At the end of 2006, the three umbrella employer organisations indicated that they would like to abolish the system whereby older employees automatically earn more than their younger counterparts. In response, the three main trade union organisations expressed dissatisfaction with this proposal. While they do not object to demotion on a voluntary basis, the trade unions are not in favour of such a measure being part of structural wage policy.
Employers favour demotion of older workers
At the end of 2006, the three main employer organisations indicated in a memorandum addressed to the collective bargaining partners that they wished to abolish the system whereby older employees automatically earn more than their younger counterparts. The three employer groups concerned are: the Confederation of Netherlands Industry and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW); the Dutch Federation of Small and Medium-sized Enterprises (Midden- en Kleinbedrijf Nederland, MKB-Nederland); and the General Industrial Employers’ Association (Algemene Werkgevers Vereniging Nederland, AWVN).
Employers would like the collective agreement to take into consideration the possibility of older employees having in some cases to accept a less demanding position at an adjusted salary level. By introducing demotion of this type, the ever-increasing group of older employees will be able to remain at work for longer. In the memo, the three organisations highlight that employers face rising wage costs in view of the increasing number of ageing employees.
Under the current wage system, younger employees earn less than their older colleagues in relation to how much they contribute towards operating results. This system could be considered an incentive for younger employees who still earn relatively low wages. However, employers now wish to abandon this wage system in an effort to better align wages with employee performance irrespective of age category. Moreover, they would like to abolish structural salary increases and bonuses. As a result, older employees could receive less pay in the future. Furthermore, the employer organisations wish to reassess the availability of extra leave days for older employees based on seniority.
As far as employers are concerned, measures such as these aimed at lowering the costs related to older employees should not ignore pensions, as costs must also be reduced in this respect. In the collective agreement memo, employers emphasise the importance of investing in the training and education of older employees. By promoting further education and training, performance standards could be maintained. Employers also assert that employees should be responsible for supplementary training themselves, since they are ultimately responsible for maintaining and enhancing their employability.
Unions oppose demotion as part of wage policy
The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) is opposed to compulsory demotion as a means to retain older employees in employment for longer. According to FNV, demotion only serves a purpose for employees who feel that they have to adjust their ambitions and pace of work. Moreover, FNV does not want demotion to be regulated collectively.
The Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) considers demotion to have no positive aspect whatsoever. Chair of CNV, René Paas, believes that the problems relating to older workers are being addressed from the wrong angle. According to Mr Paas, if people are to be encouraged to work for longer, then threatening them with less interesting work for lower pay is not an option. Indeed, the level of support and encouragement provided by employers to older employees could be considered inadequate if these employees are no longer productive and motivated.
It would seem that investment in this group of workers has been lacking for too long. All too often, companies consider it less worthwhile to invest time and effort into training older employees, with the result that training and education is an underdeveloped area for this age group. This reluctance to engage in training issues became apparent when, as a united front within the Social and Economic Council (Sociaal-Economische Raad, SER), employers refused to sign the agreement on training because no decision was reached on relaxing the law on the dismissal of employees.
Like the other unions, the De Unie trade union is not in favour of the proposals put forward by the employer organisations as it opposes demotion as part of structural wage policy. The entire wage structure is intended to sustain solidarity in the long term. Younger employees earn less than they generate in output, which is something they are willing to accept in the knowledge that they will earn more in future years with a company. De Unie is not opposed to voluntary demotion but, according to the union – while an employee should be able to take a step down – it is an entirely different matter to be awarded a lower salary scale should productivity diminish.
Chair of De Unie, Jacques Teuwen, makes a connection between these initiatives on the part of employers and the failed agreement on the relaxation of rules relating to the dismissal of employees. In his view, since this option has been ruled out, employers are looking for another way to reduce costs.
Marianne Grünell, Hugo Sinzheimer Institute (HSI)