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The 2004 autumn agreement between government and the social partners was hammered out with great difficulty. Following arduous negotiations, government and the social partners finally reached accord on wage moderation, the Occupational Disability Insurance Act (WAO), life-cycle leave arrangements and early retirement, daycare, lifelong learning, and age-related personnel policy. With the exception of wage moderation, all other topics agreed at central level appear to have generated considerable conflict during the bargaining rounds. Only 6% of the collective labour agreements were closed before June 2005. A high degree of social unrest stemmed from two issues in particular: early retirement and the level of continued wage payment during the first two-year period of illness. Other important issues within the context of social innovation and age-related personnel policy were set aside, not even making it to the negotiating table.
It now appears that the 2004 collective bargaining rounds produced fewer unambiguous agreements on many topics than the parties had originally anticipated (NL0502101F). At the request of the Lower House of the Dutch Parliament, the Minister of Social Affairs called for an inventory to be compiled in June 2005, outlining the ramifications of the points agreed on in the autumn collective agreements. The random survey examines 42 out of a total 748 existing, and soon to be renewed, collective agreements. While the 42 agreements in principle represent only 6% of the total number of collective agreements, they relate to some 33% of the workforce. According to a random study of 130 collective agreements by the Labour Inspectorate, many of the collective agreements have not been concluded. This survey focused on several core topics outlined by government: wage moderation, early retirement, continued earning during the first two-year period of illness, and daycare.
Wage increase above zero line
In negotiating the autumn agreement, the government impressed upon the social partners the need to maintain a zero line in wage trends. The actual contractual movement in wages now appears to be 0.9%. However, collective agreements for the metal and technology sector exceed this level. The small wage increases comply with demands of trade unions, which promised to show great restraint in the autumn agreement. Although employer representatives refer to the outcome as a departure from this intended restraint, they do acknowledge the merits of the outcome, providing it achieves results. Increased flexibility, for example, would be one positive result, enabling employers to cut costs. They also support the increased popularity of result-oriented payment. While the agreed wage increase is above the zero line the Minister of Social Affairs had hoped to achieve, he does acknowledge that the 'spirit' of the social agreement is reflected in this result. The Minister expects that after 2006 - a year after the implementation of his social security reforms - wages will go up again and civil servant salaries and benefits will be allowed to grow proportionately.
Regulating of payments during illness
One of the most important points outlined in the autumn 2004 social agreement was that the total figure paid out to employees during the first two-year period of illness may not exceed 170% of their last-earned salary. In addition, supplementary arrangements, specifically related to employment conditions, could be made to stimulate accelerated reintegration and participation in the labour process. The June 2005 random survey shows that agreement has been reached in more than half of the collective agreements (24) regulating payment of 170% over the first two-year period of illness. In 12 collective agreements, an even greater amount may be paid out for efforts directed at reintegration. Payments in excess of this level have been agreed in as many as 10 collective agreements, notably in the metal and technology sector. This topic is still under consideration in eight of the collective agreements covered by the random survey.
Payment of childcare costs
Government policy requires that employers contribute one sixth towards childcare costs of their employees. A new element was introduced, however, whereby employers of both parents now need to contribute financially. In the past, there was no arrangement whereby the second employer, i.e. the partner’s employer, carried financial responsibilities. Instead, a single employer, usually that of the female employee, financed a third of the costs. Under this new arrangement, the parents remain responsible for contributing a third, while government pays the remaining third. The November 2004 social agreement reaffirmed this policy, as numerous employers have not complied with the requisite contribution of the second employer.
More than half of the 42 agreements contain the provision that employers must contribute one sixth of the cost; existing conditions have been upheld in these 28 collective agreements in line with government policy. The survey shows that this could imply a weakened position for parents, because government will no longer carry responsibility for the second employer’s contribution over and above its own third, as was the case in the past. The old arrangement, under which one employer paid a third of the costs, is still reflected in 10 collective agreements; the employer’s contribution remains unchanged in four, and six other collective agreements stipulate that the employer can no longer contribute financially in this manner. In three agreements, there is no mention at all of an employer’s contribution. By contrast, a major collective agreement, notably in the temporary employment sector, introduces its own employer’s contribution. This collective agreement, the biggest in the Netherlands, covers more than 400,000 employees and will, for the first time, offer one sixth of an employer’s contribution towards daycare in 2005, in accordance with government policy. Apart from that, just under a third of the collective agreements include no provisions for daycare. Because government will cover the unpaid part of the employer’s contribution until 2008, this has not yet become a bone of contention at the negotiating table. However, if the government no longer subsidises the employer’s contribution from 2008 onwards, this topic will no doubt assume a more urgent position on the agenda in collective bargaining rounds to come.
Lack of agreement on leave arrangements and early retirement
For the most part, the social partners appear not to have reached collective agreement on the new life-cycle leave arrangements and early retirement. In his proposal to the Lower House, the Minister of Social Affairs writes that there is currently a lack of relevant information in this respect. The Minister suggests an approach that takes account of the social partners and umbrella organisations for pension administrators. He still believes that implementation of the new fiscal regime, with effect from 1 January 2006, is feasible, while acknowledging that there is a great deal of work to be done during collective bargaining and at the pension administrators (AV/CAM/2005/39180, 1 June 2005). This is a technically complex and socially volatile issue in which a distinction between what should be financed collectively - partly based on pension fund premiums - and what can be dealt with on an individual basis, is essential; nevertheless, it is an issue which divides the parties.
Viewpoints of the social partners
The fact that the social agreement now appears to be at risk of derailing during collective bargaining has been attributed to different causes by the three parties. The unions and employers are directly opposed on two main points: early retirement and the continued payment of wages during illness. However, the parties are in agreement that the economy is struggling and that there is little room for wage increases. While the unions would like to see something in return for wage restrictions, employers want to see acknowledgement of the increased flexibility already shown.
In relation to early retirement and the continued payment of sick pay, the unions would like to maintain the current arrangement, while the employers are more inclined to go along with the cabinet’s position. The representative of the VNO-NCW employers’ association asserts that it would be irresponsible to maintain existing early retirement arrangements, adding that the system will become unaffordable in the face of the ageing population. What’s more, an active policy of encouraging people to continue working for a longer period of time would not be able to evolve. The employers’ association also questions whether younger generations are attracted by the idea of a collective arrangement for early retirement; perhaps instead they would rather put the funds to a different use. Finally, according to the VNO-NCW spokesperson, keeping the early retirement arrangement intact means that other fringe benefits - including daycare, 'working smarter' or the prevention and reintegration policy for sick employees - would suffer the most.
The social partners also appear to be in disagreement regarding the second point - the continued payment of wages by the employer during the first two-year period of illness. While the social agreement specifies a ceiling of 170% for the two-year period as a whole, the unions are trying to negotiate above this level. According to the VNO-NCW employers’ association, this will jeopardise agreements reached with cabinet in the social agreement on higher payments (75% instead of 70%) for new disability benefit recipients, as well as the third year of illness and the years thereafter.
The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) foresee collective negotiations becoming deadlocked. The FNV also noted a departure from the social agreement, only this time by employers. In autumn 2004, options were agreed upon, to keep early retirement schemes intact. The unions are now experiencing great difficulty integrating tax opportunities in the social agreement into collective agreements. They accuse employers, who agreed to reparation measures in order to keep early retirement partially intact in the autumn agreement, of being dismissive, despite the fact that employers and the government were well aware of the consequences of supporting the measures in 2004. The FNV even asserts that in sectors including construction, and iron and steel, the existing arrangements could be transferred without difficulty to retirement pension schemes and, in a number of cases, should be combined with life-cycle leave arrangements. According to the FNV spokesperson, this need not generate additional costs and, should these be incurred, the FNV will present employees with an outline of such costs.
The following arrangement has been made with regard to early retirement in the collective agreements in 2005: employees can now increase the size of their retirement pension (for after the age of 65) to a level that will accommodate leaving work a few years earlier. The representative from the General Employer’s Association (Algemene Werkgeversvereniging Nederland, AWVN) refers to this policy as 'burying one’s head in the sand'. By contrast, he rates the agreements reached at Akzo on early retirement as a better example. Employees retire from Akzo once they reach the age of 65. However, those who wish to take early retirement can save up for this through the life-cycle leave arrangement. Each year, employees can set aside part of their earnings tax free and Akzo will also contribute to this financially. The AWVN spokesperson believes this is a far more sensible option instead of using all of the fiscal resources to build up an early retirement provision.
The provisions taken up in the autumn agreement on the continued payment of wages during the first two-year period of illness also lead to different variants, from 100% in the first half of the year to 90% in the second half, and 80% during the second year of illness. While a reintegration policy should be put in place, payment is now a central theme in collective bargaining. The social partners blame one another for this predicament. The unions assert that employers are behaving as if financial matters are the only priority. Employers blame the unions for strongly inhibiting reintegration policy and the prevention of absenteeism, by clinging to high payment levels, especially during the first year of illness.
Measures to retain older people
Because social security has become such a controversial issue, negotiators appear to be shying away from subjects that could also provide solutions with respect to early retirement in the long term. In particular, employers need to avoid a massive outflow of older employees given the current situation of an ageing population, coupled with a smaller younger population. By the same token, however, measures to retain older people in the workplace - such as age-related personnel policy and career counselling - do not appear to be taking shape in negotiations. Employer representatives find this regrettable. Such measures could enable older employees to continue working for longer, by allowing them, for example, to perform other tasks. Employer representatives are also disappointed that the 'working smarter' issue has not been tabled either during negotiations. (Working smarter is understood to mean achieving labour productivity gains through knowledge and flexibility). Trade union representatives do acknowledge the problem of ageing, as well as sharing employers’ concerns in relation to the issue of a relative decrease in productivity, and are therefore willing to contribute towards the chosen solution. Nevertheless, controversial issues - i.e. early retirement and the level of continued payment during the first two-year period of illness - appear to be dominating the 2005 collective bargaining rounds.
Commentary
During the summer 2005 negotiations on collective bargaining, many trade union representatives have been encouraging industrial action throughout the country. From one sector of the economy to the next, workers are taking industrial action in the form of strikes, to highlight their position in relation to the negotiations. In June 2005, following the example of the metal and related sectors, employees at Dutch Railways (Nederlandse Spoorwegen, NS), the municipal bodies and the police force either protested or went on strike. Arrangements concerning early retirement have been particularly decisive in this respect, and the importance of the functional superannuation issue under discussion should not be underestimated. Some 400,000 people demonstrated for the first time in Amsterdam (NL0411101N) on the issue of early retirement in November 2004. The trade union movement is facing the difficult task of relinquishing security to employers and the government in their drive to create individual savings structures for matters such as early retirement. While, to a certain extent, this may be an acceptable option for higher income earners in younger generations, individual savings schemes will fail to create an adequate provision for older generations and employees in lower income brackets. As far as older employees are concerned, transitional arrangements must be provided for. Protection (through premium contributions) of collective funds should be reconsidered with respect to younger employees in lower income brackets. (Marianne Grünell, HIS)