Trends in collective agreements reviewed

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A survey of the most important collective agreements signed in the Netherlands so far in 1999, published in June, finds moderate average pay increases of 2.7%. The number of agreements on training, flexible pension schemes and the accumulation time off has increased in recent years. While employers and, to a lesser extent, trade unions are in agreement on the issues to be addressed in negotiations during the coming year, both sides criticise aspects of the Netherlands' consultation and consensus-based system - the "polder model".

June 1999 saw the publication of the Labour Inspectorate's spring report on collective agreements concluded in 1999 ("Voorjaarsrapportage CAO-afspraken 1999", Arbeidsinspectie, Den Haag, June 1999). Below, we outline the main findings of the survey and of that for 1998 and examine the views of the social partners on the issues raised

Pay increases

An average pay rise of 2.7% was agreed in the collective agreements (collectieve arbeidsovereenkomsten, CAO s) concluded for 1999, compared with an average of 2.8% in 1998. The figures for the 1999 pay increase are based on the Labour Inspectorate's survey of 80 large agreements, which cover 63% of the total labour force, while the 1998 figure was based on 117 agreements governing 95% of the labour force.

Employers, fearing a slowdown in economic growth, deem this increase too high. According to the chairs of the employer's organisations, Confederation of Netherlands Industry and Employers (VNO-NCW) and the General Industrial Employers' Association (Algemene Werkgevers-Vereniging VNO-NCW, AWVN), mounting wage costs are eroding Dutch competitiveness. Compared with the rest of the EU, following the 1990-6 period when Dutch wage costs dropped, costs are now increasing twice as quickly, according to employers.

Based on a survey of labour costs conducted by the British-based consultancy firm, William Mercer, the Netherlands ranks ninth in Europe with an annual expenditure of EUR 34,128 per employee, including social security contributions and mandatory or voluntary bonuses.

At the end of June 1999, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) lowered its wage demand for the coming bargaining round, and negotiators will thus seek a maximum pay increase of 3% for 2000. The expected downturn in the economy prompted this downward adjustment from the original 3.5% figure. The Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) called the FNV's step premature, a sentiment echoed by the De Unie trade union, which anticipates accelerated Dutch economic growth rather than recession and plans not to follow the reduced wage demand. De Unie also criticised the FNV's generalised approach and instead plans to demand higher pay increases from certain companies, particularly in the services and information technology sectors.

Other bargaining issues

The Labour Inspectorate surveys of collective agreements examine other topics in addition to wages. Of the 117 agreements signed and surveyed in 1998: 24 explicitly address employee availability or employability; 114 contain specific arrangements for training and training leave, education plans, motivating pay policy and evaluation or performance discussions; and 113 contain provisions on general or position-specific training, or forms of apprenticeship. Most of these agreements also contain provisions for (paid) leave related to training.

According to FNV, agreements on training remain inadequate. On 8 June 1999, the organisation's chair, Lodewijk de Waal, claimed that employers should allocate at least 5% of payroll for training and that companies should earmark more money for research and development. Dutch companies spend an average of 1.1% on R&D, while companies in Germany and the USA spend an average of 1.5% and 1.9%, respectively.

Agreements on work placement and job creation schemes appear in 86 of the 117 agreements signed in 1998, with a total of 7,300 such plans established - an average of one per 228 employees covered. Most schemes are aimed at minority groups and long-term unemployed people. Agreements on so-called "Melkert jobs" - a scheme granting subsidies to employers that provide work to long-term unemployed people - appear in 17 agreements.

As many as 87 of the 117 agreements from 1998 contain provisions on early retirement (vervroegde uittreding, VUT). The average age provided for early retirement is 60.2 years, much the same as in previous years. In 1998, the tendency to convert VUT schemes into flexible pension provisions continued (NL9808194F). Pension schemes with benefits calculated on the basis of the retiree's age (flexible pensions, or flexibele pensionering) continues to gain favour over early retirement based on a set benefits percentage, as evidenced by the existence of provisions on this issue in a total of 75 of the 117 agreements. The average age for entering flexible pension arrangements stood at 61.3 years.

The number of collective agreements containing regulations on the accrual of leave increased to 30 in 1998. Employees can accumulate time or money, or a combination thereof, for future leave, based either on full-time or part-time employment. Agreements related to "saving up" time - actual hours worked, extra days off or days of holiday - appear in all 30 of the relevant agreements. Arrangements for "buying" days off appear in 21 agreements and for "selling" them in 20 agreements (NL9906144F).

Towards a four-day working week?

The Labour Inspectorate survey does not address hours of work. Employers and trade unions, however, have already been considering this issue in preparation for the next bargaining round. On 18 June 1999, the new chair of AWVN VNO-NCW, which is involved in 500 of the 900 collective agreements in the Netherlands, spoke out in favour of implementing a four-day working week in exchange for longer business hours. In return, Saturday would become a normal working day. The goal of the measure would be to utilise capital goods reserves more efficiently and to reduce traffic congestion in the Netherlands.

The proposal resembles one submitted four years ago by the Industriebond FNV trade union - now part of the Allied Unions (FNV-Bondgenoten). However, while the earlier proposal was directly linked to reducing working hours, AWVN VNO-NCW seeks to maintain the current weekly average of 37 hours.

The Allied Unions, the largest trade union in the Netherlands, responded favourably to the employers' proposal. However, unlike AWVN VNO-NCW, Allied Unions champions maintaining the existing bonus for Saturday work.

Commentary

Employers and trade unions stand remarkably united on several key points to be addressed in the next round of negotiations, indicating that the foundations of of the Netherlands' consultation and consensus-based system - the "polder model" - remain unshaken. The largest trade union confederation and trade union have once again emphatically embraced the cornerstone of wage moderation.

Criticism rumbles on at a more fundamental level, however. Recently, employers' associations expressed a great deal of dissatisfaction with increasing government intervention in terms and conditions of employment. Cabinet and Lower House proposals on care leave (NL9907154N), part-time employment (NL9803164F) and pension schemes (NL9812111F) are viewed as "a violation of the division of responsibility between the government and the social partners". According to Hans Blankert, the VNO-NCW chair, the House and cabinet should not interfere with agreements already reached between unions and employers within the bipartite Labour Foundation (Stichting van be Arbeid) (NL9903128F)

The "polder model" risks falling victim to its own success, CNV chair Doekle Terpstra believes. The tight labour market is seen as being to blame, as it widens the gap between employed and unemployed and exerts pressure on the move to the 36-hour working week and wage moderation. (Robbert van het Kaar, HSI)

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