netherlands executive summary

8/10/2019 Netherlands Executive Summary

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Social dialogue and the public services in the aftermath of the

economic crisis: strengthening partnership in an era of austerity -the case of The Netherlands

Peter Leisink, Ulrike Weske, Eva KniesUtrecht University School of Governance, The Netherlands

European Commission project : Industrial Relations and Social Dialogue VP/2011/001,November 2012

Executive Summary

IntroductionThe research aims to understand the particular challenges facing the social partners, whatstrategies they are putting in place to manage change and what contribution forms ofemployee consultation and involvement i.e. social dialogue can make in maintaining highquality public services in an era of austerity . A key goal is to encourage the adaptation ofthese systems of consultation and involvement to deal with new challenges.

The analysis builds on a series of broader underlying research questions:

1. What have been the main drivers and measures of austerity adopted in each country?2. How have these changes been implemented and to what extent has social dialoguecontributed to the change process at national, sectoral and workplace level?3. How have institutions of social dialogue influenced industrial relations processes/outcomes in the public services?

A particular strength of the research has been to build on and extend our understanding ofmacro level developments by researching workplace change. This has involved detailed casestudy work in local government to identify how local employers are affected by, and areresponding to, national austerity measures.

This report addresses how austerity measures and other drivers of change have impacted onpublic sector employment relations in the Netherlands, and how government, employersand trade unions have attempted to shape those policies and to deal with theirconsequences. The report presents an overview of recent changes in public sectoremployment relations, illustrating the degree of diversity by including central government,primary education and hospitals. A detailed analysis of local government is included.

MeasuresPublic management reform programmes aimed at creating a smaller government thatprovides better public services for citizens date back to the 1990s. The economic and fiscalcrisis has added an extra impulse to these reform programmes. This impact manifests itself


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first in quantitative measures aimed at cuts in public sector employment and wages, andsecond in structural reforms such as the decentralization of public services to localgovernment.

In the Netherlands, successive governments have implemented austerity measures. First theBalkenende IV government in 2010 (3.2 billion Euros), and then the Rutte I government thatdecided on 105 austerity measures which would save 18 billion by 2015 in order to complywith the requirements of the European Stability and Growth pact by 2013. It is estimatedthat as a consequence about 10 per cent of total government jobs will disappear. Becausethe economic crisis affected government finances more than foreseen extra austeritymeasures were required by the European Commission before 30 April 2012. An ad-hocparliamentary majority agreed upon a new package of austerity measures amounting to 12billion Euros. These cutback decisions included a wage freeze for public sector employees for2 years and a rise of the pension age. A new coalition cabinet took office in November 2012,which announced new austerity measures topping earlier measures with an extra 16 billion

Euros. Measures include efficiency cuts, legislation concerning harmonization of dismissal ofpublic sector employees with regulations for private sector employees, caps on dismissalcompensation, and raising the pension age more quickly. The implementation of austeritymeasures taken by central government for the public sector in general is left to therespective sectors and organizations. Employer and trade union representatives at sectorallevel add their own agendas to the negotiations over the implementation of centrallydecided measures, which often involve structural reforms.

The goals of these measures are quantitative as well as structural. The quantitative goals areevident from measures to achieve more efficiency, for instance through outsourcing and the

creation of shared service centres, and from measures cutting employment and wages.Structural re forms can be summarized as service -oriented government. Previousgovernments have implemented their own reform programmes from the 1990s onwardswith structural reforms called better government or another government, which shouldprovide better service to citizens and firms. The present structural reforms involve forinstance the decentralization of public services to municipalities.

While the focus of the report is on austerity measures as a consequence of the economicand fiscal crisis, demographic changes are another important driver of change that should betaken into account. Demographic trends (ageing, fewer children) have been a factor

influencing public sector employment policy for more than a decade. The combinedconsequence of demographic changes and the economic and the fiscal crisis is manifestedby the decision of successive governments to raise the retirement age.

Social DialogueThe institutions of social dialogue involve:

- at sectoral level: negotiations between employer and trade union representativesover the collective agreement covering all employees in that sector

- at organizational level: negotiations between employer and trade unionrepresentatives about organizational issues such as reorganizations/collective

redundancies, and other issues that have been decentralized by the sectoralagreement


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- at organizational level: consultation and negotiation between the works council andthe employer/top management of the organization dealing with issues according tothe Works Council Act.

In relation to local government social dialogue union representatives have had a role not somuch in the decision-making over the austerity measures but in their implementation. Wagenegotiations at sectoral level were especially difficult. When employers and unionscontinued to disagree, unions organized demonstrations and strikes, which eventuallyresulted in a collective agreement. The agreement that was concluded in April 2012 providesa fairly normal wage rise, flexibilisation of working hours, and an arrangement replacing jobsecurity by two year work-to-work support for redundant employees.

Overall, the social dialogue is a stable institution in the Netherlands. The economic crisisdoes not impact the central institutions of the collective agreement, the consultation andnegotiation mechanisms at sectoral level, and the works council at organizational level. It

also appears that the Dutch culture of cooperation is quite resilient and supports socialdialogue. However, it appears that the effectiveness of the social dialogue varies by sector,partly reflecting the differential impact of economic and demographic circumstances. Thesocial dialogue at sectoral and organizational level is able to generate innovativearrangements. So it appears that social dialogue institutions in the Netherlands facilitatebalanced outcomes that take into account the interests of various stakeholders.

Local GovernmentThe economic and fiscal crisis prompted central government to introduce austerity measuresthat affect local government in two ways. First, the general financial contribution from

central to local government has been reduced. Second, central government decided todecentralize the provision of specific welfare arrangements, such as providing shelteredworkplace s, to local government with a simultaneous efficiency saving on the se budgets.Apart from central government decisions, local government has suffered financially becauseof losses on ground exploitation and social assistance payments. Consequently localgovernment employers feel the need to cut back on employment conditions.

The dominant driver of change in the case studies in Leeuwarden and Zwolle is the existingtrend towards a smaller and service-oriented government. Austerity measures havecontributed to this process by putting extra pressure on this trend. In both municipalities,

the works council demanded strategic personnel planning which would enable theorganization to react better to social changes. In Leeuwarden the works council controlledthat staff reduction was effectuated according to the rules but offered no active support infinding alternative employment opportunities whereas in Zwolle the works councilcollaborated with the employer in arranging job opportunities in the private sector and inother public organizations. Because the Leeuwarden municipal employer decided at a latermoment to cut more jobs than initially foreseen and expected forced redundancies, aconflict between employer and works council arose including court proceedings. In bothcases, the role of the social dialogue involves the works council monitoring the process ofchange. In both cases the works councils and HR directors also acknowledge the need to

collaborate in the current situation which requires change towards a more flexibleorganization.


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ConclusionThe current economic and fiscal crisis has provided an extra impulse to public sector reformsaimed at creating more efficient and service-oriented public services. However, thesereforms have a longer history going back to the 1990s well before the current economiccrisis emerged and also stem from other longstanding trends (e.g. demographic change).

The effectiveness of social dialogue varied, partly reflecting the differential impact ofeconomic and demographic circumstances. In some sectors collective bargaining is able toproduce moderate or even normal results. Nevertheless, austerity measures have had asignificant impact on employment relationships in central and local government and inprimary education but hardly any impact in hospitals. This impact is manifest in agovernment decided wage freeze in central government and primary education , wheregovernment ministers act as employer and is evident in the decline of public sectoremployment in all sectors except hospitals. Local government felt the impact of austerity

measures because central government reduced its funding to municipalities. In localgovernment negotiations were more difficult than before, however eventually collectiveagreements were reached which provided a modest wage rise and measures to supportemployees made redundant. The local government employer association made use of itsrelative autonomy to conclude a collective agreement, which includes a modest wage rise.

When it comes to job losses unions and works councils take the role of controlling that theprocess proceeds according to established rules. On the level of local municipalities, socialdialogue is more actively supported in the case of Zwolle and a long trust-based relationshipexists, supporting the creation of alternative employment opportunities through public-

private partnerships and mobility networks. The case of the Leeuwarden works councilshows that legally institutionalized rights help the works council to enforce its control role.

Second, the social dialogue at sectoral and organizational level is also able to generateinnovative arrangements, such as the work-to-work support scheme which is regarded byboth employers and unions as a modernisation of employment relations that is better fittedto todays permanent change. They take the view that measures to support employeesem ployability reflect employers social responsibility, and feel that the social dialogue hasbeen able to contribute to developing such arrangements. So it appears that social dialogueinstitutions in the Netherlands facilitate producing balanced outcomes that take into

account the interests of various stakeholders. Overall, social dialogue is a stable institution inthe Netherlands. The Dutch culture of cooperation, which is also referred to aspoldermodel, is quite resilient and supports the continued functioning of social dialogue.

Key sources/ references Kickert, W. (2012). State responses to the fiscal crisis in Britain, Germany and the

Netherlands. Public Management Review , 14(3): 299-309. Steijn, B. & P. Leisink (2007). Public management reforms and public sector

employment relations in the Netherlands. International Journal of Public SectorManagement , 20(1): 34-47.

netherlands executive summary

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