The Netherlands: Developments in working life – Q1 2016

Refugees integration, the impact of new work and security legislation and pension funds are the main topics of interest in this article. This country update reports on the latest developments in working life in the Netherlands in the first quarter of 2016.

Refugees in the labour market

As in many other EU countries, the refugee issue dominated the headlines in the Netherlands in the first quarter of 2016. However, the implications for industrial relations and the labour market are minor. The legislative regime in the Netherlands is relatively restrictive when it comes to refugees’ access to the labour market. Several cities, including The Hague and Amsterdam, have developed initiatives to stimulate the labour market participation of refugees. At the end of April 2016, the Cabinet announced it would spend €550 million on supporting the integration of refugees.

New legislation

With regard to the labour market, two issues stand out. The first is the effect of the new legislation on work and security (which came into force partly in mid-2015, and partly in 2016). The aim of the legislation is to strike a new balance between 'insiders' (incumbent employees whose jobs are protected, for example, by seniority or have strong union representation) and 'outsiders' in the labour market (those who lack similar protection, such as people who are unemployed, temporary workers or those in the informal sector), lowering protection for the former and improving security for the latter. However, critics have stated that the opposite may have occurred, and it is unclear whether the position of temporary workers has improved. There have been several examples of fixed-term contracts being terminated just before the two-year deadline, beyond which an employer is obliged to convert a fixed-term contract into a permanent one. At the same time, the new legislation seems to have made it harder to dismiss employees. A hearing in Parliament showed mixed reactions on proposals to change the law, which was based on a 2013 agreement between the social partners. The Minister of Social Affairs and Employment, Lodewijk Asscher, stated that it would be premature to change the fundaments of the new legislation after such a short period of time.

Pension funds

Pensions have been a major issue in the Netherlands for several decades, with low interest rates seriously undermining the financial position of the (second pillar) pension funds. This problem may result in the actual lowering of pensions and they have had, and are still having, major effects on the collective bargaining process. The interest rate is a benchmark for calculating the future pension obligations of the funds, and the fall in interest rates has seriously undermined the capacity of the funds to fulfil their obligations. Equally problematical is the long-term sustainability of the present system. A major issue in this debate is the solidarity principle, both with respect to the relation between generations, and with regard to the preferred mix between individual responsibility and the collective sharing of risks.

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