SER to advise government on an integrated lifelong working time and leave scheme

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In spring 2003, the Netherlands' tripartite advisory Social and Economic Council (SER) has been asked by the government to draw up recommendations for a 'life-span regulation'- an integrated set of measures aimed at enabling workers to manage their working time and leave over their entire working lives so as to better balance their work and family/care responsibilities. This is an issue of considerable debate at present, with the NYFER research institute recently proposing the creation of a single lifelong scheme for all types of leave and time off, based on an individual voucher system with employer and government contributions.

In 2002, the centre-right coalition government led by Prime Minister Jan Peter Balkenende proposed the introduction of a 'leave purse' (verlofknip) scheme, whereby employees would be entitled to save a certain amount of money, with tax advantages and a government contribution, in order to finance a subsequent period of unpaid leave from work (NL0207103F). The context was government policy on helping workers to reconcile their various work and care obligations. It has now been decided to link this scheme with the overall issue of a so-called 'life-span regulation' (levensloopregeling) - ie an integrated set of measures aimed at enabling workers to manage their working time and leave over their entire working lives so as better to balance their work and family/care responsibilities. The tripartite advisory Social and Economic Council (Sociaal-Economische Raad, SER) has been asked by the government to draw up recommendations on such a 'life-span regulation'.

FNV survey

The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) recently commissioned research into the factors that influence the degree of pleasure that workers derive from work. The report, based on a non-representative sample of 500 workers, was published in February 2003 (Werken = plezier? Resultaten vragenlijstonderzoek[Work = pleasure? Questionnaire survey results], MuConsult BV, FNV, Amsterdam, 2003) and highlights the importance of opportunities to combine work and care obligations. The survey finds that employees are not enthusiastic about the existing opportunities for combining work and care, and have little confidence in the 'leave purse' or other plans put forward by the Balkenende government to expand individual options for accumulating leave, as a solution to current problems. The respondents themselves favour solutions such as flexible working hours, opportunities for working at home and the provision of training during office hours. When asked about their views on the division of responsibilities, employees believe that responsibility for a 'life-span regulation' should be shared by employers, employees and the government. They consider education and leave for carers as the joint responsibility of the employer and the government .

Based on this information, FNV concludes that life-span policy should be broad-based and not confined to individual leave-accumulation regulations. The survey results will contribute towards determining FNV’s viewpoint in the SER debate on a life-span regulation. FNV believes that individual leave-accumulation regulations represent a limited approach to the issue of creating a balance between work and care obligations.

On 26 March 2003, the Dutch Federation of Small and Medium-sized Enterprises (Midden- en KleinBedrijf-Nederland, MKB-Nederland) issued a statement that it opposes life-span regulations. If such a regulation is introduced, MKB will call on its members to boycott it.

Single scheme proposed for all forms of leave

In a report published in 2003, the Forum for Economic Research (NYFER) asserts that the existing Dutch 'labour order' still caters insufficiently to a changing social reality, in which it is no longer single-income households but double-income households that form the majority, including among families with children (Even pauze in de levensloop. Internationale ervaringen met verlofregelingen en lessen voor Nederland[Take a life-span break. International experiences with leave regulations and lessons for the Netherlands], NYFER, Breukelen, 2003). Comparisons with other countries in western Europe, especially in Scandinavia, indicate that the Netherlands still invests relatively little in terms of helping employees with their care responsibilities, while participation in the labour market among women is now on a par with the European average. This results in tension between the obligations arising from paid employment and those stemming from relationships in which caring plays a role. This in turn is manifested in a high rate of absence from work, rising numbers of occupational disability benefit claimants and a very high number of extremely small-scale jobs occupied by mothers. Most employees are not in a position to accumulate sufficient time off to take leave, given their income levels and the time at which leave is most required, generally during the initial years of the career.

To combat such problems, NYFER proposes the creation of an integrated leave scheme in the form of a life-span regulation and 'insurance'. Existing leave schemes for pregnancy, parenthood, emergencies and long-term (informal) care could be united in a new scheme, along with extended maternity leave and six months of parental leave for both parents. NYFER is very much in favour of such an integrated scheme and is critical of the existing variety of diverse rules. Based on European comparisons, the institute concludes that the most effective systems are characterised by a good balance between state intervention and individual responsibility.

In the NYFER proposal, employees would accumulate leave entitlement throughout their working lives through an individual voucher system. The two other interested parties - the government and employers - should be responsible for 60% of the input. Because employees with higher incomes would tend to save leave more quickly, the option of compensating employees in lower-income brackets is raised. It is also proposed that employees could have a negative balance in their leave account - ie take leave without having saved an adequate number of days off. This could then be reimbursed through work at a later stage - towards the end of the career for example, with employees required to continue working for a longer period. The proposed life-span regulation would also cover the end-of-career period, with further cuts in very favourable early retirement schemes and the possibility of partial retirement. To this end, NYFER believes that it will be necessary to take more serious account of the input of older employees than is often the case at present, and that employers must continue to invest in their further training.

The proposed 'life-span insurance' scheme would require an annual investment of some EUR 3.2 billion. However, NYFER points to benefits such as a more efficient utilisation of human capital. The higher level of labour participation facilitated by the regulation (eg a female participation rate up 2 percentage points) would, it is claimed, generate EUR 3 billion over time. One third of this would flow straight back to the government through taxation. Employers would incur costs in making their organisations more flexible, but benefit from increased employee availability and reduced absence through illness or occupational disability

Life-span insurance and pension schemes

As seen above, NYFER raises the issues of increased flexibility with respect to the retirement age and the possibility of people continuing to work for longer, on a part-time basis for example. Most political parties are open to this form of increased labour flexibility, since this could serve to compensate for the consequences of an ageing population. The social partners believe that such a solution could also cater to an existing need among employees who have no desire to stop working abruptly when they reach a certain age.

At the same time, warning bells have already been sounded with respect to dangers in broadening the discussion on a life-span regulation to include the pension system. The capital accrued under a life-span insurance scheme must not detract from the accrual of provisions for old age. The Vermeend committee has calculated that 81% of the Dutch labour force will be confronted with a pension gap and will thus fail to achieve an income level of 70% of their last-earned pay at the age of 65. However, it has been suggested that unused vouchers from the life-span regulation scheme could contribute towards supplementary pension provisions. From an initial advice on the life-span regulation topic issued by the SER, following assessment of the views of its social partner members, it appears that the most difficult point for the trade union movement would be any conversion of all early retirement schemes into life-span insurance.

Commentary

There is at present broad-based consensus across various political parties and between the social partners that the work and care issue has evolved into a question of lifelong organisation of working time and leave. However, opinions differ regarding the precise form of any such 'life-span regulation' and the extent to which the respective parties should contribute financially. Consequently, in the recommendation ultimately issued by the SER on the life-span regulation, the ratio between individual employee responsibility, shared employer responsibility and collective government responsibility will play a significant role. In this context, the NYFER research institute has put forward an innovative proposal based on an individual voucher system, which ties in with the first steps taken in this area by the Balkenende government. However, the NYFER proposal is more generous for workers: employers and the government will be required to contribute and employees could take out an 'advance' on leave which has yet to be accumulated.

Working less during a particular period of one’s life, compensated for by continuing to work for a longer period is an attractive structure, because it diminishes the rigidity of existing retirement regulations and reduces the high cost of early retirement schemes. While such labour flexibility will no doubt appeal to employers, it will mean a short-term increase in their financial burden. Long-term benefits, such as the more efficient utilisation of staff, will still have to be proved in practice. This is also a thorny issue for the trade union movement. The path recommended by SER may involve conversion of existing early retirement schemes into the life-span regulation; older employees might have to continue working for longer and be required to relinquish existing early retirement schemes in solidarity with younger generations. (Marianne Grünell, HSI)

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