Unions face financial problems as representativeness issue resurfaces

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In 2001, overall trade union membership in the Netherlands fell slightly, despite attempts to attract new members, prompting questions again to be raised about their representativeness. At the same time, financial problems are besetting some unions, notably FNV Bondgenoten, the largest union in the private sector, while the FNV confederation's invested capital has shrunk and questions have been asked about the ethicality of its investments. One new way of attracting members, proposed by the FNV chair in May 2002, is for unions to seek to represent the inerests of illegal workers.

In 2001, trade union membership in the Netherlands fell by 0.4%, while the labour force grew by 1.4%, thus slightly reducing the overall union density (which stands at around a quarter of the labour force). Among the three largest union confederations, De Unie-Federation of Managerial and Staff Unions (Unie Middelbaar en Hoger Personeel, De Unie MHP) suffered most with a fall in membership of 6.5%, resulting from the departure from its ranks of the nurses' trade union, Nieuwe Unie '91 (NU'91). The Christian National Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) recorded a small membership increase of 0.2%. The Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV) saw its membership rise by 0.5%, mainly attributable to the affiliation of a new member union, the 5,000-strong Marechaussee Vereniging, which represents members of the military police corps. However, the membership of the FNV-affiliated Allied Unions (FNV Bondgenoten), the largest trade union in the private sector, dropped by 0.5% to 486,455.

The publication of these membership figures in 2002 once again prompted discussions on the issue of trade union representativeness (NL0103127F and NL0112135F) - ie whether the membership levels of unions are sufficient to regard them as representative for various purposes. In spring 2002, the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) and the social liberal Democraten 66 (D66) - both then members of the coalition government - brought up the matter of the trade unions’ representation on the tripartite advisory Social and Economic Council (Sociaal Economische Raad, SER) and the question of the system of extending collective agreements to cover an entire sector by making them 'generally binding'. Also in the light of questions over the representativeness issue, private sector employers have questioned the so-called union bargaining subsidy (vakbondstientje) - a contribution paid by employers covered by collective agreements to unions to meet the costs of the collective bargaining process (currently EUR 4.5 per employee covered by the relevant collective agreement).

Unions face financial losses

Faced with declining membership, one approach taken by FNV has been to merge unions, with the aim of streamlining internal organisation. Some mergers have failed, such as that planned between the Abvakabo FNV public sector workers' union and the FNV Kiem arts, information and media workers' union in 2001. However, there was a major merger in 1998 when four FNV affiliates came together to create FNV Bondgenoten (NL9711145F). Since its formation, the new union's financial situation has become increasingly difficult.

From the start, FNV Bondgenoten faced financial problems resulting from the combination of decreasing membership, excessive personnel costs, shrinking capital due to stock market falls and the need to eat into this capital to cover losses. Various reorganisation measures, which included reducing the union's workforce from 840 to 674 over two years, seem to have had little effect, and financial targets been not been met. The FNV Bondgenoten board submitted its resignation in spring 2002, stating that it could no longer competently guide the reorganisation process or meet financial and savings targets. The anticipated financial shortfall of EUR 4.5 million in 2002 was already exceeded in the first quarter of the year. Although the union's employees sympathise with their employer’s problems and are prepared to tighten their belts, no agreement has been possible on cutbacks proposed during negotiations. Staff pensions and member service are at stake, along with another 40 to 50 jobs. The board elections have been moved forward from 2004 to late 2002 and an interim manager has been appointed to provide support and straighten out internal affairs.

One of the setbacks suffered by FNV Bondgenoten has been the devaluation of money invested in capital markets over recent years. The invested capital, some of which has been used to make up shortfalls, has shrunk as market conditions have meant that disposing of it has brought losses. More widely, the entire FNV investment portfolio, intended as vehicle for strike funds, capital and pensions, has come under debate. Although guidelines dictate that FNV must direct its EUR 715 million of investments to companies emphasising social and environmental sustainability in their strategies, it came to light in June 2002 that investments have been made in practically every major arms manufacturer, along with nuclear energy firms and chemicals and clothing companies whose operations have been the subject of some controversy. Examples include Dow Chemical, the nuclear energy generator Exelon and the Gap clothing manufacturer. Cees de Wildt, the chair of the executive committee of FNV's mutual investment funds, admits that screening of investments commenced in 2001 but has yet to be concluded. FNV has not ruled out nuclear energy as an investment possibility. In 2001, the FNV investment portfolio showed losses of 18%, compared with an average loss of 14%.

New initiatives

Trade unions have failed to achieve any significant membership gains during the period of employment growth which started in 2000, although the unions have launched a number of strategies aimed at attracting new members. For example, CNV has conducted a 'corporate identity' project designed to give all its affiliated unions a uniform look, while FNV has expanded its membership services to include new types of individual service provision. By offering legal assistance and tax services, FNV has sought to attract new members who want something different for their membership fees. While this strategy has worked to some extent, it has proved that the services provided cost the unions more money than they generate. FNV Bondgenoten ran into this problem and was subsequently forced to cut member services again. Its financial advice service attracted new members, but not enough. The union's investments do not balance out its costs, which continue to exceed its income despite an increase in membership fees. Indeed, nowadays each new member actually costs the union money. However, the parties involved see opportunities for growth in this area: the annual number of consultations provided by FNV membership services totals more than 40,000 and continues to increase.

On 1 May 2002, the FNV chair, Lodewijk de Waal, made a notable proposal for trade unions to represent the interests of illegal employees - ie those working in undeclared employment, often in the clandestine economy, who are frequently immigrants. Although illegal workers are already allowed to join unions, Mr de Waal now wishes to offer them advice and legal support, and provide them with the opportunity to lodge complaints concerning abuses at work. Whereas FNV had only two months previously rejected a recently formed Illegal Workers' Union (Vakbond Ilegale Werknemers) as a discussion partner, efforts will now be made to represent the estimated 46,000 to 116,000 illegal employees in sectors including cleaning, construction and agriculture. Mr de Waal justified his new approach by stating: 'If the government was doing its job properly there wouldn’t be any illegal workers, but they are here.' FNV no longer wishes to deny this fact, nor to ignore the existence of a labour market 'underbelly' in the cleaning, agriculture, catering and care sectors. The economy needs illegal workers, with both high and low levels of skills, according to FNV, which will now seek to ensure that they are covered by collective agreements and social insurance and that their working conditions meet Dutch standards. The FNV chair's proposal was met with both support and criticism

Commentary

Following its creation by merger in 1998 as the Netherlands' largest private sector trade union, FNV Bondgenoten was expected to profile itself as a union focused on the future, and one shaped in part by modern industrial relations. However, the opposite occurred. From the start, the union was largely focused on internal matters as a result of its organisational problems. This is regarded as a missed opportunity, as the merger should have created the strength which could have put to good use in finding new ways to recruit and retain members.

More broadly, the scope and composition of union membership are currently under scrutiny as the question of the union confederations' representativeness is again raised. Although union membership has not fallen significantly of late, demographic trends mean that it is ageing, indicating problems in future. The legitimacy of trade unions has become an urgent issue both externally and internally. If unions are to act in a way that can be considered as focused on the future, this calls for the provision of individual services to members and acceptance that irregular labour relations, such as illegal workers experience, still exist in the Netherlands, and that the employees involved need recognition and assistance. (Marianne Grünell, HSI)

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