Unions claim higher basic wages while employers offer performance-related pay

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The trade union in the Netherlands' trend-setting metalworking industry is demanding a 4.75% increase in pay for 1998. By contrast, the VNO-NCW employers' organisation wants to eliminate pay scales based on automatic wage increases and would rather pay variable wages based on individual performance.

Industriebond FNV, the largest trade union in the Netherlands' trend-setting large-scale metalworking and electrical industry (grootmetaal) is demanding a 4.75% increase in pay for 1998 - 3.75% as a basic increase and 1% as an end-of-year bonus. The central employers' organisation, VNO-NCW, is adopting the opposite standpoint: it wants to eliminate pay scales based on automatic wage increases and would rather pay variable wages based on individual performance, willingness for training and availability.

In order to create room for variable pay, employers want to reduce pay awarded under the terms of collective agreements. They feel that the variable component could comprise 15% to 20% of annual pay. In 1997, an experiment with "function contracts" (functiecontracten) was conducted in a few large companies for a limited group of managers. Other companies are willing to follow suit in 1998. In addition to introducing payment based on performance, the "function contract" also abandons the notion of formal working hours. However, payment on the basis of performance can have profound consequences for the position of older employees. In the employers' view, employees should continue working until they reach 65 years of age, through demotion (and therefore on lower pay) if necessary.

The relatively high pay claims (for the Netherlands) demanded by Industriebond FNV are based on the improved financial position in the metal and electrical industry. Even with a wage increase of 3%, the proportion spent on labour costs in these sectors would decline from 79% to less than 76% in 1998. A 3% claim is also within the guideline for 1998 set by the Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV), which was recently raised to 3.75%. In addition, the FNV wants to use a 1% wage increase for training and career counselling, both of which have recently been agreed with employers in view of increasing employee flexibility (NL9711148N). Reducing workloads and stress should also be important issues in discussions on labour conditions.

Industriebond FNV views the proposed 1% end-of-year bonus as a variable component of pay. Employers and employees have reached an agreement within the Labour Foundation (Stichting van de Arbeid, STAR) to encourage variable pay components in new collective agreements. It remains to be seen in the actual bargaining whether employers regard a collective end-of-year bonus as a "variable pay component".