1998 Annual Review for The Netherlands

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This record reviews 1998's main developments in industrial relations in The Netherlands


The Dutch economy had another relatively good year in 1998, with GDP growing by 3.7%, compared with 3.6% in 1997. However, in the course of the year growth slowed down, especially in manufacturing industry, falling to 3.1% in the fourth quarter. Inflation averaged 2% over 1998, compared with 2.2% in 1997.

Employment increased by nearly 200,000 in 1998, with the numbers of both people with "permanent" jobs and "flexible workers" increasing strongly. Unemployment dropped to 6.5% of the national workforce over the course of 1998. However, a large number of workers - predominantly at the lower end of the labour market - have effectively been excluded for a long time.

A second "purple" coalition government, made up of the Labour Party (Partij van de Arbeid PvDA), the Liberal Party (Volkspartij voor Vrijheid en Democratie, VVD) and the social democratic Democraten 66 (D66) was formed after the general election in May 1998, which resulted in a left-wing majority in the second chamber of parliament.

Key trends in collective bargaining and industrial action

Collective bargaining in 1998 was largely dominated by issues such as stress at the workplace, pensions and related schemes, "employability" and flexible pay arrangements.

Most voluntary early retirement (VUT) schemes have been substituted by more flexible "pre-pension" systems. The trend of replacing traditional pension systems, based on final wages and a set level of benefits, with systems based on average wages and a set level of contributions seems to be continuing, albeit slowly. In 1998, negotiations between the government and central employers' and employees' organisations resulted in an agreement to curb the costs of pension schemes and, consequently, labour costs (NL9808194F).

In the Netherlands, employees' low average working hours often mean heavy workloads, resulting in stress and stress-related absences from work. This issue was addressed in the collective bargaining process in 1998 (NL9802161N, NL9802163N and NL9804173N). The issue of "employability" also drew a lot of attention in bargaining at the beginning of the year. However, differences of opinion between employers and unions meant that relatively few companies reached concrete collective agreements on this subject. A deal was concluded at the ABN Amro bank, where employees received a guarantee of employment until 2001 in exchange for their willingness to participate in training courses and to work flexible hours (NL9808196N). Similarly, large multinationals such as Unilever and Akzo reached agreements on employer contributions towards employee training (NL9804175N).

Flexible and performance-related forms of pay are making up an ever-increasing part of employees' salaries, and this trend seems to be persisting (NL9801155N). More than in the past, unions are now willing to enter into agreements on this subject, although they do not wish to see flexible pay replace regular forms of remuneration (NL9803166N). One form of flexible pay, share options, was a source of much debate in the first half of 1998 (NL9801154F). Due to a sharp rise in share prices, many senior managers of listed companies saw their incomes rise dramatically (NL9805177F). Trade unions and the government were unanimous in condemning the effects of this form of payment. As a result, wage moderation - one of the cornerstones of the Dutch "polder model" (its system of consensus and consultation) - suffered in terms of its credibility. Unions in the private sector demanded an equal share in the recent economic prosperity for all employees, while public sector unions called for alternative forms of pay for their members.

Most collective bargaining retained a highly national character, as opposed to a European one. If anything, there was a trend towards greater decentralisation of bargaining to the company level. An example was provided by the efforts of employers in the banking and healthcare sectors to achieve separate company agreements instead of the current sector-wide collective agreements (NL9811105F). This fits in with the legislative trend of allowing social partners to reach more agreements at company level, as was the case with recent amendments to the Works Councils Act (NL9802162N), the Working Hours Act and the Working Conditions Act (NL9812112F).

Strikes remain a relatively uncommon occurrence in the Netherlands. Nevertheless, 1998 was not a quiet year, with small and large-scale actions occurring, primarily in the transport sector and in the public sector. The liberalisation of public transport strained labour relations in this sector, and negotiations between employers, trade unions and the minister concerned were often accompanied by wildcat strikes by drivers and engineers (NL9805179N and NL9806187N). Until now, unions have been quite successful in shielding employees from the worst consequences of the liberalisation process. The trend to initiate legal proceedings regarding such strikes, which have potentially serious consequences for third parties, continued in 1998 (NL9804170F and NL9812113N).

The year saw a number of major conflicts in the public services and (semi) government sectors (NL9810103F), including hospitals (NL9805181N), and in the education (NL9802161N and NL9812116N) and welfare sectors (NL9806185N). A number of these conflicts remained unresolved at the end of the year. According to the unions, wage trends in these sectors have for a long time lagged behind the private sector, while workloads are often exceptionally high. Employers in these sectors are highly dependent on collective funding for their budgets, while the budget allocated by the government is bound by the limits set in its September 1998 coalition agreement (NL9809198F). Civil service unions announced that they would resist the budget cuts proposed by the ministries in the coalition agreement, while the police force saw conflicts regarding workloads and pay (NL9810104N).

Industrial relations, employment creation and work organisation

Part-time work was an important issue in 1998. Following rejection by the First Chamber of a legislative proposal aimed at guaranteeing the right to work part time in late 1997, two opposition parties submitted new proposals in February 1998 (NL9803164F). Proposed statutory regulations regarding part-time work were finally set out in the new government's coalition agreement in September, following difficult negotiations between the parties. The subject is to be included in a Work and Care Framework Act (Kaderwet Arbeid en Zorg), covering all forms of leave as well as provisions for part-time employment. A legislative proposal to this end was submitted to the Second Chamber in late December. The proposal centred around a legal right to modified working hours - ie, either longer or shorter hours - for public and private sector employees, in the absence of overriding business interests. Agreements on part-time work have been included in approximately 60% of collective agreements. Despite the fact that the social partners represented in the bipartite Labour Foundation (Stiching van de Arbeid, STAR) have generally been in agreement on this point in the past, there are clear differences in emphasis. In 1998, employers drew attention to the tight labour market, while unions stressed the factor of increased workloads. Furthermore, over the course of the year, there were calls to lengthen the working week (NL9804173N and NL9811109N).

Labour market flexibility will be influenced significantly by the new Flexibility and Security Act (Wet Flexibiliteit en Zekerheid), which was passed in May 1998 and came into force at the start of 1999 (NL9901117F). The Act mainly focuses on creating a new balance between: employers' needs for a flexible response to fluctuations in the supply and demand of products and services; and a basic level of job security for employees with flexible working hours (NL9706116F). The Act eases redundancy regulations and allows employers to sign a series of temporary contracts with an employee. On the other hand, it offers those working under flexible contracts (including employees from temporary employment agencies) the prospect of permanent employment under certain circumstances. In mid-1997, the legislation was preceded by the WAADI Act, which liberalised labour market access for temporary employment agencies. Both Acts were, for a large part, the result of the combined efforts of the employers' organisations and trade unions within the STAR.

In order to address the problem of long-term unemployment, the government has set itself targets for the reintegration of those affected over the next five-year period. During this time, the government aims to create a situation where unemployed people are assessed in terms of training needs and work experience, and subsequently offered job opportunities or the sound prospect of future employment. The implementation of social security and job creation programmes will also be adapted to this end.

The 1998 government coalition agreement (NL9809198F) laid the foundation for a new structure to oversee the activation of labour market policy. A local public body, the Centre for Work and Income (Centrum voor Werk en Inkomen, CWI), will be responsible for providing access to the labour market and guaranteeing benefits. The execution of the tasks themselves, such as the reintegration of job-seekers in the labour market and the provision of benefits, could then be handled by private organisations. The cabinet aims to limit severely the role of the social partners in the various CWIs. However, both social partners and local authorities will be involved in central monitoring of CWI activities. The unions especially were highly critical of the government's plans to limit the social partners' role.

Another weapon in the fight against long-term unemployment is the intensified use of job-creation schemes such as subsidised labour. As of 1 January 1998, two existing measures in this area - the National Labour Pool (Rijksbijdrageregeling Banenpool) and the Guaranteed Youth Employment Act (Jeugdwerkgarantiewet) - were included in the Job-seekers Deployment Act (Wet Inschakeling Werkzoekenden, WIW). This legislation obliges local councils to help benefit recipients, young people and long-term unemployed people to find paid employment. The new government seeks to create 20,000 entry-level jobs and other positions offering prospects for long-term unemployed people.

In January, the government established a lifelong learning action plan, which focuses on promoting participation in the educational system and stopping students from dropping out of school. The social partners were asked to take concrete steps to bring this initiative to fruition.

The Dutch National Action Plan for employment, in response to the EU Employment Guidelines, was presented to the European Commission at the end of March 1998. However, in view of the pending coalition negotiations in the summer, a great many points were left open at the time (NL9805180N).

Still on the subject of employment/unemployment, despite generally favourable economic developments in the first half of the year and the healthy financial position of many companies, the second half of 1998 saw a large number of major or minor company reorganisations involving job losses (NL9811106F). The firms included at Philips (NL9811107N), Shell, Baan, Kodak (NL9809100N) and Akzo (NL9811108N). Nearly all subsequent negotiations with trade unions led to agreements on redundancy programmes and, in some cases, staff transfers.

The abovementioned plan for the establishment of CWIs to implement labour market policy forms part of a broader process of "privatisation" affecting the social security system, an area in which the social partners have traditionally played an important role. The implementation of the Unemployment Insurance Act (Werkloosheidswet, WW) and the Occupational Disability Insurance Act (Wet op de Arbeidsongeschiktheidsverzekering, WAO) is also set to be privatised (NL9807188F). In June, an agreement was reached in the STAR over a new executive body responsible for the provision of social security, in which both employers' and employees' organisations will play an active role (NL9806184N). The agreement proposed the future privatisation of the entire social security system - implying an especially radical change of position for the trade unions involved - and took an earlier government proposal for partial privatisation a step further (NL9804174N). The new government's subsequent coalition agreement made no mention of full privatisation: the assessment of disability claims will remain in state hands (NL9807190N). However, the social partners did not move from their positions as set out in the STAR agreement (NL9809198F).

Developments in representation and role of the social partners

The amended Works Councils Act (Wet op de ondernemingsraden) took effect on 4 March 1998 (NL9802162N). The key objective of the amendments was to update the existing law, with a heavy emphasis on the desirability of self-regulation as opposed to elaborate legislation. The act also made it legally possible for employers and works councils to reach agreements independently (and not only on issues laid down in the Act), as had already been happening in practice for quite some time. The most important concrete measure was an amendment to the Act's workforce-size thresholds. Now, all companies employing more than 50 (formerly 35) employees must establish a works council. For companies employing fewer than 50 employees, the new law introduces a personnel forum (personeelsvertegenwoordiging), a kind of mini-works council, which must be set up if requested by more than 50% of the employees. Otherwise, the employer must organise a biannual meeting of all employees - formerly, this requirement applied only to companies employing between 10 and 35 employees. The Act was also simplified and modernised where possible.

Application of the Works Councils Act in the public service sector caused quite a stir on several occasions in 1998, with government bodies being forced to revoke a number of decisions in cases where the works council had been circumvented or insufficiently consulted. In general, courts appear to be applying the same approach to employee consultation in government organisations as they have with respect to commercial organisations (NL9810102F).

With regard to the structure of social partner organisations, the most important development in 1998 was the merger between four trade unions affiliated to the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV). The four unions, representing workers in industry, services, transport and food, formed Allied Unions (FNV Bondgenoten), which is by far the largest union in the Netherlands with approximately half a million members. Membership figures for the main union confederations increased slightly in 1998 (NL9901122N). Another notable development in 1998 was that, for the first time, the FNV-affiliated building and woodworkers' union (Bouw- en Houtbond FNV) accepted self-employed people without employees as members.

Industrial relations and the impact of EMU

As in 1997, wage moderation was a key issue in 1998 in the preparations for EMU. The end of the year in particular saw numerous calls for wage moderation from employers and government. The reactions from trade unions varied widely.

Conclusions and outlook

Collective bargaining in 1998 was dominated by the issues of early retirement pensions, workplace stress, performance-related pay and employability measures. Collectively agreed early retirement schemes are increasingly being replaced by pre-pension schemes, and this debate is likely continue in 1999. The increase in the value of employee share options has posed a problem for the policy of wage moderation and is therefore under review. Recent years of budgetary stringency have led to industrial unrest in the public sector and many of the issues in dispute remain unresolved at the beginning of 1999. The legislature has been concerned with revisions in regulations on part-time and fixed-term contract work and these topics will continue to preoccupy the political sphere. (Robbert van het Kaar, HSI)

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