Government and social partners unite efforts to tackle economic crisis

The sharp economic downturn that has followed the financial crisis in the autumn of 2008 has brought the government and social partners closer together. The government permitted companies to temporarily register employees under the Unemployment Insurance Act, and the social partners requested in December that this arrangement be extended in 2009. They also proposed a range of supplementary arrangements targeting unemployed people and business.

Extension of temporary unemployment benefits

The financial crisis hit the Netherlands in August 2008. The sharp economic downturn that followed encouraged the government and social partners to maintain a more united front. Aside from the government’s bank takeovers, which have saved thousands of jobs, the Minister of Social Affairs and Employment, Piet Hein Donner, granted companies permission to temporarily register employees under the Unemployment Insurance Act (Werkloosheidswet, WW).

Although the call to have this arrangement extended met with a mixed response from the Dutch House of Representatives (Tweede Kamer der Staten-Generaal) in November 2008, the social partners were immediately positive, as such a move would help to prevent mass redundancies in the short term. The government and social partners jointly established the criteria for the measure.

Large companies seek recourse to unemployment arrangement

The ‘unemployment arrangement’ already existed for companies to apply for in times of emergency, including the economic crisis. Under this arrangement, a working hour reduction permit can be issued for a period of six weeks and can, at most, be extended three times to 24 weeks. The companies themselves can choose how many employees to include in the application and for how many hours. Employees receive unemployment benefits for the reduced number of hours, which are ultimately deducted from their unemployment rights should they eventually be dismissed and find themselves unemployed. They would then receive unemployment benefits for a shorter period. The trade unions strongly objected to the latter provision.

Companies hoping to be eligible for the arrangement must show a decline in production of 30% for the past quarter and must also be able to plausibly demonstrate that the trend will be temporary. In November 2008, a number of large companies such as the manufacturing firms Nedcar, Daf and Corus and the information and communication technologies (ICT) company Ordina made immediate use of the arrangement. In December, the social partners called for the arrangement to be extended in 2009. However, they were disappointed when the minister only extended the entry date to mid January 2009.

Social partners propose supplementary arrangements

The social partners put forward a number of their own supplementary arrangements in the wake of the economic downturn. For example, they proposed that unemployed people should be obliged to continue training, that job-finding assistance should be improved and that intervention should be sooner. They also highlighted that opportunities for business credit should be expanded.

In addition, the social partners proposed the possibility for government projects to be brought forward, so that construction companies do not find themselves without work. They have also called for permit application procedures to be relaxed, facilitating swifter project implementation. The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) put forward its own 10-point programme, emphasising the importance of investing heavily in people and a sustainable economy in light of rising unemployment levels.

Recession imminent

In December 2008, a number of large enterprises, including the courier company TNT, and the manufacturing companies ASML and DSM, announced pending dismissals for 1,000 or more employees, despite the availability of the arrangement for temporarily reducing working hours. In the same month, the government for the first time acknowledged the threat of a recession, expecting it to set in during the first quarter of 2009.

Marianne Grünell, Hugo Sinzheimer Institute (HSI)

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