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As negotiations over the formation of a new right-wing coalition government proceed in May-June 2002, it seems likely that the new Dutch administration will radically restructure the current system of subsidised employment for groups such as long-term unemployed people and people with disabilities. There is a widespread consensus on the need for change in this area, with some favouring modernisation of the system and others its abolition.
A major restructuring of subsidised employment schemes seems to be in prospect in the Netherlands. Following the general election in May 2002, the Christian Democratic Appeal (Christen Democratisch Appèl, CDA) and the populist List Pim Fortuyn (Lijst Pim Fortuyn, LPF) are putting together a new right-wing coalition government, along with the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD). The prospective government plans to abolish the 'I/D jobs programme' for long-term unemployed people, one of the central subsidised employment provisions, within three years.
Moves to revise the current subsidised employment system have been prompted by current labour shortages as well as the reorganisation of social security and employment policy. During the past year, around 200,000 people were in subsidised jobs, representing 3% of the active labour force. During the same period, unemployment has fallen to an almost unprecedentedly low rate of below 3%. In November 2001, an interdepartmental study group added fuel to the subsidised employment discussion in a memorandum examining the current labour market situation, entitled 'Get to work' ('Aan de slag'). Prominent advisory bodies and the government have since contributed to the discussion. At present, the fate of subsidised employment is teetering between modernisation and abolition.
Background
Subsidised employment is a special measure of 'last resort', designed to promote social inclusion by giving access to employment to unemployed people. When all other efforts aimed at getting people back to work fail to result in a job, subsidised employment is a final option in labour market policy. There are three kinds of subsidised employment schemes in the Netherlands, provided for by: the Sheltered Employment Act for people with disabilities (Wet op de sociale werkvoorziening, WSW, passed in January 1998); the Job-seekers Employment Act (Wet inschakeling werkzoekenden, WIW, January 1998); and the I/D jobs programme for long-term unemployed people (introduced in January 2000). A total of about 200,000 people currently have subsidised jobs under these various schemes, with many of these jobs (89,000) in the social sector.
The provisions have various objectives. For example, jobs under the WSW scheme offer protected employment to individuals who are unable to work in a normal job situation. The WIW scheme aims to provide work experience and increase participants' qualifications, with the ultimate aim of moving into normal employment. This is also the idea behind I/D jobs, albeit to a lesser degree. I/D jobs serve different (and at times conflicting) goals - to ease social problems, offer work to long-term unemployed people and improve their chances through subsidised employment, with the possibility of making the transition to regular employment over time. During the first term of office of the 'purple' coalition government - made up of the social democratic Labour Party (Partij van de Arbeid, PvdA), the liberal VVD and the social liberal Democraten 66 (D66) - there were a total of 40,000 I/D jobs, a figure that dropped to 20,000 during its second term of office. Most of these jobs are in the lowest wage brackets in the public sector, including education and public transport. Ticket inspectors, security guards, porters and teachers' assistants with I/D jobs earn up to 130% of the minimum wage. The state pays their wages indirectly through the municipalities.
The current system of subsidised labour dates back to the early 1990s when the then Minister of Social Affairs, Ad Melkert, came up with a plan to deal with the high unemployment which prevailed at the time. The government decided to take a more active role in labour market policy, which led to a shift in accent from normal work to subsidised employment. Furthermore, subsidised labour was increasingly used in the public sector. The Minister met the bill for 'Melkert' jobs, which were the forerunners of I/D jobs, mainly by slashing the budget of the former Public Employment Service (Arbeidsvoorziening, PES), at the cost of its programmes. At the time, the social partners on the PES board were very critical of Minister Melkert's actions.
Later in the 1990s, the emergence of labour market shortages intensified discussion on subsidised employment. Now, there seems to be widespread consensus across the political spectrum that changes are in order. Opponents of subsidised employment are calling for its abolition, while supporters favour modernisation, pointing out the high number of long-term unemployed people who have yet to find work despite many years of economic growth and an enormous increase in the number of jobs.
Modernisation through reserved jobs
A new advisory body, the Council for Work and Income (Raad voor Werk en Inkomen, RWI), has launched a proposal to modernise subsidised labour. The Council contains representatives of : the VNO/NCW employers' ogranisation; organisations representing employees - the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV), Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV), Council for Government Staff (Raad voor het Overheidspersoneel) and De Unie-Federation of Managerial and Staff Unions (Unie Middelbaar en Hoger Personeel, De Unie MHP); and the Association of Dutch Municipalities (Vereniging van Nederlandse Gemeenten, VNG).
The RWI's position on subsidised labour stresses the importance of reserving normal low-paid jobs in the public sector for long-term unemployed people and people unable to work as a result of disability. These additional jobs, which are currently subsidised, are found in sectors including healthcare, welfare and childcare, and have contributed to increased public safety. The RWI proposes separating out the objectives of the current provision and turning 'starter' and 'transfer' jobs into normal jobs, while reserving them for the intended target group. Under this proposal, the municipalities would retain control over the jobs, but reserved jobs could only be created by employers where a relevant collective agreement or similar measure is in force. Conditions attached to current subsidised jobs that do not apply to normal jobs would be eliminated. Under the RWI's proposals, one of the current subsidised employment provisions, the WIW, would disappear as a labour market instrument for municipalities.
The RWI initiative came from the trade unions. FNV and CNV succeeded in winning the support of the municipalities and as a result, despite scepticism from VNO/NCW, a unanimous proposal resulted.
Abolition
According to the tripartite Social and Economic Council (Sociaal Economische Raad, SER), an important government advisory body, the subsidised employment system is obsolete. In contrast to the system's intended results, people in these types of jobs rarely make the transition to the regular labour market. The original aim of the subsidised jobs was not to fill the gaps in public service provision, but to offer long-term unemployed people work experience and opportunities. The SER believes that subsidised labour has become an end in itself and therefore calls for the focus of policy to be redirected towards reintegration. In a labour market beset with shortages, a separate 'circuit' of subsidised jobs is unnecessary.
Political proponents of abolishing subsidised employment include the CDA and VVD parties, which are currently putting together a new right-wing coalition with the LPF. The CDA believes that subsidised jobs have become an end in themselves and have failed to respond to the real issues on the labour market. In this party's opinion, there are too many regulations that hinder progress in this area. A CDA spokesperson, Gerda Verburg, has issued a step-by-step plan to eliminate I/D jobs within a matter of years. Speculation will prevail until the new coalition's definitive plans are announced in the new government policy statement.
Commentary
The Netherlands is not the only country where subsidised labour is under threat. Elsewhere in Europe, dissatisfaction with the effectiveness of existing labour market programmes is bringing about changes in, or outright abolition of, subsidised employment. A common denominator is the tendency to give market mechanisms more leeway. From an efficiency standpoint, reinforcing the 'regular' character of subsidised jobs should be encouraged. However, it would be wise to reserve a portion of regular jobs for employees in a weak position on the labour market, such as long-term unemployed people. Working as employees in reserved jobs, such people will be included in normal personnel policy and organisations should pay systematic attention to career counselling and training. Doing so creates more opportunities for growth within the organisation or an eventual transition to other jobs. Moreover, it opens up places for new long-term unemployed people to fill. Ensuring that a type of protected employment exists in the future is also crucial for other long-term unemployed and disabled people, as they are so far removed from the labour market they have no chances of regular work. (Els Sol, HIS)