The current page is not translated to the selected language.
The Dutch Government has reached agreement with social partners on a package of measures to stimulate the country’s economy. The cabinet met with employer and employee representatives to conclude the social agreement in April 2013. The deal means the suspension or withdrawal of a number of cost-cutting proposals affecting unemployment benefits and dismissal law. Budgetary control has been relaxed in favour of strengthening the relationship between social partners and the cabinet.
Unions, employers and the cabinet in the Netherlands have reached agreement on a package of measures which they hope will improve conditions in the labour market. The coalition Dutch Government says postponing planned austerity measures will also increase optimism among the general population and industry, thus stimulating economic growth.
One of the most controversial aspects of the package is the delay until 2016 of reforms to the unemployment benefit system and redundancy rules. The cabinet hopes that by then the economy will have begun to recover.
Levels of unemployment benefit and the length of time for which they can be paid form an important aspect of the agreement. The social partners have agreed that current rules will remain unchanged. This means the maximum duration of 36 months for benefits will not be cut.
Unions and employers have said that they would make provisions to fund the third year of any redundancy benefit. It was agreed that this would be taken into account in collective bargaining rounds.
The unions have already announced that they will be asking for a monthly contribution from employees to boost the unemployment reserve, the well-established unemployment benefit premium. The full three years of benefit is received mainly by older workers who find it difficult to secure new employment after losing their job.Younger employees are generally reintegrated into the labour market sooner.
The cabinet’s earlier proposal to move the unemployed onto social benefits after one year had been criticised. This would have meant that after a year, an unemployed person’s benefits would drop from 70% of their last salary to the social minimum and any personal capital reserves would have to be used before they qualified for benefits.
Regulations governing dismissal will also remain unchanged until 2016. There are currently two paths to dismissal, including provision for higher dismissal compensation for older employees. Earlier proposals would have harmonised these into a single regulation with one maximum level of compensation.
Social partners agreed to a maximum limit on severance pay of €75,000 gross a year. If a worker’s annual salary is higher than this amount, however, they will receive the equivalent of one year’s salary. The deal also brought in transition measures for people aged 50 and above.
A number of agreements have been reached regarding flexible labour relations. These are intended to strengthen the position of flexible employees.
The agreement introduces rules to ensure that employees with a temporary contract will be considered for a permanent contract sooner, making it more difficult for employers to string temporary contracts together.
Employers in the Netherlands have to reach a decision about awarding a permanent contract after a third consecutive temporary contract expires. It has been common practice for businesses to circumvent this regulation by encouraging employees to claim unemployment benefits at the end of the third temporary contract. After a short period of unemployment, they then commence another series of three temporary contracts.
Temporarily ‘parking’ employees on unemployment benefit in this way will be made more difficult. It will not be possible to employ a worker on a temporary contract until six months after the expiry of a previous temporary contract.
The government is also clamping down on so-called payroll contracts and zero-hour contracts. These contracts, which are mainly used in the healthcare sector, will be banned.
The cabinet had wanted to introduce a quota for the employment of occupationally disabled employees. It proposed that from 2015, companies would be obliged to fill 5% of their workforce vacancies with employees with disabilities. This quota was rejected by the social partners. Instead it has been agreed that companies can voluntarily work towards employing increasing numbers of people with disabilities. The objective is to have at least 125,000 workers with disabilities employed in the mainstream workforce by 2025. If targets are not reached, a quota system could still be imposed within the next two years.
Pensions were also addressed by the agreement. The government had wanted to restrict tax-free savings allowances for pensions so that such taxes could be collected directly instead of after retirement. The tax surcharge would generate more revenue for the government, especially from earners in the highest tax bracket (52%). The social partners are opposed to this and have been given several months to produce viable alternatives to the measures.
The government appears particularly pleased with the agreement. Both coalition parties, the liberal VVD and the social democratic PvdA, are happy with the outcome. They believe strict adherence to budgetary discipline had to be set aside in favour of bolstering social harmony. Social unrest is highly undesirable in times of crisis.
Employer associations stood to benefit most from a successful and constructive conclusion to the agreement. It was backed by the largest employer group, the Confederation of Netherlands Industry and Employers (VNO-NCW), and the Dutch Federation of Small and Medium-Sized Enterprises (MKB-Nederland).
Internal problems plaguing the FNV, a powerful trade union federation, threatened to destabilise the talks. However, when a majority of the FNV’s membership base backed the agreement in mid-April, the respective parties knew that the agreement had met with broad-based support.
Marianne Grunell, University of Amsterdam