Social partners agree dismissal law among other issues in annual talks

The Dutch cabinet and social partners concluded the traditional autumn consultation in October 2008. Agreement was reached on moderate pay demands, lowering unemployment premiums, and maintaining the spending power of minimum-wage earners and people suffering from chronic illness. Even the social partners’ interim agreement on dismissal law was accepted. Agreements were also reached concerning vulnerable people in the labour market, and on training.

Importance of social harmony

The traditional autumn consultation between the Dutch cabinet and social partners reached a satisfactory conclusion at the beginning of October 2008. Before starting, the respective parties attached great importance to reaching consensus on the issues arising, especially given the degree of turbulence in today’s financial markets. In a positive outcome, the three parties agreed on the main points of their discussions.

The government hopes to steer the economy and labour market through these difficult times by pursuing a policy of wage moderation, maintaining spending power and reducing the financial burden. Meanwhile, more people will need to find employment in a shrinking labour market and the scarcity of jobs will affect further economic growth. It is clear that the trade unions expect something in exchange for agreeing to wage moderation, in the same way that employers did not concede lightly to putting measures in place to facilitate the employment of people who are in a more vulnerable position in the labour market. The government’s pledge to retain spending power by adopting measures such as lowering unemployment benefit contributions and scrapping a valued-added tax (VAT) increase can be considered as an important pillar of the agreement.

Demands of social partners

On entering the consultation, the objective of the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) was to maintain spending power and protect self-employed workers who do not fall within the scope of a collective agreement, based on the principle of equal pay for equal work. For its part, the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) put forward proposals on further defining corporate social responsibility (CSR). Both trade union federations were also calling for clauses to be taken up in collective agreements on telework and homeworking rights, on training and education, and on employee career counselling rights.

Meanwhile, the employer organisations – the Confederation of Netherlands Industry and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW) and the Dutch Federation of Small and Medium-Sized Enterprises (Midden- en Kleinbedrijf Nederland, MKB-Nederland) – emphasised the importance of reducing the financial burden and extent of legislation, particularly in administrative terms.

Results of consultation

The autumn consultation delivered a wage demand of up to 3.5%, and the government agreed to augment the spending power of people suffering from chronic illnesses and minimum-wage earners by a total of €460 million. Agreements were again reached in relation to training and education, in order to better equip employees for their current or future jobs. The cabinet and social partners also agreed on increasing the number of people in employment in a bid to combat labour shortages in certain sectors of the economy. Furthermore, a plan of approach specifies how regional job centres and employers will reach agreement on finding employment for the 200,000 to 300,000 people who are in a vulnerable position in the labour market.

Dismissal agreement

During the consultation, an agreement regarding employee dismissals, concluded between the respective chairs of the largest employer and employee organisations, was also approved. The agreement between VNO-NCW and FNV had been reached in secrecy during the summer of 2008, and the Minister of Social Affairs and Employment, Piet Hein Donner, approved it shortly thereafter. The dismissal issue had remained on the agenda of the social partners and cabinet for more than a year without resolution (NL0701039I, NL0807019I). Even the cabinet – represented by Minister Donner – had put forward a proposal to resolve the impasse; however, that proposal failed to gain approval from the trade unions.

The latest arrangement stipulates that no changes will take place in relation to the current dismissal procedure for those earning up to €75,000 gross a year. This means that dismissal compensation of up to one month’s salary per year of service is to be granted. Compensation is limited to one year’s salary in cases where the annual income exceeds €75,000 gross. All of the parties agreed to the new arrangement during the autumn consultation. It was also decided that the social partners would put forward proposals on providing employees with counselling to help them find alternative employment following dismissal.

Marianne Grünell, Hugo Sinzheimer Institute (HSI)