follow the lead of some employers in the industrial sector, by calling for the abolition of sector-level agreements in favour of collective agreements at company level. The reactions of trade unions have been varied

Many of the collective agreements concluded in autumn 1998 in the Netherlands resulted in relatively high wage increases, averaging around 4%. In this context, for the first time, a number of employers in other sectors are seeking to follow some employers in the industrial sector, by pushing for the abolition of sector-level agreements in favour of collective agreements at company level. The employers' preference for decentralisation is motivated by several factors and has provoked varying reactions from the trade unions concerned. Below, we look at the examples of banking and the healthcare sector.

Restructuring the banking collective agreement

If representatives of the major banks have their way, the current collective agreement for the banking sector will be split into two separate agreements: one for the five major banks and one for the 70 smaller banks. The major banks are also seeking to consolidate their links with the insurance sector in the short term by setting up a single collective agreement for financial conglomerates. The group, made up of Rabobank, ING, ABN Amro, Fortis Amev and SNS Reaal, views current sector-level agreements as both restrictive and outdated and wishes to follow major industrial firms like Philips, Hoogovens, Shell and Akzo Nobel in concluding individual company-level agreements. The current agreement (collectieve arbeidsovereenkomst, CAO) in banking dictates standard provisions for all employees with an annual salary of up to NLG 200,000. The regulations governing working hours, pay, allowances, holidays and training apply to nearly all 114,000 employees at 75 banks operating in the Netherlands.

The parties concerned have attempted to make the banking agreement less restrictive in recent years. A successful but laborious effort to achieve that end was the implementation of the 36-hour working week on individual company basis. ABN Amro favoured a 40-hour working week for the greater proportion of its employees, whereas Rabobank opted for a company-wide 36-hour policy.

The three largest banks are now seeking to conclude individual collective agreements reflecting their own policies. Rabobank, a cooperative that cannot offer its employees stocks or shares, is aiming to use training and care leave as an incentive for new recruits. ABN Amro is more inclined towards the "Anglo-American" model of performance-based bonuses, while ING plans to implement a stock option plan in a new collective agreement.

In addition to weighing up the interests of the five major banks, the Association of Banking Sector Employers (Werkgeversvereniging voor het bankbedrijf, WGVB_)_, must also take into account the wishes of the 70 smaller banks that would prefer to retain the current sector-level agreement. Often branch offices of foreign banks, they lack the expertise and human resources needed to conclude individual collective agreements. The diverse nature of the banks is a source of frustration for negotiators, WGVB and trade unions alike. The unions recognise that a sector-level agreement is now beyond their grasp and have embraced decentralisation, which, if nothing else, will allow them to direct their efforts towards an objective their members can identify with. The unions have decided to support the major banks' proposal for two separate collective agreements. Should the proposal fail, then the five major banks will push for agreements at company level.

Restructuring the care sector agreement

Employers in the care sector are also calling for an overhaul of collective agreements. Having evaluated the agreements reached in late 1998 (NL9810103F), hospital administrators indicated their agenda for the next round of negotiations. They are seeking to abolish the wide-ranging care sector collective agreement, which covers not only hospitals but also nursing homes, mental healthcare and care for disabled people. The hospitals employ 170,000 of the sector's 380,000 employees.

The hospital administrators have stressed the unique nature of hospitals in arguing the need for tailor-made policies and regulations. They feel that the care sector agreement, which is concluded by the Dutch Federation of Employers in the Healthcare Sector (Nederlandse Zorgfederatie, NZF), inadequately reflects their position. Allegations in the press have hinted at a hidden agenda behind this official line, namely that hospital administrators are seeking additional funds but know that the government's policy is oriented more towards the "caring" side of health provision, rather than the "curing" side. The hospitals, in other words, are far from top budgetary priority. Hampered by a restricted budget, the hospital administrators are feeling the pull of the market. The privatisation of social security (NL9807188F) offers them an attractive commercial opportunity - to provide rapid aid to sick employees is an expanding market to which hospitals are more than ready to cater. Furthermore, a financially attractive collective agreement will help them to recruit much needed staff in the sector's tight labour market.

Unlike the banking sector, neither the employers' coordinating body nor the trade unions are receptive to the hospital administrators' plans. In fact they are opposed outright, fearing a looming wave of wage increases as one part of the sector outbids the other to attract new staff. Furthermore, they fear the disintegration of other benefits: the sector's collective provisions such as individual health insurance, pension schemes and several other social security arrangements could come under fire if the employers' plans and wishes become unclear. Two employees in different care sectors would then receive different benefits despite making the same contribution to the collective pension fund. The usual selling points for change - increased flexibility, decentralisation and tailor-made arrangements - are not being well received as negotiators view them as the potential cause of serious disruption or even chaos.

Commentary

These examples clearly illustrate the drive by some employers to make radical changes in the current collective bargaining structure. Although the consequences of such changes are hard to gauge, it is certain that they will be far-reaching and will necessitate strong and forward-thinking opposition from those who disagree with them. For example, an initiative by the Liberal Party (VVD) to abolish the system whereby collective agreements are made generally applicable by ministerial order - a long-held aspiration of employers - was adopted by the previous cabinet as official government policy, but was successfully blocked by the previous Minister of Social Affairs. The initiative was influenced by the employers' desire for more competitive pay costs.

A similar development is currently taking place in relation to the breadth of application of collective agreements. Whether or not the message is packaged in contemporary terms such as "flexibility and tailor-made arrangements", the balance between supply and demand in sectoral labour markets is the decisive factor for individual employers. However, sectoral negotiators and policy-makers on both sides of industry look beyond present labour market conditions. Their involvement across the entire sector leads them to reject mutual competition based solely on wage costs. They stress the present cohesion between primary and secondary employment conditions. This does not imply that change is impossible, as the banking sector example illustrates, but it does demonstrate a fundamental truth about Dutch labour relations in general and the care sector in particular - that is, the pay package is inextricably linked to other collectively agreed provisions and the employers' joint responsibility for their economic sector. (Marianne Grünell, HSI)