This record reviews 2003's main industrial relations developments in the Netherlands.
Political developments
Parliamentary elections held in January 2003 (NL0302101N) resulted in gains for the governing Christian Democratic Appeal (Christen Democratisch Appel, CDA) party and the opposition social democratic Labour Party (Partij van de Arbeid, PvdA). The CDA gained 44 seats in the lower house of parliament, and the PvdA 42 seats. The right-wing populist List Pim Fortuyn (Lijst Pim Fortuyn, LPF), which had been part of the previous government, lost significant ground, retaining only eight of its 26 seats. Subsequent coalition negotiations between the CDA and the PvdA broke down (with cuts in public expenditure the main issue of disagreement) and were followed by negotiations between the CDA and two liberal parties - the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) (part of the previous coalition) and the social liberal Democraten 66 (D66) - which resulted in an agreement in May 2003 (NL0306101N). The new government, headed by Prime Minister Jan-Peter Balkenende, outlined a package of cutbacks, mainly in the area of social security, aimed at achieving a balanced state budget by 2007.
The largest employers´ association, the Confederation of Netherlands Industry and Employers (Vereniging Nederlandse Ondernemers-Nederlands Christelijk Werkgeversverbond, VNO-NCW), welcomed the new centre-right government in the belief that it could succeed in creating more economic stability and mitigate the impending recession. VNO-NCW called on the government to be more flexible and to reduce companies' administrative and financial burden, while earmarking additional funds for education, infrastructure and combating crime. The government announced measures along these lines, which were welcomed by employers' organisations. However, the government's cost-cutting plans provoked criticism among the largest trade union federations, the Dutch Federation of Trade Unions (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) (NL0305101N).
FNV and CNV were united in their condemnation of the proposed cutbacks in social security spending, mainly aimed at benefits under the Occupational Disability Act (Wet op de Arbeidsongeschiktheid, WAO) and Unemployment Insurance Act (Werkloosheidswet, WW), and at early retirement schemes. They also opposed planned major spending cuts affecting government departments, which would result in public sector job losses and wage restraint (NL0309103F).
Given the country's poor economic and budgetary position, the government called on the social partners to moderate pay increases, and in October's tripartite autumn consultations a social agreement was reached for 2004 (NL0310103F). The employers’ organisations involved were VNO-NCW and the Dutch Federation of Small and Medium-sized Enterprises (Midden en Kleinbedrijf, MKB), while the trade union federations concerned were FNV, CNV and the Federation of Managerial and Professional Staff (Centrale voor Middelbaar en Hoger Personeel, MHP). The deal provided for a collectively agreed pay freeze in 2004-5 (see below under 'Pay'). In return, the government either scrapped or watered down several previously announced public cost-cutting measures, in particular with respect to WAO and unemployment benefits, and to early retirement/pre-pension schemes. WAO benefits for partially disabled employees will not be linked to the income of the recipient partner, as planned. A proposal to deduct severance pay from unemployment benefits was scrapped. The abolition of tax benefits in relation to early retirement and pre-pension schemes announced for 2005 was postponed for a year. Existing schemes will then need to be transformed into 'life-span regulations'- an integrated set of measures aimed at enabling workers to manage their working time and leave over their entire working lives so as to better balance their work and family/care responsibilities (NL0304103F).
In November, the Minister of Social Affairs and Emancipation Policy in the new government, Aart Jan de Geus, stated that he was keen to drop the current specific government policy portfolio for gender equality (NL0312102N). Instead, gender issues should be mainstreamed into other policy areas. The Minister asserted that Dutch women now have equality in many areas, though conceding that problems persist. Various women’s organisations responded sceptically to the Minister's statements.
Collective bargaining
No significant changes took place during 2003 with respect to the number of collective agreements or the level (primarily sectoral) at which they were negotiated.
Pay
In November 2002, the government and social partners reached a 'social agreement' for 2003, which included a commitment from the FNV and CNV trade union federations to recommend a 2.5% pay increase in the collective bargaining round ( NL0212101N ). Negotiators by and large observed this recommendation ( NL0303102N ) and, on average, collective agreements concluded in 2003 provided - according to the autumn report from the Labour Inspectorate ( Arbeidsinspectie ) on a sample of 125 agreements, including all major sectoral accords - for a 2.8% pay increase, compared with 3.8% in 2002, which suggested further moderation. However, there were sectoral variations. Wages in the care sector rose particularly sharply - by 4% on an annual basis - in comparison with the average figure. The average increases were lower in the private sector and government sector, at 2.7% and 2.8% respectively. Within the private sector, increases varied from 2% in transport to 3% in business services.
As mentioned above (under 'Political developments' ), the annual autumn consultations (najaarsoverleg) held between the government and the social partners on 15 October 2003 resulted in a 'social agreement' (sociaal akkoord) for 2004, with wage moderation as one of its core themes. Under the deal, the trade unions have agreed to support a temporary pay freeze in collective agreements signed in 2004. In 2005, depending on how the economy recovers, a minimal wage increase will be permitted. It remains possible to reach collective agreements on periodic, performance-based wage increases.
Working time
No significant working time changes took place in 2003. The 36-hour working week remained the norm set in collective agreements, while average collectively agreed normal weekly hours stood at 37 hours.
Job security
Job security was not a particularly prominent issue over the year, although it naturally featured in the social plans negotiated in companies to accompany redundancies, of which there were many during 2003 ( NL0311103T ). An interesting development came in July, when the CNV-affiliated Services Union ( Dienstenbond ) negotiated extra benefits for its own members in a redundancy agreement with the Getronics IT company ( NL0308101N ). A similar deal was reached in 2002 by an affiliate of FNV at Ballast Nedam , the construction firm, and both CNV and FNV expect more such agreements in future.
Equal opportunities and diversity issues
With regard to equal opportunities and diversity issues, a key bargaining topic in 2003 was childcare provision. In 2002, 58% of collective agreements, covering three-quarters of employees, provided for childcare arrangements (according to the Labour Inspectorate). However, in 2003, in anticipation of new childcare provision legislation ( NL0006193N ) due to come into force in 2005, employers started cutting back the proportion of childcare costs that they meet under such agreements towards a sixth of the total costs ( NL0307105F ). For example, the 2003 collective agreement for the light engineering industry, covering 380,000 employees, reduced the employers’ contribution to childcare costs to this one-sixth level. At the same time, the cost of childcare is increasing as market forces take hold in the childcare sector and labour costs rise because of the abolition of state-subsidised employment and wage increases for regular staff. These circumstances are reported to be having a negative effect on the labour market participation of women, particularly in the lower income groups .
Training and skills development
A total of 117 collective agreements, covering 97% of all employees covered by agreements, contained provisions relating to paid training in 2003 (according to the Labour Inspectorate). In 76 collective agreements, training/employability arrangements were provided for specific target groups, such as older workers, young people or unemployed people with inadequate qualifications.
Legislative developments
Due to the general elections and the formation of a new government, there were few legislative developments in the field of industrial relations in 2003.
A new Sunday working law came into force, giving individual employees the right to refuse to work on Sundays (NL0110102F). The VNO-NCW employers' confederation advised its members to seek provisions in collective agreements which could prohibit employees from refusing Sunday working. Trade unions attacked VNO-NCW for what they viewed as an attempt to circumvent the law through collective agreements (NL0301101N). However, in 2003 there were no court cases concerning this 'circumvention' of the law.
In July, the social partners represented on the bipartite Labour Foundation (Stichting van de Arbeid, STAR) issued an opinion opposing a proposal for the reform of dismissals law put forward by a government-appointed committee (NL0308104F). The committee proposed abolishing the system whereby dismissals must be approved in advance by a public authority - currently the Centre for Work and Income (Centrum voor Werk en Inkomen, CWI) - which assesses if the intended dismissal is sufficiently based on reasonable grounds. The STAR argued that the objections raised by the committee did not outweigh the advantages of the present system, which keeps costs in check and offers the parties involved a high degree of certainty and security.
In spring 2003, the tripartite advisory Social and Economic Council (Sociaal-Economische Raad, SER) was asked by the government to draw up recommendations for a 'life-span regulation'- an integrated set of measures aimed at enabling workers to manage their working time and leave over their entire working lives so as better to balance their work and family/care responsibilities. The proposed regulation would replace all existing specific forms of leave (parental etc) and, compared with the current system, oblige employees to make a greater contribution (NL0304103F). However, the government, not waiting for the advice of the SER, included proposals for such an arrangement in this area in its coalition agreement. However, the autumn 'social agreement' amended the government’s proposals, linking the life-span arrangements with early retirement provisions (see above under 'Political developments'). The government promised to reach an agreement with the STAR on tax provisions related to both issues in the spring of 2004.
The organisation and role of the social partners
There were no major changes to the structure of social partner organisations in 2003. Nor did any significant changes take place in terms of their role in industrial relations and in the Dutch 'consultation economy', although relations became more tense (see above under 'Political developments').
In June, FNV, the Netherlands' largest trade union federation, decided on major cutbacks and restructuring as a result of its poor financial position, with persistent stock market losses in recent years reducing the value of its investments (NL0307101N). FNV's budget is to be cut by a quarter, activities are to be reduced (notably at regional level) and up to 90 out of 240 jobs lost. Subsidies to smaller unions will be ended, notably affecting the Women’s Union (FNV Vrouwenbond), while seven regional offices will be closed and their tasks will be taken over by two support desks.
During 2003, the established union federations - FNV, CNV and Unie MHP - made concerted efforts to distinguish themselves from one other. In particular, Unie MHP sought to make itself distinctive by accusing the larger FNV and CNV of having 'old-fashioned' aims and organisational forms. Unie MHP has distanced itself further on several occasions further by concluding collective agreements without consulting the other, more representative, unions (NL0302103F). A second source of discord in the trade union arena is the rise of organisations that act independently of the three established federations. A number of individual employers or smaller sector-specific associations have signed collective agreements with 'independent' trade unions, on which basis they have been able to achieve exemption from generally applicable sector-wide collective agreements. This has been the case for hotel, restaurant and catering wholesalers, video stores and several temporary employment agencies. The established unions have questioned the representativeness of the new organisations (and thus the legitimacy of the agreements). It is clear, however, that these new unions operate in the 'weak spots' of the traditional unions. Nevertheless, it should be borne in mind that in 2003 the established unions were still involved in the conclusion of more than 95% of all collective agreements.
FNV took the unusual and controversial step of putting the 2004 'social agreement' with the government and employers (see above under 'Pay') to a referendum of its members. The fact that FNV officials put the social agreement to the members without a recommendation (ie adopting a neutral position on how to vote) attracted particular criticism. After numerous objections to the agreement were raised by various sections of the trade union movement, it came as a considerable relief to the government, employers and trade union officials when it was announced in November that the accord had been accepted by 56% of FNV members voting in the referendum, on a turn-out of 18% of the membership (more than 218,000 of the 1.2 million FNV members) (NL0311101N).
On the employers' side, in summer 2003, the Netherlands Agriculture and Horticulture Organisation (Land- en Tuinbouworganisatie Nederland, LTO Nederland) announced that it was to make a quarter of its employees redundant (NL0308102N). The factors behind the move include a continuing decline in the number of farmers and the fact that fewer of them are joining LTO Nederland.
Industrial action
As usual, in 2003 the level of strikes was low compared with the European average, while the level of court cases related to industrial action remained high.
In general, there was probably less industrial action during 2003 than in 2002. The most substantial were 'relay' strikes and other action organised by the unions against the public spending cuts in the government coalition agreement (see above under 'Political developments'), notably those that will result in public sector job losses (up to 50,000 over four years, according to the unions) and wage restraint (NL0309103F).
A relatively lengthy strike staged by private ambulance staff, aimed at securing a cut in the retirement age from 59 to 55 (in line with public ambulance service employees) was seen as significant. The strike did not result in the retirement age being lowered, but the private ambulance employees accepted the employer’s offer of less demanding work and more days off for older workers (NL0310101N).
Employee participation
During 2003, a bill was introduced on the implementation of the employee involvement Directive (2001/86/EC) linked to the tripartite European Company Statute (EU0206202F). On 19 December, the tripartite Social and Economic Council issued an opinion on the revision of the law on works councils, with employer and trade union representatives divided on most of the issues. 2004 will bring major changes in the legislation on employee participation.
Stress at work
There were no major developments in 2003 in the area of stress at work, in the form of either legal regulations or collective agreements. Both trade unions and employers have recognised the problem and in previous years have agreed provisions in collective agreements on the need to conduct research on stress at work. The problem is also recognised in 'covenants' on working conditions (Arbeidsomstandigheden convenanten, ARBO-convenanten). At present, the social partners are trying to stimulate the development of instruments to combat stress.
Undeclared work
2003 saw no major new developments in the area of undeclared work, in terms of either legal regulations or collective agreements. During the year, the bipartite Labour Foundation was preparing an opinion on temporary employment agencies and the criteria needed to distinguish legal agencies from illegal ones (ie agencies that place illegal workers). In 2003, the FNV Bondgenoten trade unions started legal action against an alleged illegal temporary employment agency. In this case, workers placed by the agency were sent back by the authorities to their country of origin without proper payment. If FNV Bondgenoten wins the court case, the agency concerned is likely to go bankrupt, and the union hopes that this will discourage other agencies from placing illegal workers.
New forms of work
In 2003, a new collective agreement was concluded for temporary agency work sector, which involved major changes. The social partners agreed to lengthen the maximum fixed term for contracts from 52 to 78 weeks, the longest period allowed by law (NL0202108F). On pay, it was agreed that, after 26 weeks of work, temporary agency employees would be paid according to the collective agreement of the user company.
In the area of self-employment, 2003 saw a very important proposal to abolish from 2004 the specific disability insurance legislation for self-employed people (Wet Arbeidsongeschiktheid Zelfstandigen, WAZ). At the end of 2003, it was unclear whether a new regulation would be put into place and what would happen to the money already paid in to the scheme by the self-employed.
The new government that came to office in 2003 continued its predecessor's policy of cutting back subsidised employment schemes for groups such as long-term unemployed people and people with disabilities (NL0207103F). In 2002, it was agreed to turn 10,000 subsidised jobs into normal jobs in 2003, but this aim has not yet been achieved.
No other significant developments took place during 2003 in the area of 'atypical' work or its share of total employment.
Other relevant developments
Occupational pension schemes were a key issue in the 2003 collective bargaining round and led to deadlocks in negotiations over company agreements at a number of major financial services and industrial groups (NL0306104F and NL0304101N). In finance, large employers such as ABN Amro, Aegon and ING, wanted their non-contributory occupational pension schemes (ie to which employees make no contributions) to be abolished, or at least modified. At Philips, TGP Post and Akzo Nobel, conflicts took place in the 2003 bargaining round, in which unions fiercely opposed company plans in this area. Akzo Nobel even proposed hiving off its pension fund. Some of the conflicts resulted in compromises, increasing employee pension contributions. Trade unions, while opposed to more drastic austerity measures, appear increasingly prepared to accept a greater use of average-salary rather than final-salary schemes and a temporary suspension of pensions indexation.
A trend towards replacing early retirement (vervroegde uittreding, VUT) arrangements (mainly paid for by the employer) into flexible 'pre-pension' provisions continued. In 2003, in 106 of 132 collective agreements studied by the Labour Inspectorate (covering 83% of employees), flexible retirement arrangements had been concluded, and only 16 collective agreements contained only a VUT provision.
Outlook
In autumn 2003, the Dutch economy officially entered recession. Unemployment continues to rise and both economic growth and productivity are around zero. The Netherlands has dropped to the lower ranks in a list of most competitive countries drawn up by the World Economic Forum, while Dutch economic performance has fallen below the EU average.
The new centre-right government has chosen to balance the public budget, leading to major cutbacks, in particular in spending on social security. Not unexpectedly, the social partners have differing responses: employers’ organisations are satisfied with this policy, while trade unions are vociferous in their criticism.
In spite of their differing viewpoints, in 2003 the government and the social partners reached an agreement in their annual autumn consultations. The union federations have promised to freeze wage claims, in return for which the government has promised to reduce planned cutbacks on important social security provisions. Mutual trust seemed to have been re-established, but the union federations have become more and more critical of the government’s day-by-day cost-cutting strategy and have threatened to end the social agreement. The Netherlands may have only a relatively short period of social peace in 2004. (Marianne Grünell, HSI)