Restrictions for eastern European workers eased

In the summer of 2006, the government opened up a total of 21 economic sectors to employees from the new EU Member States. However, the Dutch Trade Union Federation (FNV) and a majority of the Lower House of Parliament criticised that too little is being done to counteract underpayment and illegal labour. Research conducted by FNV shows that, even in an organised sector such as metalworking, foreign workers are being paid less than the minimum wage. FNV and the Lower Chamber are also concerned that increased immigration may undermine existing plans for combating unemployment among young people.

In the summer of 2006, the State Secretary of Social Affairs and Employment, Henk van Hoof, opened up a total of 21 economic sectors to employees from the 10 new Member States (NMS), which joined the EU in May 2004. Mr Van Hoof removed certain restrictions from five sectors in May 2006 and another 16 sectors in September 2006. Thus, only a limited number of the 69 sectors in total are being opened up.

Lifting of labour market criterion

For the sectors concerned, this means that the labour market criterion is being abolished; this criterion had stipulated that companies could only hire an employee from one of the NMS if no suitable candidate could be found in the Netherlands or from the other countries of the 15 older EU Member States. Agriculture, metalworking, the retail trade, hotel and catering, commercial services and healthcare are some of the sectors in which this criterion will no longer apply.

When presenting his plans in the spring of 2006, Mr Van Hoof encountered widespread criticism in the Lower House of Parliament (Tweede Kamer der Staten-Generaal) (NL0605039I). In addition to objecting to unfair competition in wage costs, members of the Lower House feared that the government would not do enough to enforce the applicable employment conditions, combat illegal labour or help unemployed Dutch nationals find employment.

Sector-specific approach

A suggested compromise was that Mr Van Hoof should opt for a sector-specific approach (to be evaluated by the social partners), by which sectors would be opened up depending on the industry and the potential opportunities for Dutch unemployed workers. The more stringent individual labour market criterion would then be abolished for those sectors that were opened up. Moreover, it was agreed that supervision of collective labour agreements, employment conditions and taxes would be tightened. Mr Van Hoof also wants to abolish work permits as of 1 January 2007: this would mean that workers from the NMS would not need any permit to work in the Netherlands.

The Lower House agreed to the first part of Mr Van Hoof’s plan – the abolition of the labour market criterion – with several reservations. However, there has been substantial criticism of the state secretary’s proposal to abolish work permits as of 1 January 2007.

Measures to combat illegal labour

Mr Van Hoof promised a package of measures to combat illegal labour by 1 November 2006 and to counteract avoidance of employment conditions. Certain parts of the state secretary’s plan, including raising fines and increasing the number of inspections by the Labour Inspectorate, achieved some success during 2006, according to an evaluation by the Ministry of Social Affairs and Employment (Ministerie van Sociale Zaken en Werkgelegenheid, SZW) in September 2006. Nevertheless, the entire package of measures to combat undesirable side effects has to be established and clearly documented before a majority in the Lower House, the opposition parties and the government coalition party, Christian Democratic Appeal (Christen Democratisch Appèl, CDA), will agree with the plan.

The most left-wing of the opposition parties, the Socialist Party (Socialistische Partij, SP), also maintains that employers are obliged, given the current levels of youth unemployment, to train young people for their branch of industry. SP is concerned that it will become too easy for companies to hire foreign employees when restrictions on the various sectors are lifted. The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV), which had previously joined in the debate making the same argument as SP, has stated that it is surprised by the pace at which the state secretary is implementing the policy. FNV is not opposed to the free movement of workers in principle but wants more assurance about employment equality.

Foreign workers paid less

FNV’s concerns over equal employment equality are not unfounded, according to a small-scale survey carried out by the Allied Unions (FNV Bondgenoten). Some 20% of foreign employees in the metalworking sector are paid less than their Dutch colleagues. The difference in pay can amount to several hundred euro a month. FNV Bondgenoten did not expect this result, because in general the collective labour agreement in the metalworking sector lays down clear conditions in terms of pay.

Despite the sectoral collective agreement, this pay gap certainly applies to the manufacturing companies with more than 50 employees that took part in the survey. The 400 respondents indicated that their Polish, Czech and Portuguese colleagues are underpaid. FNV Bondgenoten believes that these results strengthen the view that the labour market criterion must be reintroduced. Furthermore, it feels the metalworking industry should make a much greater effort to recruit young people.

Combating youth unemployment

The General Industrial Employers’ Association (Algemene Werkgeversvereniging Nederland, AWVN) has aligned itself with the position of FNV Bondgenoten and of the Industry, Food and Transport Workers’ Union (CNV Bedrijvenbond). Companies based at the ports do not want the labour market criterion to be abolished: State Secretary Van Hoof was advised that in the coming years a sufficient supply of young people will be available to work at the ports, so that it would not be wise to abolish the labour market criterion.

In the Rijnmond region of the South Holland province, young people experience high levels of long-term unemployment. Indeed, the municipalities, companies and trade unions cooperate in finding work at the ports for this group. FNV Bondgenoten has made arrangements in collective labour agreements with a number of companies, including EMO, APMT and European Container Terminals (ECT), regarding the intake of young people. Abolishing the labour market criterion would, it claims, have a negative effect on these projects.

Marianne Grünell, Hugo Sinzheimer Institute (HSI)