Debate over policy on older workers

New legislation banning age discrimination came into force in the Netherlands in May 2004. The law could help achieve the government's aim of increasing labour market participation among older workers, but there have been some reports of companies responding by abolishing protective measures for older workers. Employers' organisations and trade unions support the government's policy of enabling people to continue working for longer, but in practice employers and unions still often seem to act in a way that contradicts this objective (eg through introducing early retirement or dismissing older workers).

On 1 May 2004, a new law came into force prohibiting discrimination in the labour market on the grounds of age (NL0308103T).

For some years, the Dutch government has stressed the need for a higher level of labour market participation amongst older people (NL9708125F and NL9912175F). Since 2000, there has been a slight rise in labour market participation among people aged 55 and above, by about 1% a year. However, their participation rate was still only 39% in 2003, far below the EU average. While the main stated aim of the new age discrimination law is not to stimulate labour market participation amongst older workers, it may nonetheless play a role in this context. For example, the legislation stipulates that termination of contract on grounds of age is permitted only after a certain retirement age - currently 65 and older. If employees are forced to depart at a lower retirement age, this must be objectively justified. Although a transitional arrangement applies until 2006, this rule is out of line with the customary 'bandwidth' of 55 to 65 years of age within which Dutch employees stop working.

In the months around the introduction of the new age discrimination legislation, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) has reported - based on telephone enquiries from members - that protective measures for older employees are being scrapped by some employers. It is claimed that employers are no longer reluctant to require older employees to work in the evening, at night or at the weekend, and that some want provisions awarding extra days off to older employees to be deleted from new collective agreements. In a recent memo, the Minister of Social Affairs informed the Lower House of parliament that he does not consider scrapping special arrangements for older workers as misusing the new law. The Equal Treatment Commission (Commissie Gelijke Behandeling, CGB) is responsible for ruling on whether factors such as health or a reduced workload are relevant in such cases.

Government policy

Government policy on older workers, reinforced further in a plan issued in April 2004, has over the past four years largely consisted of financial incentives for employers and employees in order to stimulate older people to continue working for longer. From 2004 onwards, employers have received subsidies if employees aged 55 and older continue working for longer and, in recent years, various incentives have been introduced for employees to continue working rather than becoming unemployed. In recent years, unemployment and occupational disability benefits have been cut, including for people aged 57 and older. Furthermore, since March 2004 unemployed people aged 57.5 and older are required by law actively to seek employment if they want to receive benefit. The government had planned that, in addition to receiving subsidies for employing older workers, companies should be fined if they dismiss older employees. However, the government reworked this proposal towards the end of 2003, opting instead at reduced unemployment and occupational disability insurance premiums for employers taking on or retaining older employees. While employers' representatives are enthusiastic about the new measures, trade unions are disappointed because they feel that the burden will fall most heavily on employees.

Treatment of older workers in practice

Within advisory bodies such as the tripartite Social and Economic Council (Sociaal Economische Raad, SER) and the bipartite Labour Foundation (Stichting van de Arbeid, STAR), employer and employee representatives have since the mid-1990s shared the view that the level of participation in the labour market amongst older employees should be increased. For example, the General Industrial Employers' Association (Algemene Werkgeversvereniging, AWVN) asserts that viewing older employees as a burden is largely 'in the mind'. However, the central social partner organisations’ membership often express views and behave in way that appear to contradict this aim. For example, in recent restructuring at the Philips electronics group and ABN-AMRO bank, the maintenance of the traditional 'last in first out' principle for selection for redundancy, which is clearly in the interests of older employees, has been questioned (NL0311103T). At Philips, the trade unions defended this principle, while at ABN-AMRO they accepted a management proposal for a selection procedure based on quality as well as age. Employers may also seek to get rid of older workers because they may be more costly. For instance, the Allied Unions (FNV Bondgenoten) has received several recent complaints about older employees (aged 40 and older) being forced out of employment in warehouses because they have become too expensive.

The Dutch Federation of Small and Medium-sized Enterprises (MKB-Nederland) argues that current arrangements for early retirement must be kept intact. It also reports that more than 80% of its members say that they have no problem with retaining older workers in employment, and that these employees generally possess more knowledge and experience.

Early retirement schemes (Vervroegde Uittredingsregelingen, VUT) are generally used to support reorganisations and cutbacks affecting older employees in the government sector. Under these schemes, employees aged 57 and older can be dismissed, with the guarantee of receiving more than 70% of their gross salary until the age of 65. In the course of recent expenditure cuts, resulting in the loss of more than 10% of jobs in central government, the Minister of Internal Affairs expressed the hope that older civil servants would stop working earlier in order to prevent their younger counterparts from being involuntarily dismissed. For critics, this illustrates that, in its role as an employer, the government acts in a way that contradicts the policy on older workers it prescribes for the social partners.

Simons Nederland is considered one of the few companies where account is taken of the ageing workforce in personnel policy, with the aim being to achieve low absence figures and limit the number of workers going on to occupational disability benefit. Delta Lloyd and Heineken also pursue an active policy whereby older employees can take on less strenuous tasks in the later years of their careers.

Commentators see the trade union movement’s attitude as ambivalent: on one hand it backs policy directed at stimulating labour market participation among older employees and, on the other, it accepts voluntary early retirement programmes (often bargaining only over employers' continued contribution to the workers' pensions in such cases). The 2003 National Working Conditions Survey (Nationale Enquête Arbeidsomstandigheden 2003) found that 63% of respondents aged 55 and older do not want to continue working, while 43% state that they are not in any condition to continue working in their current positions until the official retirement age. Under 20% want to continue working until their 65th year. This survey, conducted by the TNO-Arbeid labour research institute, further finds that employees cite the physical demands and mental exhaustion associated with their positions as the most important reasons for wanting to stop working earlier. Less well-qualified employees often want to stop earlier than their better qualified counterparts. These findings indicate to some observers that part of the approach pursued by the trade union movement may be out of line with members' wishes: the policy of stimulating older employees to continue working for longer clashes with the capabilities and wishes of two-thirds of workers aged 55 and older.

Commentary

In view of the financial basis required for maintaining social provisions, including those related to old age, and the relatively low level of labour market participation amongst older people in the Netherlands, it is understandable that government would want to stimulate increased participation. While the social partners also support this policy, in practice they are often hindered by the interests of their membership. Two-thirds of employees aged 55 and older do not want to continue working, companies want the most flexible and least expensive employees and government sees older employees as the most suitable group to dispose of during reorganisations. Through imposing limitations on the duration and level of unemployment benefits and scrapping early retirement schemes (NL0406102F), the government’s current policy seems to place a significant share of the financial burden of pursuing an active policy for older workers onto the shoulders of employees. This has forced the trade union movement to adopt a defensive stance, making it easier to 'trade in' its policy on promoting employment of older workers in return for decent redundancy schemes for the same group. Government policy also fails to take adequate account of the financial concerns expressed by employers. Subtle policy instruments such as semi-retirement and making older workers' work less demanding, which cater to the needs of many employees and employers alike, are consequently not addressed in a particularly serious light. (Marianne Grünell, HSI)