An IT company in the Netherlands wants to cut the pay of older workers on the grounds that their salaries are no longer in line with their performance. Capgemini Chief Executive Jeroen Versteeg has become the first company director to seriously suggest lowering wages for older employees. His idea has the support of counterparts at other IT companies, but the umbrella organisation for the sector has rejected the notion. Unions say it is wrong to automatically link demotion to pay cuts.
In January 2013, a director at IT company Capgemini was the first to put forward the idea of a wage cut for older employees in the Netherlands.
Capgemini Chief Executive Jeroen Versteeg wants to lower the wages of 400 older employees at the company because he believes that their salaries are no longer in line with their performance. The controversial theme of demotion is an issue that was raised in the debate several years ago but not yet acted upon. Mr Versteeg’s views put the subject back on the agenda.
Mr Versteeg received a great deal of support from others in the IT arena, where hourly rates have generally had to be halved and competition is tough. Keeping older employees, who now also have to continue working for longer, on the payroll is cutting into profit margins.
The financial sector also came out in support of wage cuts. The SNS Bank admitted it would like to reduce some salaries in the sector by 15% (as reported in the Dutch Financial Times in January 2013).
Capgemini also received support from Ron de Mos, Senior Vice-President and General Manager of IT multinational CGI (previously Logica) in the Netherlands.
Speaking on behalf of Nederland ICT, the trade association representing more than 550 Dutch IT companies, Mr de Mos argued that reforming the terms and conditions of employment across the sector needed to be put on the agenda. He believes that individual tailor-made solutions, as is currently the case at IT companies such as Atos and Ordina, are progressing far too slowly.
However, Ron de Mos faced opposition from within Nederland ICT itself. After consulting the association’s members, its Managing Director, Sylvia Roelofs, concluded that broad-based support for sector-wide reform of pay and conditions is still lacking.
Ms Roelofs highlighted the risk of damaging the image of the sector as a whole. She said young talent could be discouraged by discussions of this type about employment conditions.
She said the IT world represented a cross-section of the knowledge economy. Workers and their profiles differed at ICT companies, so a policy of generic demotion would undermine mutual competition. No single solution existed to suit all the needs of the members, she added.
Software companies, she said, were more familiar with young programmers while service providers had a greater need for experienced project managers. She said it was wrong to link all these different companies together and assume that they could all implement the same employment conditions package.
Although Ms Roelofs is opposed to a sector-wide approach, she does support moves to address the problem. She said that, on behalf of the Confederation of Netherlands Industry and Employers (VNO-NCW), she would put the issue on the agenda of the Social and Economic Council (SER).
The issue is not new for the unions. Former Chair of the National Federation of Christian Trade Unions (CNV), Doekle Terpstra, called for demotion during his term of office between 1999 and 2005, although he quickly realised how sensitive the issue was.
However, he stressed that at that time he did not, and still does not, want to link demotion to wage cuts. Wanting to deploy someone in a different way within a company did not mean that they contributed less as an employee, he added.
There have been calls to link the level of the demotion salary to pension payments, which are generally set at 70% of a worker’s final wage.
The General Employers’ Association AWVN said in 2013 that seven of the various currently valid collective labour agreements covered demotion processes. Using a slightly broader definition than the AWVN, the Ministry of Social Affairs said that there were 28 agreements setting out demotion processes in their collective employment conditions.
Demotion has moved up the agenda as a result of the ageing population. Older employees have to work longer. Previously it was assumed that as younger employees they would have performed better and earned less, and this would be compensated for once they became older employees.
Experts assert that if the unions want to regulate this issue, they should do so at a collective level and in collective labour agreements.
Former CNV Chair Doekle Terpstra believes unions must keep step with the changing social reality and properly regulate this matter in the collective labour agreements.
Marianne Grünell, AIAS/HSI, University of Amsterdam