The Netherlands: EIRO Annual Review 2009

  • Observatory: EurWORK
  • Topic:
  • Published on: 10 January 2011



About
Country:
Netherlands
Author:
Marianne Grunell
Institution:

In January 2009, the Minister of Social Affairs and the social partners remained committed to combating the economic crisis. The government promised to continue the 2008 scheme, offering companies in difficulties the option of making their employees unemployed for a maximum of half their working hours. The union federations committed to putting forward modest wage demands, while employers pledged not to table the issue of raising the present retirement age of 65. This peace agreement collapsed when the social partners were unable to advise unanimously on the retirement age and then in the autumn the government put forward its plan to increase the retirement age. This received the support of the employer organisations. Since the relations have been strained.

1. Political developments

The government in office during 2009 consisted of three parties. For the fifth consecutive term, the new coalition included the Christian Democratic Appeal (Christen Democratisch Appel, CDA) which, with 41 seats, presented the biggest party in the Dutch House of Representatives. Both the Labour Party (Partij van de Arbeid, PvdA) with 32 seats and the Christian Union (Christen Unie, CU) with 6 seats were new in government and accountable for the more left character of the government’s policy. Mr Jan Peter Balkenende of the CDA served once again as Prime Minister (NL0612019I).

No general or regional/local elections took place in 2009.

2. Collective bargaining developments

Pay

Collectively agreed wages decreased in 2009, compared to 2008. In 2009 the annual wage increase was 3%, in 2008 this was 3,3%, according to the 2009 Autumn Report on Collective Bargaining. This bi-annual report by the Ministry of Social Affairs, (Ministerie van Sociale Zaken, Najaarsrapportage cao-afspraken 2009, Den Haag) covered 87% of employees. There was a significant difference in pay rise between economic sectors; agriculture and commercial services scored low with an annual rise of 1,4% and 1.9%, while transport and communication scored high with a rise of 3,5%.

On average, the pay rise in 2009 was in line with inflation. Although cabinet sought to maintain the zero line, unions and employer associations agreed on an average wage increase in line with inflation (1%). The construction industry agreement indeed reflected the concordance between the social partners, with employers demonstrating that they were already thinking beyond the recession, wanting to remain an attractive sector for young people. The Central Planning Office (Centraal Planbureau, CPB) emphasised that wage moderation would be more counterproductive than productive against the backdrop of serious economic shrinkage facing the Netherlands (NL0907019I). The collective agreement for hospital staff closed in April 2009, breaching the zero line for wages. The two-year collective agreement encompassed an annual wage increase of 1%, as well as an increasing end-of-year bonus (NL0905039I).

The incidence of variable payments systems (VPS) and performance-related pay (PRP) gradually increased. Most forms of VPS were covered by collective bargaining, with the exception of share and option schemes. Employers and the government very much supported the spread of VPS, while unions were less reluctant to accept VPS than they were in the past (NL0803019Q). The issue of remuneration through bonuses has been a contested issue during 2009 (see 3. Legislative developments).

Working time

The 36-hour working week remained the norm and the average collectively agreed normal working week was 37 hours. However, trough the Working time Act the legal space and the actual pressure of employers to extend the working week increased.

Training and skills

The trend that more and more arrangements on training are included in collective agreements has continued in 2009. Arrangements on individual development plans rose in 2008 by 7% and were available for 26% of employees. The aim, agreed upon in the 2008 Autumn Agreement by employers and employees, was to increase employability.

The economic recession in 2009 has given the issue of training a large impetus by the agreement of government and social partners. In this context training has become more and more central to combat unemployment.

The scheme on reduction of workings hours remained intact. The scheme enabled companies to apply for part-time unemployment for some of their employees. In order to avoid mass redundancies, every attempt was be made to increase employee mobility. Many of the companies and employees involved set up refresher training programmes aimed at the unemployed.

Equal opportunities and diversity issues

Women

In 2009 three quarters of all women working in the Netherlands were in part-time positions and that they are mostly satisfied with this. The ‘Deeltijd-Plus’ (part-time plus) government committee, established to develop policy directed at women aspiring to work in larger-scale part-time positions, derived support from the result that many women wished to work an average of five hours more a week. Employers appeared to provide women with little incentive to do so. At the start of 2009, studies showed that the number of women occupying upper management positions in the business community was stagnating (NL0904049I).

The telecom and ICT company KPN took the lead in looking into a different and contested approach. KPN was the first group to exclusively invite women to apply for some executive positions. In so doing, the telecom and ICT company took a step further than the Dutch House of Representatives, which adopted a proposal tabled by the governing Labour Party (PvdA) at the end of October 2009 to introduce a target of 30% for women in executive positions at large-scale companies. In a manifesto drafted by 240 women in executive positions directed at parliament, there was even a call for a quota of 40%, the same as in Norway. The problem in the Netherlands was the dominance of small-scale part-time jobs: three quarters of all working women held such a position and most of them were happy to do so. The Part-Time Plus Taskforce appointed by government concluded that employers should engage more in discussing career plans with their female employees e.g. in relation to them having children (NL0911019I).

The issue of equal pay and the problem of the gender pay gap have been on the agenda of the social partners and the government for many years. Government and social partners have taken action to tackle this form of discrimination. They stimulated research into sectors, offered instruments and guidance to companies and parties in collective bargaining. In 2009 the gap became once more smaller; the goal of the government to reduce the gap of net 6.5% further with 2% in 2011 was viewed as realistic by the social partners (NL0912019Q).

With respect to diversity issues it has been argued that in 2009 they lost their urgency during the economic recession.

Other issues

Neither new forms of work, job security nor occupational pensions were featured prominently on the collective bargaining agenda during 2009. It is obvious that during an economic recession job security (unemployment) is a concern for many workers. In the course of 2009 it became clear that the self employed had a higher than average change of loosing assignments, work and income. In 20019 ccupational pensions did not feature prominently on the bargaining agenda, but became a highly sensitive issue. The value of pensions dropped dramatically during the financial crisis and the National Bank intensified its supervision (NL0905019I).

3. Legislative developments

Companies liable for malafide agencies

The Ministry of Social Affairs submitted a legislative proposal directed at holding companies that hire temporary employees through malafide employment agencies liable for non-paid-out wages. The unions and employers’ organisations called for the legislative amendment to combat the practices of malafide employment agencies, in particular those that underpay foreign workers. The social partners were satisfied with this legislative proposal to hold companies liable if they worked with non-certified employment agencies. Understandably, bonafide employment agencies were satisfied with the more stringent legislation as they faced unfair competition from the malafide agencie (NL0902029I; NL0902039I).

Retirement age

The Dutch cabinet put forward a legislative proposal raising the retirement age to 67. The social partners were divided in their response. The unions were outraged, partly because of the proposals and partly because they felt by-passed. The VNO-NCW employers’ association on the other hand was positive. The government proposal consisted of an increase in two steps: the retirement age will be raised to 66 in 2020, and then to 67 in 2025. This also applies to the age at which company pension schemes will be paid out. Employees currently aged 55 will be spared from this cutback. The criticism included assertions that cabinet’s financial budgetary difficulties will not be resolved in the short term and that the proposed scheme was too rigid and would be difficult to implement. The trade unions pointed out that poorly paid workers who carry out heavy tasks will be unjustly burdened by these measures. Although employer representatives were satisfied with the proposed cutbacks on company pension schemes, they believed it would be practically unfeasible for employers to bear responsibility for workers who carry out heavy tasks until the end of their careers (NL0910019I).

Bonuses

In February 2009, the Dutch House of Representatives requested the government to close a gentlemen’s agreement with the banks on bonus moderation. In summer 2008, the House of Representatives agreed to a proposal tabled by Minister Wouter Bos of Finance to tax more heavily incomes at the top end of the salary scale and to get to grips with the manipulation of shares and options surrounding business takeovers. The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) much supported such policy, as measures taken in recent years have achieved little. These measures included the call for transparency and more room for self-regulation. The VNO-NCW employers’ association was critical, fearing that the Netherlands will only price itself out of the market as a result. Over the years, advisory committees have become stricter in their recommendations in this area. The current financial and economic crisis has broadened political support for intervention of some form in relation to excessive remuneration (NL0902059I).

Governance

The CNV Services Federation (CNV Dienstenbond) launched a plan to increase employee influence within companies. Its aim was to secure continuity for the companies and create a better balance in terms of mutual interests. The proposals related to different aspects such as raising the number of employee supervisory directors in the management board, introducing a loyalty dividend and improving strategic communication between the executive and work floor levels within companies. The first company eligible for the power shift was ABN Amro / Fortis, which was partly taken over by the state in the wake of the financial crisis in 2008. This proposal would certainly inspire upcoming governance regulations regarding companies and financial (pension) funds (NL0907029I).

4. Organisation and role of the social partners

During 2008 no major changes took place in the organisation and role of the social partners. There were no mergers or a change in social dialogue structure. Membership levels and representativeness did not change significantly.

In 2009 he organisation and role of employer organisations did not change. The three national peak associations remained – VNO-NCW, MKB-Nederland and LTO-Nederland – representing the same types of companies. These associations remained the accepted parties in consultations with government. In addition, there were between 800 to 1200 sectoral organisations, which concluded the sectoral collective agreements. These sectoral agreements are usually extended and cover the labour conditions of more than 90% of employees. This dense organisation of employers reflects their unchanged importance and their unchallenged position in Dutch industrial relations (NL0910049Q).

In 2009 the organisation and role of employees’ organisations did not change. The same three national peak organisations FNV, CNV and MHP represent Dutch employees. The decline since the 1980s in trade union membership undermines the reprentativeness of the union federations. In 2007 union density was 23%, in 1990 the union density was 24%. Since 1995 fewer males and young employees joined the unions, although female membership has increased. Initiatives such as the internet union and cheaper membership fees (for fewer services) were employed to attract more pragmatic younger members (NL0901029I). In December 2009 the largest union of the FNV, FNV Bondgenoten reported an increase in membership of 40.000. Its total membership was then 478.552, the highest number since 2001. The union federations are accepted parties in consultations with government and in bargaining negotiations with employer organisations.

5. Industrial action

In 2008 120.600 labour days were lost in a total of 21 disputes. 51.900 Employees were involved in these strikes. In comparison to 2007 there were about the same number of disputes (21 to 20), but the number of labour days lost increased fivefold and the number of employees involved doubled. 9 of the 21 disputes took place in the transport sector, involving 26.300 employees and loosing 82.900 labour days. (Central Bureau for Statistics)

No changes took place in the law on strikes or dispute resolution (NL0910039Q).

6. Restructuring

Arguably, the impact of the crisis in the Netherlands has been less severe than in many other EU countries. Unemployment has increased, but only to just over 5% in the beginning of 2010. The actual numbers of hours worked has probably fallen much more than that, due to loss of jobs by flexible workers, less overtime, and significantly less hours worked by the self–employed. Like in many other countries, a system of part time unemployment arrangements has been created, covering between 30,000 and 40,000 employees. Large scale restructuring has occurred, but only in a limited number of firms and only partly due to the crisis itself.

7. Impact of economic downturn

At the start of 2009, Minister Piet Hein Donner of Social Affairs and the social partners have joined forces to combat the economic crisis. The government and social partners reached an agreement on moderate wage demands, scrapping unemployment premiums and earmarking millions to retain the spending power of people suffering from chronic illnesses and minimum-wage earners. Even the social partners’ interim agreement on dismissal law was accepted (NL0901029I).

Since January 2009 the three parties have been looking for sustainable measures to modernise the labour market. In order to avoid mass redundancies, every attempt was to be made to increase employee mobility. The reduction of working hours scheme has remained intact. A new scheme took effect on 1 April 2009, enabling companies to apply for part-time unemployment for some of their employees. Government offered companies in difficulties the option of making their employees unemployed for a maximum of half their working hours and for a period of no more than 15 months. Since benefits amount to 70% of the salary level, employees would have had to forfeit 15% of their overall salary. To increase their mobility refresher training programmes were introduced and the role mobility centres had to play was intensified (NL0901049I).

In 2009 3.800 companies made use of the scheme, benefiting 40.000 employees. Over 2009 the scheme costed nearly 1,2 billion euro. Due to this scheme unemployment figures remained relatively low in 2009; in December around 400.000 unemployed were registered. This is 110.000 more than in December 2008.

In the spring of 2009 the social partners agreed to support the crisis package proposed by the cabinet, but their support of the cabinet proposals was conditional. The social partners have reached mutual agreement that the trade unions would only put forward modest wage demands and that the employers would not raise the issue of adjusting the retirement age of 65 without due consideration. Cabinet released €6 billion to maintain spending levels and infrastructural investment (NL0904039I).

The mutual agreement between the social partners was disrupted by the government. The social partners were critical of the concrete plans put forward by the Dutch cabinet to cushion the impact of the economic crisis. The unions were against the cabinet’s plans to keep older employees working for longer and to raise the retirement age specified in the General Old-Age Pension Act (Algemene Ouderdomswet, AOW). The VNO-NCW employers’ association planned to scrap the mortgage interest rate deduction (NL0902049I).

In the autumn of 2009 it became obvious that the government would leave the tax reduction on the mortgages of home owners in place, instead focussing on the raising retirement age to 67 (NL0910019I). The union federations were outraged, but lacked sufficient support within and outside of parliament. In October 2009 a majority in the Lower House accepted the government’s proposals. Since then the State Council approved the government’s proposals, though proposed some amendments to them. In December 2009 this adjusted legislation was sent to the Lower House; further discussion are planned before spring 2010.

8. Other relevant developments

There were no other significant industrial relations developments in 2009.

Marianne Grünell, University of Amsterdam, HSI

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