Netherlands: Latest working life developments Q4 2018

Moves to make the Dutch labour market more balanced and new efforts to encourage people with disabilities to enter the workplace 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 fourth quarter of 2018.

Balancing the Dutch labour market

While unemployment has been declining (3.5% as of December 2018) [1] and is now below the level observed during the 2008 economic crisis, the Dutch labour market is not without its challenges. It is characterised by a high percentage of flexible contracts, as many Dutch employers are reluctant to offer permanent contracts because they have a high level of responsibility for their employees and are obliged to contribute to their social security provisions. For example, a Dutch employer is obligated to pay out sick leave instalments to an ill employee for up to two years, and it is extremely difficult to fire an employee who is performing badly. These arrangements mean that many Dutch employers tend to favour fixed and flexible employment contracts, which can lead to insecurity for employees.

This feature of the Dutch labour market has long been recognised by social partners and the government. The Ministry of Employment and Social Affairs has drafted a new law, the Law on a Balanced Labour Market, which was recently submitted to parliament and is undergoing consultation. The law encompasses a variety of measures as the labour market imbalances cannot be attributed to a single cause. [2]

One of these imbalances – relating to the obligation to pay two years of sick pay – has recently been addressed by the Ministry of Social Affairs and Employment through discussion with the country’s largest trade union (the Federation of Dutch Trade Unions (FNV)) and employer organisations. The social dialogue was deemed a success by both trade unions and employer organisations, as the ministry agreed to cancel the planned €300 million budget cut to the sick leave payment programme (the WIA) and promised that the government would add an extra €450 million to subsidise small enterprises. While this was a step away from the plans presented in the government’s initial coalition agreement, it was welcomed by social partners. [3]

New efforts to support workers with disabilities

The question of how to encourage greater participation in the workplace for people with disabilities has been the subject of policy debate at national level for the better part of 2018.

The Participation Act was put into effect in 2015 to make the provision of social security and employment subsidies and allowances easier. However, the Act is still seen as complex by both employers and people with disabilities, and leads to unbalanced incentives.

As of September 2018, around half of those people with disabilities who were willing to work did not have a job. People with disabilities sometimes earn less on balance if they start working, because they lose certain benefits and can struggle to earn a minimum wage. This acts as a form of discouragement. In turn, enterprises can find it difficult to meet the needs of people with disabilities and struggle to accommodate the protected job positions they are required to provide.

Tamara van Ark, the State Secretary for Social Affairs and Employment, has therefore begun developing a range of measures to address these disincentives.

  • Enterprises will receive subsidies for employing multiple people with disabilities on the same day.
  • People with disabilities will receive more income the more they work.
  • The administration and rules relating to hiring a person with disabilities will be reduced and simplified.
  • Stronger links will be made between employers and potential employees.
  • Working will be made a more attractive option for people with disabilities.

The aim is also to create 125,000 jobs for people with disabilities, as promised by the cabinet during its formation. The private sector is to provide 100,000 of these jobs, and governmental bodies will provide the other 25,000. [4] While the private sector has achieved its target, the government needs to take further steps. [5]

Commentary

The Ministry of Social Affairs and Employment is working to counteract the imbalance in the Dutch labour market with the aforementioned Law on a Balanced Labour Market, which includes a range of measures. In a context where the employment rate is low and certain sectors are facing labour shortages, change is needed. Not only in terms of balancing the labour market dynamics (encouraging fewer fixed, flexible contracts and more permanent or longer-term contracts), but also in terms of making it easier for companies to hire and fire workers, and making a renewed commitment to increasing the inclusion of workers with disabilities.


Footnotes

  1. ^ de Volkskrant (2018), Hosanna! De werkloosheid is op een recordlaagte van 3,5 procent , 21 December
  2. ^ HR Praktijk (2018), Wet arbeidsmarkt in balans (WAB) naar Tweede Kamer , 7 November
  3. ^ NRC.nl (2018), Koolmees maakt vakbond én werkgever blij , 20 December
  4. ^ Clean Totaal (2018), Banenafspraak: onderscheid tussen markt en overheid afgeschaft , 9 October
  5. ^ Government of the Netherlands (2018), Reactie staatssecretaris Van Ark over de banenafspraak en de overheid , 9 October

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