Government's collapse leaves many controversial issues unresolved

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The Netherlands' three-party centre-right coalition government collapsed after only a few months in October 2002, following conflict within one of its member parties, the right-wing populist List Pim Fortuyn (LPF ). Until new elections are held in January 2003, no further decisions may be taken on controversial issues, leaving a number of the outgoing government's employment-related proposals unresolved.

In October 2002, the coalition government of the Christian Democratic Appeal (Christen Democratisch Appèl, CDA), the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) and the right-wing populist List Pim Fortuyn (Lijst Pim Fortuyn, LPF), led by Prime Minister Jan-Peter Balkenende, collapsed after only a few months in office. Its demise came as a result of internal LPF conflicts – within the party membership, between the party and its executive and between two LPF cabinet ministers. The other two coalition parties called and won a vote of no confidence in the government on 16 October, while the leader of LPF was still attempting to find replacements for two quarrelling ministers who had just resigned. What first appeared to be a quarrel between ministers quickly emerged as government crisis, and the coalition parties lost confidence in the cabinet’s performance.

New elections will be held in January 2003. In the meantime, the outgoing cabinet will continue in a caretaker capacity, though it may not take any controversial decisions. The Lower House of parliament is currently debating which measures should be seen as controversial and which are necessary to run the country properly. For their part, the social partners have breathed a sigh of relief. Employers and trade unions alike had doubts regarding many of the outgoing government's proposals.

The social partners represented on the bipartite Labour Foundation (Stichting van de Arbeid, STAR) have asked the Lower House to set aside the government's legislative proposal on reform of the Occupational Disability Insurance Act (Wet op de Arbeidsongeschiktheid, WAO) for the time being. The proposal would oblige employers to continue to pay sick employees 70% of their last-earned salary during their second year of sickness absence. Trade unions have made it clear that they will not attend the traditional autumn consultation meeting with the government at the end of November if the WAO proposal is not withdrawn from the Council of State (Raad van State). The government's plan deviates on a number of essential points from the recommendations on WAO reform put forward by the tripartite Social and Economic Council (Sociaal-Economische Raad, SER) in March 2002 (NL0204101N).

The caretaker government may also put aside the issue of wage moderation. However, employers have independently expressed their fear that, as a result of the government's demise, they will have to pay EUR 750 million more tax in 2003 because the WW unemployment insurance premium will not be lowered, as planned, and the government's proposal to abolish a tax-exempt employee savings scheme (spaarloon) has been shelved for now. Employers are demanding that the interim cabinet does not go back on its earlier proposals in these areas. Trade unions, on the other hand, appear to favour withdrawal of the proposals, believing it unfair to abolish tax-exempt employee savings – often used a pension supplement – because this would affect workers financially.

The government's proposal to scrap subsidised employment schemes (NL0206104F) has met with fierce resistance from trade unions. In the weeks leading up to the cabinet’s collapse, the unions put forward proposals to avert job losses in the subsidised employment sector by using unemployment insurance contributions, in exchange for which they would be prepared to withdraw their demand for easing the tax and social security contribution burden. Employers oppose spending unemployment insurance funds on supporting subsidised jobs; they still favour easing the tax and social security contribution burden in the interests of strengthening the competitive position of the Netherlands. Municipal authorities have since made it known that they intend to pay the bill for subsidised employment themselves, because they cannot afford to do without these employees who, for example, work in public transport or as as wardens in city centres. Left-wing members of the Lower House believe that the sensitive issue of subsidised employment should not be addressed prior to the forthcoming elections.

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