Social Pacts in Netherlands
Background
The Netherlands have a long tradition of a “social dialogue -
negotiation economy” (overlegeconomie) since the post
war period. In the 1970s, however, the Dutch economy suffered
from what commonly became known as the “Dutch
Disease”. The discovery of North Sea gas led to the
overvaluation of the Dutch guilder, which in turn, made
manufactured goods internationally less competitive, resulting in
increasing imports and decreasing exports of Dutch manufacturing
goods. This led to the de-industrialisation of the Dutch
economy, with devastating effects on economic structure and
employment. All economic indicators showed an alarming
situation – high interest rates, rising inflation, growing
public debt and job losses. The Dutch economy was in
crisis.
1982 marked a sea change in Dutch social dialogue. With
unemployment running at more than 10%, workers’ organisations
decided not to demand wage increases. Social partners
recognised the need for a high level of investment and a high level
of profits to facilitate job creation. There was also growing
pressure of the government’s intervention in wage setting, if
social partners were not able to manage bipartite agreements on
wage moderation. With this threat of state intervention,
social partners joined forces to come up with bipartite agreements,
resulted in the General Recommendations on Aspects of an Employment
Policy, also known as the Agreement of Wassenaar, of 1982. It
is widely acknowledged to be a ground breaking agreement, setting
the tone for later social pacts in many European countries.
Wassenaar is a short document which outlines the social
partners’ general consensus to work towards sound economic
and labour market policies. The main trade-off negotiated in
this agreement was between wage moderation and working time
reduction / job sharing. Unlike past agreements, Wassenaar
did not indicate concrete figures on wage developments. The
proposal was to keep wage increases lower than productivity
increases. Wage setting was decentralised, with the role of
the central organisation of collective bargaining mostly confined
to redirecting the implementation at the sectoral level.
Wassenaar had an immediate impact on the recovery of the Dutch
economy, especially through the restoration of profits and
increased investment levels. The number of part-time job
increased, mainly for women and young workers.
In the beginning of the 1990s, the Dutch negotiation economy was
hit by another crisis with the revelation of bi-partite
mismanagement and abuse of social security, especially disability
insurance. The economy was depressed due to the international
recession. With renewed threat of government’s
intervention, social partners struck another bipartite social pact,
“A New Course”, embracing the spirit of participation
and decentralisation. With this agreement, social partners
agreed on further flexibility of employment relations and further
decentralisation of wage setting. In line with this
agreement, social partners started a discussion with the Foundation
of Labour on the modernisation of contract and labour law, which
led to the “Flexibility and Security” document in
1996. The Agenda 2002, agreed in 1997, again stressed further
“coordinated decentralisation” in collective
bargaining
The Dutch social pacts are generally bipartite, and normally
negotiated under the auspice of the Foundation of Labour
(Stichting van de Arbeid, STAR), a bipartite consultative
body, and signed by all the central social partners’
organisations represented the in the Foundation (workers’ and
employers organisation). The government is not a formal party
in social pacts. However, it exercises its influence
indirectly, through various consultative mechanisms and the threat
of unwelcome state intervention. (such as ending the mandatory
extension mechanism of collective agreements or direct intervention
in wage setting)
Dutch social partnership was revitalised in the 1980s and
1990s. Since the Wassenaar agreement, collective bargaining
has become a responsibility of social partners, without the
intervention of the government. The economy has recovered and
labour market participation has risen over the last two decades.
1. This is “an
advice” document by the Social and Economic Council to the
government, not an agreement. However, it comes close to a
de-facto social pact because the tripartite members of the
Social and Economic Council unanimously agreed on the
content.
2. Originally, it
was an advice paper by the Foundation of Labour to the
government, not an agreement. However, it has been
considered to be a de-facto social pact because the bipartite
members of the Foundation of Labour unanimously agreed on the
content.
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