1999 Annual Review for The Netherlands

This record reviews 1999's main developments in industrial relations in The Netherlands

Economic developments

Although GDP growth continued to be relatively robust in 1999, it decreased slightly to 3.5%, compared with 3.7% in 1998 and 3.8% in 1997 (which was the highest level since 1990). The budget showed a surplus of 0.25% of GDP in 1999, compared with deficits of 1.75% in 1998 and 2.5% in 1997. Public debt as a proportion of GDP stood at 70.0% in 1998, down from 72.6% in 1997 (the figures had previously run at over 77% throughout the 1990s). Inflation rose slightly over 1999, to 2.2%, compared with 2.0% in 1998 and 2.2% in 1997 (throughout the 1990s, inflation ran at around 2%-3%)

Unemployment appeared to be continuing its downward trend after the high point of a rate of 8.3% (533,000 people) reached in 1995. Although figures for 1999 are not yet available, 1998 figures show that the unemployment rate dropped to 6.0% (400,000), from 6.9% (455,000) in 1997.

Political developments

On 19 May 1999, much to the surprise of many, the second-term "purple coalition" government, once again comprising the Labour Party (Partij van de Arbeid, PvdA), the liberal People's Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie, VVD) and the social democratic Democraten 66 (D66), disbanded. The two-thirds majority required in the First Chamber to approve a corrective referendum was not achieved (NL9905141N). However, over the summer of 1999, the breach was healed and the coalition reformed.

In September 1999, the cabinet presented its plans for a fundamental reform of the Dutch tax system, aimed at reining in labour costs and increasing the country's ability to compete in the global market. Overall, reactions by the social partners were positive (NL9906149N), although with many specific criticisms (NL9909162N).

Collective bargaining

In general, collective bargaining was difficult in 1999. In several sectors, such as construction, metalworking and banking, negotiations were suspended once or more. After an agreement for police officers had been reached (NL9901120N), the unions threatened to go to court when the Minister of Internal Affairs announced that he wanted to review the pay clauses. The relatively large number of conflicts during and around the negotiations can largely be explained by the booming Dutch economy, resulting in increasing labour market shortages (NL9903130N). In terms of main issues, the unions pressed for higher wages and a reduction of stress at work, while the employers aimed for a more flexible bargaining structure and pay flexibilisation by linking a part of wages to the performance of enterprises. In several sectors, such as banking, the current sectoral agreement is likely to be divided into smaller constituents in future, whilst in others, such as construction, the current very detailed agreement is likely to be replaced by a framework agreement (NL9905139F).

The government continues to "normalise" industrial relations for civil servants, attempting to model them on the private sector (NL9904134F). Budgetary restraints, however, make this a laborious process (NL9904138N and NL9905142N).

Pay

The average collectively-agreed basic pay increase in the Netherlands in 1999 was 2.7%, slightly down from the 1998 figure of 2.8%.

In the autumn of 1999, stock option plans for senior management again led to protests by the unions, threatening to blow apart the famed Dutch "polder model" of consensus and consultation. This led employer representatives to promise to urge their members to practice moderation, while stressing the need for the continuation of moderate wage developments ( NL9908159N ). In late 1999, the trade union confederations increased their wage claim for the forthcoming bargaining round from 3% to 4% ( NL9910169N ).

Working time

The average working week in 1999, as in 1998, was 37 hours. There was no marked increase in flexibility arrangements. In 1993, 63% of employees had a full-time job, 28% a part-time job and 9% a "flexible" job. In 1997, the respective figures were 58%, 30% and 12% and it appears that these percentages have remained stable since this date. Because of the prevalent labour market shortages, the gradual increase in the proportion of flexible workers seems to have been reversed. The incidence of part-time work in the Netherlands is traditionally very high. A report by the Labour Inspectorate , issued in April 1999, showed that two-thirds of collective agreements contain clauses aimed at encouraging part-time work.

Equal opportunities

There were no important developments in 1999, as far as collective bargaining is concerned, in the field of equal opportunities.

Job security

In some collective agreements, job security and training and skills development (see next point) have been linked: employment security has been made dependent on continuous training and education.

Training and skills development

Almost all collective agreements contain clauses on general and job-specific education and training, and leave for reasons of training and education. Almost 25% of collective agreements contain clauses relating to long-term training schemes for employees.

Legislative developments

On 1 January 1999, the Flexibility and Security Act took effect (NL9901117F). This Act aims to bring about a new balance between employers and employees in the labour market. It has made fixed employment more flexible and increased the security of flexible employees. The law has changed Dutch labour law in many respects, amongst which are the following:

  • companies have more freedom to use temporary employment contracts than in the past;
  • a chain of consecutive temporary employment contracts will, under certain conditions, lead to a permanent employment contract; and
  • agreements between employees and temporary employment agencies will now be considered to be employment contracts.

In the last month before the law took effect, many temporary agency employees were dismissed. Later in 1999, the largest temporary agencies and trade unions agreed to examine and deal with the consequences of the new law (NL9902125N), while later still the initial effects of the law were investigated (NL9905140F).

In February 1999, a bill for a new framework law on "work and care" was introduced (NL9902126N). Under this bill, employees will be entitled to 10 days of paid leave every year in order to care for a sick relative. The bill also proposes the introduction of four weeks of paid leave in the case of adoption, long-term unpaid leave for reasons of care, and new rules on part-time work. The main goal of this proposed legislation is to facilitate the combination of work and care. Part of the bill also aims to introduce an obligation on unemployed lone parents with one or more children between the ages of five and 12 to apply for a job.

The proposals have received mixed responses, both from the social partners and political parties (NL9902126N and NL9907154N). Overall, the bill is supported by the unions, while it is fiercely opposed by employers' organisations (NL9903128F).

On 1 November 1999, an new law on working conditions took effect. The amendments it makes to its predecessor are minor, although it creates scope for a more prominent role of works councils in the field of working conditions.

Over the course of the year, the Working Hours Adjustment Bill, granting employees the legal right to choose to adjust their working hours upwards or downwards, was introduced. In October 1999, the bill was approved in the parliamentary lower house (NL9910170N).

In keeping with a promise made earlier to the lower house of parliament, the Minister of Social Affairs and Employment installed a committee of experts on 25 February 1999 to advise upon reform of Dutch legislation governing dismissal, which is currently based on a "dual" system (NL9909160F). In principle, in order unilaterally to terminate an open-ended employment contract, a private employer must obtain prior permission to do so from an administrative body. However, an alternative procedure, originally created as an "emergency exit", has developed into a parallel "main road" to dismissal: the employer may file a request at the subdistrict court to dissolve the employment contract, on the basis of "compelling grounds" or "changed circumstances" (NL9907152N).

The organisation and role of the social partners

There is an increasing tendency, among both employers' organisations and trade unions, to cooperate or even merge. Developments in 1999 included the affiliation of occupational unions such as Nieuwe Unie '91 (NU'91), representing nurses, and the Federatieve Spoorweg Vakvereniging (FSV) railway workers' union to a main union confederation (NL9901122N). The Military Police Association (Marechausseevereniging) withdrew from the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) to join the General Federation of Military Personnel (Algemene Federatie voor Militair Personeell, AFMP), affiliated to the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) (NL9910168N).

Unions have also begun to open their doors to self-employed individuals who do not employ any staff. In mid-1999, the largest union in the Netherlands, the FNV-affiliated United Unions (FNV Bondgenoten), created a separate organisation for self-employed people. Other unions have been more hesitant, however, fearing an erosion of the strength of collective agreements. In summer 1999, several union confederations announced initiatives concerning financial services and education for their members.

Industrial action

The bargaining round for the 180,000 civil servants in 1999 was accompanied by substantial industrial action, especially in the big cities and in the areas of public transport and waste collection (NL9905142N). As was the case during the previous year, 1999 also saw several strikes in the railway sector.

In addition, some unofficial action took place during the bargaining round in public broadcasting (NL9903131N). Finally, many smaller strikes and conflicts were caused by planned company reorganisations (NL9904136N).

National Action Plan (NAP) for employment

During 1999, there were no significant developments related to the Dutch National Action Plan (NAP) for employment, as far as the social partners were concerned. The debate on employment focuses in the Netherlands on the increasing labour market shortages and the need to increase the participation of disabled workers (see below under "Other developments"), employees with children and older workers.

The impact of EMU on collective bargaining and industrial relations

The subject of the EMU is not currently hotly debated in Dutch industrial relations, and mainly figures in debates on the development of wages. According to the largest union confederation, FNV, the policy of European countries and the European Central Bank should focus more on the growth of employment. FNV also sees a need to coordinate collective bargaining in different countries, partly to prevent trade unions from being played off against one other. The largest confederation of employers, VNO-NCW, continues to stress the importance of moderate wage increases with regard to EMU.

Employee representation

The trade unions and part of the parliamentary lower house are aiming to reform Dutch company law in relation to the supervisory board. Some of the proposals relate to the introduction of genuine "worker directors" on the board. The proposals are not so much a consequence of developments concerning the proposed European Company Statute, but stem rather from dissatisfaction with existing legislation relating to the supervisory board. Employers' organisations are calling for the postponement of new legislation in order to integrate the proposals with the regulation of related subjects such as the supervisory board, takeover bids and defensive measures against hostile takeovers in one legislative round (NL9910166F).

In October 1999, the Enterprise Chamber of the Amsterdam Court ruled for the first time that works councils have a right to give advice (and go to court) when the employer asks for a "suspension of payments" (originally a means of giving companies a breathing space to resolve temporary financial problems, but in practice usually the forerunner of bankruptcy) (NL9911171F).

New forms of work

On 28 April 1999, employees and employers reached agreement within the bipartite Labour Foundation (Stichting van de Arbeid, STAR) on increasing the provision of personalised options for individual employees within collective agreements (NL9906144F). Under the plan, standard package of conditions of employment as established in collective agreements will provide the foundations for employment conditions. However, in addition, certain components of the standard package (such as participation in savings schemes, premium payments for flexible pension plans, extra days off, end-of-year bonuses and study leave) can be marked in advance for "interchange", with one condition of employment being exchanged for another (NL9906148N).

Legislative developments in 1999 in the area of part-time and flexible working are dealt with above (under "Legislative developments").

Other developments

A subject that remains permanently high on the agenda of both the government, political parties and the social partners is the very high number of people claiming disability benefit (NL9902124F). All measures aimed at reducing the flow into, and increasing the outflow from, this benefit have up until now failed (NL9904133F and NL9910167F). Employers are calling for a reduction of the duration and level of benefits for these people, while unions stress the importance of an improvement in working conditions and reintegration measures. At the end of 1999, plans to reorganise the implementation of social security provision resulted in protests from both employers' organisations and unions, which maintained that under these plans, their present role would be reduced to one of insignificance (NL9912176F). (However, in January 2000, the social partners and the government reached a compromise on a new structure for the social security system, under which the social partners will assume a larger role in formulating policy on reintegrating unemployed and disabled people into the labour market. The cabinet's proposal to place the payment of benefits to these two groups, and responsibility for implementation, entirely in the public domain, remained unchanged (NL0002179N).)

Dutch industrial relations are increasingly shaped by rising labour market shortages. These not only to a large extent explain the intensity of the discussion on disabled employees and stress at work (NL9909161F) but also the increasing focus on the labour market position of people from ethnic minorities (NL9805176F), asylum seekers (NL9909163N), lone parents (NL9911172F) and older and retired workers (NL9912175F).

Outlook

As mentioned above (under "Other developments"), Dutch industrial relations are increasingly shaped by labour market shortages and this is likely to continue to be the case in the years to come. The solutions proposed by employers on the one hand and unions on the other hand will remain a cause for tension. Unions reject lower benefits for disabled people and are not keen on raising the retirement age. Employers reject the higher wage claims unions think are fair and stress the benefits of wage moderation for the good of the Dutch economy.

In relation to collective bargaining, the new issue seems to be the flexibilisation of pay. The tendency to decentralise the level of bargaining will continue and will probably result in the splitting up of one or more sectoral agreements.

Industrial conflict will, as in previous years, be concentrated in sectors that are confronted with privatisation and liberalisation, such as public transport and public utilities.

In different ways the subject of corporate governance (in a broad sense) will be high on the agenda: salaries and benefits for senior management, which put pressure on moderation of wage increases; the intended changes in Dutch company law; and, more generally, the relative weight of the interests of employees and shareholders in large companies.

Finally, in view of the continuing high number of people claiming disability benefit and the continuing debate about this benefit, social security is likely to remain an important topic throughout 2000.

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