Netherlands: Latest working life developments – Q3 2016

The increase in wages, rise in self-employed workers, and new reports on the state of the labour market and works councils are the main topics of interest in this article. This country update reports on the latest developments in working life in the Netherlands in the third quarter of 2016.

Wage increase

Wages increased at a higher rate this quarter with collectively agreed wages increasing by 2.1%, the highest rate since the start of the financial crisis. This rise took place against the backdrop of a gradually improving labour market situation and falling unemployment levels. At the end of October 2016, the unemployment rate was down from 6% in Q2 to 5.6% in Q3 (502,000 people). 

However, there is debate over whether wages are increasing quickly enough and a growing number of economists have said that the state of the Dutch economy means there is scope for further wage increases. Unsurprisingly, this position has been welcomed by the unions but challenged by the main employer federations. Employers are arguing for a more flexible approach that allows for differences between companies and sectors. They want to see wage increases based on productivity gains and competitiveness, rather than traditional incremental rises based on length of service.

The debate on wages has also focused on self-employed workers. The self-employment rate is increasing rapidly, far exceeding that of neighbouring countries. One issue is whether – and to what extent – this growth may be partly responsible for the falling rate of labour income share (LIS) in the Dutch economy, although this suggestion is hotly debated. See the Dutch Central Bank’s bulletin on the status of the LIS.

Reports on the labour market

During the summer and early autumn, several research reports addressed the current state and the future of the Dutch labour market. The tripartite Social and Economic Council (SER) issued preliminary advice about the effects of digitalisation (including the use of robots) on the Dutch economy. The Social and Cultural Planning Bureau (SCP) and research company TNO published a report on the labour market position of people with health problems, highlighting some adverse developments since the start of the financial crisis. Another SCP report focused on training and education, highlighting the growing gap between employees with different educational backgrounds. Of the total employees who need training and education to cope with forthcoming changes, 24% were lower skilled workers and 57% were higher skilled.

Works council developments, company disputes and new legislation

A report by the SER on the training and education of works council members indicates that the 2013 change in the financing of training and education for works council members has had no major effects. A court ruling in July reconfirmed works council rights to nominate members of the supervisory board.

The summer and early autumn of 2016 saw major disputes at Royal Dutch Airlines KLM, which resulted in several court cases on the right to strike. Apart from one compromise for ground personnel, a number of conflicts are still pending.

Finally, legislation was introduced to protect whistle-blowers with the of use non-binding but highly recommended codes of conduct. Previously, such legislation had been lacking in the Netherlands.

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