Addressing labour market insecurity in the Netherlands
Like many other OECD countries, the Netherlands has seen a significant increase in non-standard forms of employment over the past two decades. However, data has found the Netherlands to be an outlier in the OECD landscape. For example, three out of a total of nine million (one in three) in the Netherlands do not have a stable labour contract, compared to fewer than one in ten workers across the OECD on average.
A significant part of the labour force in the Netherlands thus faces high-risk job insecurity, particularly during times of downturns and corporate restructuring. This is mostly the case for low-skilled workers as almost one out of two (45%) do not have a stable contract.
The Social and Economic Council of the Netherlands (SER) advises the Dutch Government and Parliament on social and economic policy. It is one of the country’s main social dialogue institutions and comprises employers’ and workers’ representatives and independent experts who work together to reach agreements on key social and economic issues.
In June 2021, following the general elections in the Netherlands, the SER issued a joint opinion statement that proposed a blueprint of social and economic policies for consideration by the incoming government during its mandate (2021-25). It stressed that insecure jobs and flexible labour arrangements play a major role in explaining the rise of inequalities in the Netherlands. To build an inclusive and secure labour market and ensure businesses can adapt to changing economic circumstances as needed, the SER advanced a range of detailed policy proposals aimed at:
1. Restricting the use of flexible labour arrangements. To do this, the SER proposed:
- Limiting the number of temporary contracts with the same employer to no more than three contracts over a maximum of three years.
- Abolishing on-call contracts, including zero-hour contracts, and substituting these with basic contracts that specified at least a quarterly volume of hours to be worked.
- Regulating the activities of agency work companies by reserving access to this particular market to officially certified companies as well as advocating for these workers to be remunerated on an equal basis.
2. Making open-ended contracts more attractive to employers. The SER proposed:
- Making it easier for employers to temporarily reduce working time for all employees in cases of business-related circumstances that would otherwise lead to redundancies.
- Reimbursing flexible contract surcharges for employers who assist workers in moving from a flexible contract to an open-ended one following a mutually agreed-upon redundancy (a 'job-to-job' transition plan).
- Ensuring employers remain responsible for paying wages when workers are on sick leave for up to two years by: 1) allowing them to insure themselves against such a risk and 2) permitting the employer to refocus the efforts of reintegrating workers during the second year rather than finding a different employer.
3. Addressing the phenomenon of 'false self-employed' and improving the labour position of genuine independent workers by:
- Gradually reducing the special tax incentives for self-employment and replacing them with tax advantages for those self-employed who are effectively running a business risk by investing capital of their own.
- Making it mandatory for all self-employed workers to take out insurance against work incapacity.
- Reversing the legal burden of proof on better remuneration so that self-employed workers earning less than EUR 30-35 an hour would be assumed to be dependent employees, and it would be up to the employer to provide evidence in court to prove otherwise.
4. In the longer term, building a new 'job-to-job' policy infrastructure that would be more amenable to better matching labour market demands, supporting people in the transition to new jobs and enhancing access to stable careers. The SER identified two pillars in this new policy infrastructure:
- Promoting lifelong learning in a structural way by, among others, incentivising social partners to regularly chart skills needs for the market.
- Developing labour-market services that assist workers in moving into new jobs.
Dutch social partners have announced that they are ready to support and assist in building this new 'job-to-job' policy infrastructure.
A new government in the Netherlands took office in January 2022. A coalition agreement referred to the SER’s opinion statement and committed to implementing it.
In June 2022, the Labour Foundation, a bipartite consultative social dialogue institution composed of national-level employers’ and workers’ organisations, discussed a draft policy document provided by the government that outlined the guiding principles to implement the SER’s policy proposals. Furthermore, social partners indicated their positive evaluation of the government’s proposals. The next step is a discussion at the Dutch Council of Ministers level, followed by communication to Parliament with the objective of officially launching the labour reform process.
Key Lessons
This good practice case testifies to the role social partners can play in informing and signalling the challenges that urgently need to be addressed to policy makers. It also underscores social partners’ capacity to use the deep knowledge they have of working conditions and businesses’ needs to design policy proposals that are fair and balanced.
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