2004 Annual Review for the Netherlands

This record reviews the main industrial relations developments in the Netherlands during 2004.

Political developments

There were no elections in 2004 and none are expected in 2005. After the January 2003 elections, a coalition government was formed. It consisted of three parties, the Christian Democratic Appeal (Christen Democratisch Appel, CDA) with 44 seats in the Lower House of parliament, the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) with 28 seats and the social liberal Democrats 66 (D66) with six seats.

From its inception, the trade unions have opposed the government’s social and economic policy. The most outspoken have been the Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union (Christelijk Nationaal Vakverbond, CNV). During 2004, they were joined by the Federation of Managerial and Professional Staff Unions (Vakcentrale voor Middengroepen en Hoger Personeel, MHP). Finally, they even received some support from employers' organisations such as Medium-sized Enterprises (Nederlandse Vereniging van het Midden en Kleinbedrijf, MKB), the Confederation of Dutch Industries and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW) and the Dutch Confederation of Agriculture and Horticulture (Land- en Tuinbouworganisatie Nederland, LTO).

In 2003 a compromise between the government and the social partners proved possible and in the tripartite 'autumn agreement' of 2003, a pay freeze was accepted (NL0403103F). However, in 2004, no compromise with the union federations seemed to be possible on a package of state spending cutbacks amounting to EUR 19 billion - mainly in the area of social security and aimed at achieving a balanced state budget in 2007. The parties disagreed on the following government plans (NL0410101N):

• from 1 January 2006, making early retirement schemes accessible only to employees of 58 or older. All other employees would have to save towards early retirement using the newly created 'life-span leave' arrangement (levensloopregeling) (NL0409105F). This individual arrangement would also cover all other career breaks;

• economising on expenditure related to the Unemployment Insurance Act (Werkloosheidswet, WW), tightening the eligibility requirements for unemployment benefits. From 1 January 2005, employees would need to have worked for 39 of the preceding 52 weeks to be eligible. The government also proposed making 'golden handshake' payments to dismissed employees deductible from their subsequent unemployment benefits (NL0410103F);

• amending the Occupational Disability Insurance Act (Wet Arbeidsongeschiktheid, WAO) (NL0404101N), in particular by tightening disability (entry) criteria and splitting the current Occupational Disability Insurance Act into two separate items of legislation - one covering people who are either permanently disabled or at least disabled for a long period of time, and one for people still capable of working to some extent; and

• no longer extending to non-signatory employers the provisions of collective agreements relating to wage increases.

In 2004, a tripartite agreement could not be concluded (NL0407101N). However, in November 2004, a compromise was reached through arbitration by the Prime Minister and the Minister for Economic Affairs. In a referendum this compromise was accepted by the large majority of the members of FNV and CNV. The compromise reached in secret November 2004 meetings between government and social partners resulted in an agreement covering almost the complete socio-economic agenda for the years ahead. The main issues mentioned above were included in the agreement:

• the government upheld its decision to scrap current tax incentives related to early retirement, and two new tax measures will be introduced concerning retirement pensions. The social partners will be given the option of specifying in occupational pension schemes that employees who have accrued 40 years of contributions in the fund and are older than 63 are entitled to a pension of 70% of last-earned salary. This is allowed even if the actuarial recalculation would result in a pension level of less than 70%. Such an arrangement is especially important for people who start work at a young age. This arrangement would be eligible for tax support. Furthermore, the government will make it possible to accrue more towards the pension based on tax incentives over a 15-year period, making it possible to reach a pension level of 100% of last-earned salary. This may then be used to stop work earlier at a lower percentage of last-earned salary. For the trade union federations, these new arrangements facilitating a decent income on early retirement are very important; (see below under 'Equal opportunities and diversity issues');

• the government has postponed its plans to scrap unemployment benefits for short-term unemployed people and to deduct all, or part of, the compensation awarded to dismissed employees from their subsequent unemployment benefits (NL0410103F). Instead, the tripartite Social Economic Council (Sociaal Economische Raad, SER) has been asked to make a recommendation on a 'future-proof' Unemployment Insurance Act system before April 2005. The SER must seek to achieve the same decrease in the number of unemployment benefit claimants as the government has envisaged in its own plans;

• the compromises on the Occupational Disability Act consist of widening the definition of full disability, the entry criteria and the maximum age for re-examination; and

• the government is prepared to withdraw its proposals no longer to extend the pay provisions of collective agreements and expects in return that the social partners will adopt a degree of restraint regarding wage increases (NL0411101N and NL0411102F).

This agreement has thawed industrial relations, but a great many of the proposals presuppose consensus between the social partners. Employers are much less satisfied with the outcome than the trade union federations. In a memorandum entitled The Netherlands must be more active, Work(ing) in the knowledge economy in 2010 (The Hague: VNO-NCW 2004), the VNO-NCW employers’ organisation calls for a variety of changes to current employment law and industrial relations practices. These employers’ proposals are similar to the original government proposals (NL0408104F).

Collective bargaining

No significant changes took place during 2004 with respect to the level of collective agreements - these remain primarily sectoral - although there is a slight trend among employers to conclude agreements at company level. This preference was encouraged by the government’s threat no longer to extend collective agreements across a whole branch or sector. However, in general employers still prefer extension procedures (NL0403102F, NL0407102F and NL0412103S). As a result of the social conflicts outlined above, there was a delay in the conclusion of new collective agreements. Of the recurrent Labour Inspectorate (Arbeidsinspectie) research sample of 122 collective agreements, 50 were not yet renewed as at the autumn of 2004 (Najaarrapportage CAO-afspraken 2004. Labour Inspectorate, Ministerie van Sociale Zaken en Werkgelegenheid, Den Haag, 2004).

Pay

Wage moderation for 2004 was a core theme in the annual autumn 2003 consultations between the government and the social partners. A temporary pay freeze for 2004 was then agreed upon. In its autumn report, the Labour Inspectorate observed that, based on a representative sample of 71 collective agreements (covering 2.7 million employees), pay rose on average by 0.2% in 2004 (NL0407102F and NL0402102F). There were small differences between sectors: in the commercial sector the average pay rise was 0.5%, in the civil services -0.1% and in the care sector -0.4%.

Working time

Although pressure from employers to extend the working week did not wane, no significant working time changes took place in 2004. Successful legal action by trade unions against the introduction of a 40-hour week at the Smead company illustrated this (NL0408103N and NL0409101N). The 36-hour working week remained the norm; the average collectively agreed normal working week is 37 hours. The government intends to simplify working time legislation and wants to offer the possibility of working longer. Employers may try to achieve this through collective bargaining (NL0408104F).

Job security

Unemployment increased further in 2004, and job security featured prominently in the 'social plans' drawn up in many larger companies carrying out restructuring exercises. For example, in November 2004, the telecommunications group KPN announced 700 compulsory redundancies in its fixed-line telephone services division, adding to 1,550 job losses made earlier in the year in the wake of restructuring. Concerns were raised by the works council and trade unions (NL0412101N).

Equal opportunities and diversity issues

In 2004, political discussion focused on the government’s plans to introduce a 'life-span leave' arrangement, giving workers greater scope to save for periods of time off during their careers (NL0406102F) Care, education and training, leisure time and early retirement are all included and mutually exchangeable in this proposal. The present different types of care leave, combined in the general Act on Work and Care (NL0002182F), will co-exist with this new arrangement. Financially the proposal is directed at reducing government expenditure by giving employees more responsibility and choice in whether to save for time off for care or for early retirement, or even not to save at all. This topic was one of the contested issues between the trade union federations and the government, as only employees with a longer working history and with higher salaries can afford to save enough to take time off for any substantial leave period (NL0406102F).

In 2004, efforts to eliminate gender pay inequalities resulted in a government initiative to introduce an equal pay checklist at company level. The VNO-NCW employers’ organisation will cooperate in this initiative (NL0407104S).

In December 2004, the Minister for Social Affairs informed the lower house of parliament of his intention to intensify measures to eradicate persistent, unaccountable and unfair pay differences between men and women, between Dutch nationals and people from minority groups, and between employees with open-ended and temporary contracts. The established equal pay 'quickscan', used by the Commission on Equal Treatment (Commissie Gelijke Behandeling), will be simplified in order to stimulate its wider use. In addition, the minister, Aart Jan de Geus, wants to initiate a broad public campaign and will request the relevant advisory bodies to give their opinions on the founding of an 'Equal Pay Force'.

Training and skills development

Training and skills development (linked to employability) are areas that began to appear in collective agreements in 2002 and 2003. In 2004, provisions relating to these areas were included in the majority of collective agreements: 121 of the Labour Inspectorate research sample of 122 collective agreements, covering 99% of employees, contain provisions relating to training and skills development. Paid training leave is provided for in 113 agreements, covering 96% of employees, while 32 agreements provide for schemes to save for training. In 90 collective agreements, training is related to career development and promotion. Provisions for leave during training often accompany these arrangements.

Other issues

Occupational pensions featured significantly in collective bargaining in 2004. The financial shortfall of pension funds, partly because a large share of their resources are invested in the stock market, which has performed weakly, has confronted employers and employees with higher contributions, eating into the scope for pay increases and placing pressure on collective bargaining. At the same time, pensioners are challenging the power of the social partners in running the pension funds (NL0409104F and NL0401104S).

Legislative developments

At the beginning of 2004, the lower house of parliament discussed far-reaching government proposals to simplify the working hours Act. The government wants fewer rules and regulations and wants citizens and companies to bear more responsibility. In its legislative proposals, the government will take into account the fact that the EU working time Directive is under revision. The simplification of the Act includes the abolition of the current 'two-tier norms' system, of which one comprises standard statutory provisions for the regulation of working time and the other comprises broader and more flexible regulation set through agreement between the social partners. A single set of norms, indicating the minimum protection level, is being proposed. The minimum protection level will be lower than the present standard level and will be broader than the present more flexible agreed regulation. Above this minimum level, the social partners or individual employees may regulate working time. Work on exceptional days or at unusual times has to be agreed upon collectively or in an individual agreement. (NL0404103F)

The government has expressed similar criticism of the working conditions Act (Arbo-wet). In its opinion, the number of health and safety regulations in the Act could be halved. Mark Rutte, the state secretary for social affairs, proposed in 2004 to make distinctions between high and low occupational risks. If low risks were eliminated, companies could concentrate on high risks. Research has shown that a large proportion of employers fail to comply with the Act and the state secretary believes this is mainly because its provisions are too detailed and not sufficiently geared to specific sectors (NL0408102N).

The Social Economic Council, in a 2004 advice on occupational health services (Arbo-diensten), looked elsewhere for solutions. The SER has proposed allowing companies to opt out of using external services, by agreement with trade unions or employee representatives on internal options (NL0403101N). Recent research into the occupational health and safety impact of worker participation found positive effects on working conditions. Under the current working conditions Act, the presence and effective operation of works councils makes a difference in carrying out occupational health and safety policies (NL0402101F).

See below (under 'Employee participation') for proposals on a new Act on works councils.

The organisation and role of the social partners

No significant changes in the organisation and role of the social partners took place in 2004. Nevertheless, the year was characterised by a rather frosty relationship between the government and the social partners. Trade unions were highly critical of government proposals for reform in a range of areas. During the autumn, unions organised strikes and demonstrations in protest at the government's reform plans in the areas of early retirement, unemployment benefit, disability insurance and the extension of collective agreements (NL0411101N). However, the government and the social partners concluded a new 'social agreement' on 5 November 2004. The 'autumn agreement' contains an almost complete socio-economic agenda for the years ahead, covering topical issues such as early retirement and 'life-span leave' arrangements, occupational disability insurance and unemployment insurance. Controversy surrounding wage moderation was clarified by the agreement, which commentators see as reflecting an explicit choice on the part of the government to cooperate with the social partners, following a year of very cool relations. (NL0411102F)

Industrial action

As mentioned above, 2004 was marked by protests against government policy by trade unions. Union federations staged strikes and mass demonstrations against various social reforms proposed by the government, and a spring 'social agreement' could not be concluded. On the day before budget day, 20 September, 30,000 people demonstrated in The Hague, and on 2 October 300,000 people gathered in Amsterdam (NL0409102N).

Aside from the broad social protests outlined above, there were a number of 'incidental' strikes throughout 2004, mostly over restructuring exercises and planned redundancies, such as the plans at the telecommunications group KPN (NL0412101N).

Employee participation

In October 2004, a new law on supervisory boards in large companies took effect. The law changes the role of works councils in nominating members of supervisory boards (in large companies with shareholder equity of at least EUR 16 million and a workforce of at least 100 employees - NL0410102N) As at the beginning of 2005, the European Company Statute had not been implemented.

As the Dutch Works Councils Act already largely covers most of the issues raised by the EU Directive on information and consultation, the Directive is not expected to have a significant impact in the Netherlands.

The Minister for Social Affairs in October 2004 sent to the lower house of parliament a proposal for a new Act on employee involvement (NL0407103F). The government wants to increase the level of self-determination by giving employers and employees an opportunity to determine the structure of employee involvement in their own organisation. Furthermore, the government wants to make it possible for the works council, subject to its own approval, to restrict its legal powers. Trade unions and employers could, therefore, by means of collective agreement, establish a different structure of employee involvement. Further, works council will be able to establish the issues on which employees are consulted. In addition, elections to the works council will be simplified. The SER will take on responsibility for the introduction of a national body to monitor and promote the quality of employee involvement. The SER will also organise arbitration in disputes between employers and works council, replacing the existing joint sectoral committees (bedrijfscommissies). The new Act also regulates the employee involvement of flexible workers. Finally, the Act allows the works councils of large companies general information on the pay structure in the company, such as the pay relationship between the board, management and categories of workers (NL0407103F). It is foreseen that this obligation will be implemented for 2006.

Research found that employees were largely satisfied with the functioning of works councils in 2004. Some 80% of employees believe works councils' activities to be important; 75% are of the opinion that councils function well; 50% are satisfied with their relationship to the works council; and 60% feel committed to the activities of the works council. Despite this high level of appreciation, employees do not show a great deal of interest in the activities of the works council. (Achterban over de ondernemingsraad; M van Ewijk and M van der Aalst, Mu Consult, 2004, and De ondernemingsraad over de acherban, Ministerie van Sociale Zaken press release 04/215, Leiden/Den Haag, 2004)

No significant developments in the area of European Works Councils took place in 2004 ( NL0409103S).

Absence from work

The issue of absence from work due to sickness, especially on a long-term basis, has been a significant theme and a focus of government policy in the Netherlands for many years. It would appear that sick leave is declining, from a rate of 5.2% in 2002 to 4.7% in 2003. The government has introduced in its policy to reduce sickness absence the tool of 'covenants' (with employers). In 2004 for example, the police force signed a working conditions covenant (Arboplusconvenant) with the authorities. The sector has promised to reduce sick leave by 20% in the coming years, from a rate of 8.2% in 2002 to 6.6% in 2007, and furthermore to reduce long-term sick leave and the number of disability claimants. The covenant contains a range of new measures. For example, to help prevent sick leave, a health test will be introduced. Employees will also receive advice on lifestyle and work-related stress. Furthermore, the registration of accidents (for example, resulting from aggression) will be improved and standardised. These measures will help the police to find more specific solutions. Specific measures are envisaged for disability claimants. The measures will cost EUR 3 million, of which the Ministry of Social Affairs will pay a third.

The government wants to reduce further the influx and number of disability claimants and announced in March 2004 its plans to reform the Occupational Disability Act. The social partners criticised the government’s plan on two main grounds. The first is the re-examination of individuals currently receiving disability benefits (NL0404101N). The second is the interpretation of occupational disability criteria. On these two points the government proposals are radically different from the social partners' advice through the SER in 2002 and 2004, which was intended to be the basis for the legislative proposals (NL0204101N). The SER had proposed that the concept of 'long-term occupational disability' should cover both those whose (medical) recovery is excluded as well as those with a limited chance of recovery (in the distant future). This broad definition is crucial as it plays a role in determining access to a proposed long-term scheme covering completely occupationally disabled individuals. However, the government plan was to limit the concept of long term occupational disability to only the first category. Furthermore, the government´s opinion was that the SER’s proposed interpretation of occupational disability criteria would not sufficiently stem the influx of new disability benefit claimants.

The government’s plans to reform the Occupational Disability Act formed one of the social partners’ major points of criticism of government social policy in 2004. The social agreement signed in November 2004 accepted the SER’s broader definition of fully occupational disabled. This means that more people will be excluded from the new scheme for partly disabled people, who are expected to work a certain number of hours. The age at which the re-examination of individuals currently receiving disability benefits will take place will be lowered from 55 to 50. Extra measures will be taken to help those who fail to meet the provisions for disability finding a new job (NL0411102F).

Psychological harassment

Since 1995, there has been legislation in place to combat psychological harassment, as part of the Act on Working Conditions. Employers are legally obliged to establish policies against undesirable conduct, psychological and sexual harassment, and occupational health services should play a supportive role.

In 2004, research was conducted into psychological harassment in the workplace as part of an evaluation of the Act on Working Conditions. This repeated research on psychological harassment that was conducted in 2000. With respect to employers meeting their legal obligations, improvement was noted. Nearly 75% of employers had developed a policy and an action plan on the subject (in 2000 only 54% had established a policy). Some 80% of companies had approached the occupational health services for support and 53% employed a 'confidence person' as part of their strategy to combat psychological harassment. In general, larger companies performed better in this area than smaller companies.

In the 2004 research, more employees reported aggressive behaviour by customers: 27% in 2003 compared with 21% in 2002. Reports of physical aggression also increased, from 7% to 9%. Of employees, 15% reported psychological harassment by colleagues - harassment by colleagues is experienced as being worse than that by customers. Psychological harassment occurs most often at the social security administration.

Although psychological harassment has increased in the last few years and policy instruments have been implemented more often, the number of complaints has declined. The researchers believe this to be because employees do not think a complaint will have any effect (Evaluatie van de Arbowet inzake ongewenste omgangvromen, Research voor Beleid, RvB/Ministerie SZW. Leiden/Den Haag, 2004).

In 2004, psychological harassment was not a topic in the public debate or an issue for the social partners.

New forms of work

'Atypical' labour relations faced stricter regulation in 2004. Policy focused on creating more clarity. The criteria have been tightened for defining self-employed persons (without staff), differentiating them from employees. This distinction is significant in areas such as gaining access to insurance schemes for employed persons. In 2004, the Disability Insurance Act for self-employed people was abolished. Further, there was a clampdown on illegal employment, including illegal employment agencies.

Temporary agency workers were covered by a new collective agreement signed in 2003, in which pay levels were clarified. (NL0405102F)

Outlook

2004 was marked by disturbed relations between government and social partners due to the government’s social and economic policy in general, and social security in particular. The conservative policy choices pleased employers, but offended trade union representatives. Union federations have lost legitimacy in recent years, but through major protests, strikes and mass meetings they have recovered ground and in 2004 the government had to acknowledge that the unions are still a factor to be reckoned with.

The social agreement reached in the autumn of 2004 is a far-reaching compromise with the unions. However, many issues remain unresolved, to be examined by the SER or the social partners. Social peace has been achieved for the present, but the industrial relations climate is far from settled and the economic outlook is far from rosy. It remains to be seen whether union federations can keep their grip on the process of restructuring the social welfare state, a process that is expected to continue throughout 2005. (Marianne Grünell, HSI)