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The tight labour market in the Netherlands is having an impact on collective bargaining in 2001. Most collective agreements concluded up until April include a 4% wage increase, with some displaying strong upward deviations. Warnings from the government against straying from wage moderation have met with little success so far. Negotiations in the public sector have taken centre stage following publication of a report at the start of the year outlining the sector's recruitment potential.
At the end of December 2000, the central employer and trade union organisations within the Labour Foundation (Stichting van de Arbeid, STAR) agreed to uphold wage moderation and focus on flexible forms of payment, education, and combining work and care responsibilities in the 2001 collective bargaining round (NL0101123F). Willem Vermeend, the Minister of Social Affairs and Employment, pledged to use tax incentives to stimulate flexible payment systems and investment in occupational training. However, apart from much official consultation, little has come of these intentions.
Employers have since considered revoking the agreement reached in December, because they believe that the unions are interested only in the wage issue. Jacques Schraven, the chair of the VNO-NCW central employers' association, has openly questioned the validity of such central agreements with the trade unions. In the collective agreements reached to date in the 2001 bargaining round, training and education appear to play only a subordinate role and there is little reference to wage moderation.
Nonetheless, KPN (with 34,000 employees) is an example of a company where an agreement has been reached on training and education. Under the telecommunications firm's new collective agreement concluded on 30 March, employees will be awarded an individual education budget of EUR 1,150 a year. However, agreement was also reached on a 4% wage increase at the company.
In a letter sent recently to the Labour Foundation, Minister Vermeend reiterated the call to employers and employees to uphold a policy of wage moderation. According to the minister, high wages erode businesses' ability to maintain a competitive position and impede employment growth. The minister argued that Dutch competitive positions in the "euro-zone" (EU countries which have joined the third stage of Economic and Monetary Union and the single currency) have slipped by as much as 7% between 1998 and 2001. He urges the bargaining parties to uphold the central agreement reached in December. The trade unions are outraged and believe the minister should not interfere with the current collective bargaining round. Employers seem more receptive to the minister's calls.
Public sector developments
In March 2001 the government-commissioned "Van Rijn committee" published a report on the public sector's recruitment potential, while the Organisation for Strategic Labour Market Research (Organisatie voor Strategisch Arbeidsmarktonderzoek, OSA) has addressed the issue of government terms of employment in its March 2001 "trend report" on Labour demand. This has helped focus attention in the current bargaining round on the public sector.
According to AbvaKabo, the civil servants' union affiliated to the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV), a sum of NLG 10 billion would be needed to bring employment conditions in the public sector up to acceptable levels, with NLG 6 billion alone needed for the introduction of a bonus in the form of a 13th-month salary payment. A further NLG 2 billion is needed for readjustment of salary scales, higher wages for trainees, faster progression though pay scales and differentiation of positions. The remaining NLG 2 billion is needed for secondary employment conditions such as childcare, training and education and leave arrangements.
According to the Van Rijn committee, people with better qualifications working in the care and education sectors currently suffer a wage imbalance of between 11% and 17% in relation to the private sector. At lower levels, the disadvantage amounts to less than 5%. AbvaKabo has been very critical of these figures. One of the points it raises is that profit-sharing and share-option schemes have not been included in the comparison. A further point of criticism is that government employment should be compared with the business service sector as opposed to just "the market", which makes the shortfall even greater. Furthermore, the union asserts that educational qualifications alone were taken into consideration in the comparison, to the exclusion of the weight of the employee's position. The Van Rij report has played an important background role in collective bargaining in the public sector, the main developments in which (by April 2001) are set out below.
Hospitals
The most important proposal put forward in the 2001 bargaining round by hospital employers – accounting for 160,000 employees – is to extend the working week from 36 to 38 hours, which would be accompanied by a reduction in the gross hourly wage. The bill for increasing the number of working hours would be covered by introducing a 13th-month salary cheque, which would result in a wage increase of around 7% over and above the normal increase of 4%. According to the unions, the proposals mean that some employee categories will ultimately lose ground. Additionally, hospitals would like to end bonuses for evening and weekend work. In exchange for this, there would be better pay for night work.
Despite disagreement on these points, agreement has been reached between employees and employers on other points, including a significant salary increase for trainee nurses. AbvaKabo is calling for a 13th-month salary cheque and a 4% salary increase. Along with the independent health workers' unions NU'91 and Unie Zorg en Welzijn, the civil servants' union affiliated to Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV), CFO, is pushing for 6% (a 4% wage increase and 2% bonus in December). At the start of April, it was announced that the trade unions would be meeting with their members to discuss industrial action. The unions want employers to drop the idea of extending the working week from 36 to 38 hours. Negotiations stalled in the first week of April, and a decision on possible industrial action was expected by 24 April.
Nursing and rest homes
On 16 March, agreement was reached between employers and the largest trade unions on a new collective agreement for nursing and rest homes (200,000 employees). The wage increase amounts to 4% and the year-end bonus will be increased by 1.6% to 2.5%. Trainees will also earn between 10% and 12% more. Nonetheless, industrial action may still follow. The NU'91 trade union has rejected the agreement. It demands total reform of the salary classification system, especially for care personnel, in order to improve their situation by 10% to 15%. According to NU'91, which grew out of dissatisfaction with the policies of the existing unions at the end of the 1980s, it should be the actual execution of tasks that determines payment, not qualifications.
Initially, employers were very concerned about the level of absence in the sector (10%, against a national average of 6%). They wanted to force sick employees to cooperate on a reintegration programme. If unwilling to cooperate, penalties could be imposed in the most extreme cases. The unions rejected this, shifting their focus towards improving working conditions, and calling for the current occupational health and safety agreement to be included in the collective agreement. In the end, a "bonus" provision, rewarding attendance, was include in the collective agreement in an attempt to stem the high level of absence.
Education
A three-day rotating strike was organised across the education sector around 10 March. The unions demanded that the cabinet produce at least NLG 1 billion extra to be ploughed into upgrading the quality of education. The minister responsible found the actions premature, and claims to be willing to allocate more money than the unions are currently demanding.
Private sector developments
By April 2001, sectoral agreements had been reached in the private sector for construction and light engineering.
Light engineering industry
At the start of March, strikes broke out in the light engineering industry (40,000 companies accounting for a total of 370,000 employees) for the first time ever. By calling the action, the unions aimed to uphold their demands for a 4% wage increase as well as a one-off bonus of NLG 1,000. After threats of a ban on strikes and after various smaller companies acceded to the unions' demands, a new collective agreement was concluded at the start of April. Employees will receive a pay increase of 8% spread over a two-year period, in addition to an annual bonus of EUR 275. The periods over which no increases are paid will be extended. In specific cases, increases of 15% to 50% will apply. The unions are especially pleased with the provisions concerning working time. Employers can now oblige employees to work only an extra 10 hours above normal working time over a four-week period. Employers concur with the agreement, even though they consider the wage increase somewhat high.
Construction
Having passed through eight bargaining rounds, negotiations over a new collective agreement for the construction sector (160,000 employees) reached a deadlock at the beginning of March. The unions clung to their demand for a 6% wage increase. Employers offered 4% coupled with a bonus of NLG 500, effective from 1 July 2001. It is noteworthy that the chair of the central FNV union federation initially asserted that its construction union had no recourse to a strike fund, since the union had departed from the central demand for a wage increase of 4%. The federation later withdrew this assertion, thus implicitly departing from the centrally agreed wage demand itself.
Nonetheless, agreement was reached at the end of March. Employees will be awarded a 5% wage increase. However, this figure may be supplemented in the form of price compensation if retail price increases amount to more than 3.5% over 2001. The small majority of building workers who do not receive a performance-based bonus at present will now receive an additional 2%. Employers are especially enthusiastic about the introduction of flexible elements in the collective agreement. A pilot project will commence regarding flexible working time, and extra days off can be converted into early retirement. A further agreement was reached on 5 April for operational, technical and administrative staff in the construction sector. The 50,000 staff in this category will receive an additional 3.25% from 1 June 2001, plus 1.75% on 1 January 2002. A wage increase of 5.5% had earlier been agreed for the small-scale construction sector (NL0103126N).
Dispute between construction sector and temporary employment agencies
In the construction sector, employers and unions have specified that temporary agency employees should also be covered by the new collective agreement. This also means that temporary employment agencies must now contribute financially towards the "collective agreement funds" for the construction sector. These funds are intended for training and education, and unemployment relief. However, the agencies are refusing to comply with this agreement. As long as this conflict remains unresolved the collective agreement for the construction sector cannot be declared binding - as a rule, sector-wide collective agreements in the Netherlands can be declared binding on the whole sector by the Minister for Social Affairs and Employment at the request of the negotiating parties (NL0103127F). NBBU, the organisation that mainly represents the smaller temporary employment agencies, has submitted a complaint to the Dutch competition authority. According to NBBU, the employers' association for the construction sector refuses to conduct business with agencies that are not willing to contribute towards the collective agreement funds, and it therefore believes that this measure restricts competition.
Commentary
Government and employers are becoming increasingly concerned about the level of the wage increases agreed in the 2001 collective agreements. The minimum pay increases stand at around 4%, with several significant upward deviations. The central agreement reached in December 2000 to limit wage increases in exchange for expanded training and education facilities for employees now appears completely undermined. Trade unions and employers are passing the buck back and forth in this respect. The unions accuse employers of ignoring the issue of training and education and, the latter state that little evidence of wage moderation seems to be prevailing.
The reasons underlying high wage demands are clear: extreme scarcity continues to characterise today's labour market and inflation in the Netherlands now exceeds that in almost all other EU countries. This makes it virtually impossible for the trade union federations to maintain control over their member unions. Some parties even reject the concept of a central wage standard as being "behind the times". An additional factor is that unions in several different sectors (including healthcare) are being overtaken on both sides by more militant organisations representing various occupational groups.
The conflict between the construction sector and temporary employment agencies also transcends the interests of this sector alone. It touches the very fabric of the Dutch "consultation model", which relies on declaring collective agreements binding. According to ABU, which represents the larger employment agencies, this problem could also surface within the hotel, restaurant and catering industry, the steel industry, and the cleaning and security service sectors.
The prevailing worldwide slowdown in economic growth has not left the Netherlands unscathed. However, it remains to be seen if this will influence current collective bargaining. The chair of the employers' association representing the largest metalworking and electronics companies, who much to his relief does not have to conclude a collective agreement this year, has stated that he is confident that the trade union movement will put a brake on wage trends in good time. In this regard, it should be noted that individual employers often go much further when it comes to wage increases than recommended by the unions. Indeed, actual wages in the metalworking and electronics industry have risen by up to twice the level prescribed in the current collective agreement. Clearly, scarcity in the labour market has a mind of its own. (Robbert van het Kaar, HSI)