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Both trade unions and employers' organisations have reacted negatively to the coalition agreement reached by the new three-party centre-right government formed in June 2002. The most controversial points of the government's plans relate to reform of WAO disability benefits and private pensions, abolition of subsidised employment schemes, and cutbacks in public employment and severance pay.
In June 2002, a new coalition government was formed, following May's general election (NL0206103N), by the Christian Democratic Appeal (Christen Democratisch Appèl, CDA), the liberal Party for Freedom and Democracy (Vereniging voor Vrijheid en Democratie, VVD) and the newly-founded right-wing populist List Pim Fortuyn (Lijst Pim Fortuyn, LPF). The social partners reacted negatively to the coalition agreement between the three parties.
The new coalition has decided not to accept an opinion on the reform of the Occupational Disability Insurance Act (Wet op de Arbeidsongeschiktheid, WAO), reached in March 2002 by the social partners in the Social and Economic Council (Sociaal-Economische Raad, SER) (NL0204101N). Instead, the government intends to restrict access to WAO benefits, reduce the level of benefits for employees and raise the costs for employers. While the SER agreement aimed to reach a compromise between the wishes of employers or employees, the new government's proposals aim mainly at cutting expenses for the authorities
The VNO-NCW employers’ organisation is incensed by the fact that the new government is thus planning once again to make businesses responsible for much of the pay during an employee's second year of sickness absence. This places an additional burden on companies, which had been hoping for tax reductions in light of the prevailing economic downturn. However, the Federation of Small and Medium-sized Businesses (MKB-Nederland) is happy with the government's plan that small employers will no longer face a fine if their employees start receiving WAO benefits.
The largest trade union confederation, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) is strongly opposed to the new government's proposals in this area, and the fact that the agreement reached in the SER is being over-ridden. Collective bargaining between trade unions and employers' organisations will now have to resume on the level of benefits during the second year of illness - under the SER agreement, during the second year of sickness, the employee's benefit of up to 70% of last-earned salary could no longer have been topped up on the basis of the provisions of collective agreements (in the first year of sickness, benefits could still generally have been topped up to 100% by collective agreed provisions, as at present). The government believes that receipt of benefits topped up to the equivalent to 100% of pay is inappropriate for WAO recipients - a view that FNV finds 'scandalous', given the fact that the employees concerned have a 100% disability.
FNV has also been angered by the government's proposal to pay lower benefits than agreed by the SER to employees who are declared completely unfit to work (the SER agreement had included reduced benefits for partially disabled employees). Furthermore, FNV is opposed to: plans to make the criteria for receiving WAO benefits tougher, by excluding psychological illnesses; the fact that the procedure for linking benefit levels to the income of a WAO recipient's entire household (ie including any partner) will remain unchanged, despite the SER's proposals for change; and a plan to require partially disabled WAO recipients and unemployed people over the age of 57.5 actively to seek work - a group that FNV believes has zero chance of finding a job.
The Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) reacted equally vehemently, demanding to know what has become of the CDA’s Christian values and expressing the fear that the WAO (as well as healthcare and education) will be pushed down the government's agenda.
FNV and CNV expressed incomprehension and astonishment at the government's plans for abolishing the most widespread of the current subsidised employment schemes for groups such as long-term unemployed people and people with disabilities (NL0206104F). CNV is concerned that thousands of people with lower levels of education will lose their jobs, which are subsidised by the government in the form of payments to employers. The unions believe that eliminating subsidised employment will further damage what they see as the already tattered fabric of the healthcare and education sectors.
The new government is planning to reform private occupational pension schemes, restricting their freedom in areas such as investment and savings policy, while making them more flexible. The coalition parties have agreed to lower the contribution to private pension schemes from 2% to 1.75% of pay. In this way, the government wants to encourage employees to continue working longer. Under the proposed new rules, employees would have to work five years more in order to achieve a pension - made up of both the basic state retirement pension and a supplementary private provision - of 70% of former pay. Failure to work an extra five years would result in a pension of 61% of former pay.
Employer associations’ call the plan too ambiguous to evaluate, while FNV’s initial reaction was to state that half of all employees will be affected by this proposal. Moreover, it points out that the increase to 2% in private occupational pension contributions implemented by the previous government was used to finance a variety of flexible 'pre-pension' schemes designed to replace the 'costly' collectively agreed VUT early retirement scheme. According to the unions, the flexibility in the new government's proposals seems to affect employees only, in that they will be required to work longer.
The government plans to combine various existing leave schemes enabling employees to take time off to care for children and sick relatives and for training, introducing a new scheme, referred to as the 'lifetime facility'- a fiscally advantageous way to save in order to be able to take leave when necessary. Along with changes to early retirement - which the government also regards as a form of leave - the various amendments in this area should save up to EUR 550 million.
The new government plans to cut back the severance payments to employees whose employment contracts are terminated, provided for by the Unemployment Insurance Act (Werkloosheidswet, WW). Given the existence of 'golden handshakes' and compensation for dismissal awarded by the courts, the government wishes to reduce the attractiveness of using the WW as a redundancy scheme. The WW payments are not currently affected by the award of golden handshakes and court awards, but in future it is planned that they will be. According to the Central Planning Bureau (Centraal Planbureau), which costed this proposal for the new government, it could save up to EUR 150 million from 2006. The largest trade union and employers' organisations are unanimous in their opposition to these proposals, though for different reasons.
FNV claims that the new coalition's plan unjustly gives the impression that compensation in the event of redundancy is a luxury, leading to abuse of the WW. FNV claims that the proposal would rob the unions of their room for manoeuvre in negotiations over 'social plans' accompanying company reorganisations. However, CNV does not have any complaints about the proposal, due to the perception that it primarily involves highly paid employees.
The VNO-NCW employers’ association believes that WW payments plus the payment of supplements by employers ease the rigidities of Dutch dismissals legislation. For employers, paying employees off is the easiest way to shed personnel. However, the government proposal would make the dismissal system inflexible.
The new government wants to cut back government personnel costs by 10% - a move opposed by the civil servants’ unions affiliated to both FNV and CNV. The relevant CNV union, Publieke Zaak, fears that public service provision will as a result decline at a time when citizens are calling for better services in the areas of healthcare and safety and monitoring compliance with regulations. The FNV-affiliated AbvaKabo states that the government’s proposed approach is misguided: instead, it should first be established what people want from the public sector, and then priorities should be set. Both unions point to the 2001 report of Van Rijn committee, which examined recruitment in the public sector (NL0104129F). Pointing out the large number of vacancies and high workload in the public sector, the committee stated that pay and conditions in the sector are inadequate. The committee concluded that the public sector suffers from a negative image and that the government must take steps to re-establish its reputation as an attractive employer .
The coalition agreement reached by CDA, VVD and LPF has been concluded in a less favourable economic climate than that in which the previous 'purple' coalition of the social democratic Labour Party (Partij van de Arbeid, PvdA), VVD and the social liberal Democraten 66 (D66) operated during the past decade. However, the question remains of whether the strict budgetary discipline chosen by the new government is appropriate for the current mild recession. Within their own narrowly defined margins, the three parties took decisions and did not duck controversial issues, with disagreements resolved and agreements reached regarding the WAO, subsidised employment and pensions. However, the social partners remain critical of the whole programme. It will take several years of implementation of the new government's policy to enable an assessment of whether the measures are as stringent as they are now being presented. Should that turn out to be the case, the social partners will be opposed and the government will be confronted with widespread anxiety and dissatisfaction among employers and employees alike. (Marianne Grünell, HSI)