Download Take-away points for other countries

Labour Relations in the Netherlands:
On Flexibility and Human Capital Investments
Frank Cörvers
Session 4
Resilient Labor Markets:
Cases of Germany and the Netherlands
Overview
1. Some characteristics of the Netherlands
2. Typical Dutch
3. A resilient labour market?: Analysing the
decrease in unemployment
4. Flexible contracts and trade-off with firmspecific human capital investments
5. Take-away points for other countries
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Labor Relations in the Netherlands
Sept. 26, 2011
Most recent figures for the Netherlands
(from the World Bank)
•
•
•
•
•
•
•
•
•
3
Population
Life expectancy at birth
GNP per capita
Exports of GDP
Labor force with tertiary education
Labor participation rate (15+)
Part time work among women
Unemployment
Youth unemployment
Labor Relations in the Netherlands
16.6 million
81 years
$ 50k
69%
29%
66%
60%
3.4%
6.6%
Sept. 26, 2011
Typical Dutch
• Corporatist system: central level bargaining with
moderate unions at the industry level (-> wage
moderation, agreements on working conditions and
training, pension contributions, etc.)
• Collective labour agreements (CLA’s) concluded at
the industry level are binding for all firms
• Employers can freely choose from dual dismissal
tracks: They can either go to the employment
office or file for permission by the civil court.
• Relative high protection for permanents workers,
low protection for flexible workers
4
Labor Relations in the Netherlands
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GDP growth 1970-2010; forecast 2011-2012
10,0
8,0
6,0
4,0
%
2,0
0,0
-4,0
GDP growth
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Labor Relations in the Netherlands
Sept. 26, 2011
2
20 1
0
20 1
8
20 0
6
20 0
4
20 0
2
20 0
0
20 0
8
19 9
6
19 9
4
19 9
2
19 9
0
19 9
8
19 8
6
19 8
4
19 8
2
19 8
0
19 8
8
19 7
6
19 7
4
19 7
2
19 7
0
19 7
-2,0
Unemployment shows a structural downward
trend since the middle of the 1980s
10,0
8,0
6,0
4,0
%
2,0
0,0
-4,0
GDP growth
6
unemployment
Labor Relations in the Netherlands
Sept. 26, 2011
2
20 1
0
20 1
8
20 0
6
20 0
4
20 0
2
20 0
0
20 0
8
19 9
6
19 9
4
19 9
2
19 9
0
19 9
8
19 8
6
19 8
4
19 8
2
19 8
0
19 8
8
19 7
6
19 7
4
19 7
2
19 7
0
19 7
-2,0
Why unemployment went down since the
middle of the 1980s?
• Agreement of Wassenaar (1982) between
government, employment associations and labour
unions: wage moderation for shorter working
weeks; government promised not to intervene in
wage negotiations
• Cuts in government spending and social security
without much opposition of labour unions; decrease
in taxes and social security contributions -> lower
wage costs
• Stricter eligibility criteria for social security benefits
(disability), more financial responsibility for
municipalities (welfare)
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Labor Relations in the Netherlands
Sept. 26, 2011
Recent moderate increase in
unemployment was a surprise
• Official forecasts in 2009: unemployment
would rise to about 7% (doubling) or
more...
• In fact we are still a bit puzzled why it
didn’t….
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Labor Relations in the Netherlands
Sept. 26, 2011
Possible reasons for moderate increase in
unemployment, despite large fall in GDP
• Very short period of negative growth
• Many vacancies before turndown
• Anticipation on new labour market shortages after
crisis: employers were reluctant to fire highlyqualified personnel
• Many retirees and less young people than before
• Short-time working (in Germany: Kurzarbeit), both
officially and voluntary (without wage compensation)
• Higher % of flexible workers, incl. self-employed,
than before
• (SAB: more discouraged workers and young people
in education, less immigrants, ALMP
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Labor Relations in the Netherlands
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Five contract types in the Dutch labour force
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•
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Permanent contracts
Fixed-term contracts (direct hire temporary)
Temporary work agency contracts
On-call contracts
Self-employment without personnel
Labor Relations in the Netherlands
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Shares on the labour market
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Regulation since 1999: Flexibility and
Security Act
• With implications for fixed-term contracts,
temporary agency contracts and on-call work
• F&S Act was prepared by social partners and made
into law.
• Aim: increase flexibility for firms and security for
workers.
• More flexibility in ftc, less in on-call work
• More security in twa and on-call
• Deviations are always possible by collective labour
agreements
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Labor Relations in the Netherlands
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Temporary employment as % of dependent
employment
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Self-employment as % of total employment
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Warning: Trade-off between flexibility
and firm-specific training
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Wage penalties on temporary contracts
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The flip side of flexibility
• Some specific groups mainly bear the costs of
labour market flexibility: low-skilled & young
people incl. recent graduates (‘dual labour market’
problem)
• Those groups are faced with job insecurity,
repeated spells of unemployment, wage penalties,
worse job match, poor working conditions and less
training investments
• Differences in protection between permanent and
temporary workers are rather large in the
Netherlands
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Labor Relations in the Netherlands
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Take-away points for other countries
• Corporatist system of labour relations may offer
good elements for other countries
• More labour market flexibility may decrease
unemployment
• But comes at the cost of poor working conditions
and job match for those workers
• Relatively small group of flexible workers is hit in
the Netherlands, which may be prevented by
closing the gap of employment protection between
permanent and temporary contracts
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