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Collective Bargaining

The vast majority of employees in the Netherlands are covered by collective bargaining, mostly at industry level. However, many large companies negotiate their own deals. Negotiators generally follow the recommendations agreed at national level and recent pay increases have been moderate.

The framework

 

The pay and conditions of most employees are set through collective agreements (CAOs) reached either at industry or at company level, although industry-level agreements cover many more employees.[1]

 

Collective agreements must be registered with the Ministry for Social Affairs and Employment and its report on collective agreements in 2018, published in June 2019, shows that there were 651 current collective agreements, covering normal pay and conditions issues.[2] (Current is defined as having an expiry date on or after 31 December 2017.)

 

The 651 agreements on normal pay and conditions issues in 2018 covered 5,615,500 employees and, with the CBS official statistics office showing that there were 7,829,000 employees in the Netherlands in 2018,[3] this suggests that 72% of all employees were covered by collective bargaining.

 

Collective bargaining coverage has fallen since the start of the decade, when, based on the same series of statistics, it was 86%. This is largely because the number of employees covered by collective agreements has fallen by 12% from 6,372,100 in 2010 to 5,615,500 in 2018 but also because the number of employees has increased by 6% from 7,397,000 in 2010 to 7,829,000 in 2018.

 

Agreements at industry level account for the vast majority of those covered by collective bargaining. In 2018, the 176 agreements covering normal pay and conditions issues signed at industry level covered 5,133,700 employees – 91% of all employees. There are many more company agreements – 475 in 2018 – but they only accounted for 9% of all employees whose terms and conditions were set by collective bargaining in 2018. However, these agreements cover many of the country’s largest companies, such as Philips, DHL, Heineken, ABM AMRO, ING and the railway company NS.

 

Dutch legislation allows the government (the Ministry for Social Affairs and Employment) to extend – to declare generally binding – industry-level agreements to all the employers in the industry concerned, although even where they have been extended the government can give companies may sometimes an exemption (dispensatie) from their terms.in certain circumstances. The decision to extend is taken in line with a regulated framework which requires that the agreement must already apply to a “significant majority” of those working in the industry.[4] This is automatically the case if 60% are covered and will normally be the case if the agreement covers 55% of the industry’s employees, unless the coverage is skewed in some way. Agreements which cover fewer than 55% will only be extended in special circumstances.

 

In practice, most industry-level collective agreements are declared generally binding – 60% in 2018, according to figures from the Ministry for Social Affairs and Employment.[5] However, extending agreements in this way has a relatively modest impact on the numbers of employees covered. Overall, in 2018, extensions only added around a fifth (19%) to the numbers already covered by industry collective agreements. The bulk of those whose pay and conditions were set by industry-level agreements – 4.3 million out of 5.1 million – were covered because their employers belonged to employers’ associations which had signed the agreements.

 

Collective agreements apply to all the employees in an industry or company covered by the agreement, not just union members. However, there are possibilities of varying their terms. A study by the Ministry for Social Affairs and Employment, looking at 171 industry-level agreements covering 3.4 million workers, found that more than half (54%) allowed employers to diverge from the terms of the agreement.[6] However, almost all of these agreements (48% of the total) made clear that divergence was only possible in ways that were positive from the employees’ point of  view. The remaining 46% of the agreements examined either stated that generally their terms were not simple minimum requirements and had to be implemented (34%) or were not specific (12%). However, even in this group, two-thirds left some aspects of the agreement open for local settlement, with working time the issue most frequently decided at company level.

 

With industry-level pay settlements normally very moderate, at least in the past (see below) this leaves room for companies to pay above the agreed rates leading to a situation where industry level agreements are framework agreements, with higher pay and many of the detailed provisions relating to conditions, particularly working time being set at company level. Around three-quarters of employers say that the agreements that cover them provide for local arrangements to be agreed with the works council and the vast majority make use of this option (see section on Workplace representation).[7]

 

Union negotiators at both industry and company level work within a framework of recommendations coming from the confederations centrally, which are largely observed. These follow the traditional autumn meeting between unions, employers and the government who meet at national level in the Labour Foundation (see below) to exchange views about economic prospects. The result for many years was a series of relatively moderate pay demands. However, in autumn 2018, the largest union grouping FNV called for a 5% increase for 2019, at a time when inflation was 1.9%, the highest union pay demand for 30 years.[8] This was followed by the same demand in 2019 for bargaining in 2020, and appears to indicate a more muscular approach to pay bargaining.

 

Unions, employers and independent experts come together in the Social and Economic Council (SER), which is a statutory body, whose task is to provide advice to the government and the parliament on economic and social issues. The SER consists of 11 union representatives (eight from the FNV, two from the CNV and one from VCP), 11 employers’ representatives and 11 experts, known as crown members. Representatives of government departments also attend as observers.[9] Its reports play an important role in developing public policy.

 

Unions also participate in the Labour Foundation (Stichting van de Arbeid) which is a bilateral body involving only the employers’ associations and the union confederations, with three representatives from the FNV and two each from the CNV and VCP. It was here that the influential Wassenaar Agreement, which removed direct state invention in pay and committed the unions to wage moderation was signed in 1982.

Who negotiates and when?

 

Collective bargaining is normally conducted between employers or employers’ federations on one side and trade unions or groups of unions on the other. 

 

There are few rules governing those who are entitled to bargain.  The only requirement placed on trade unions is that the union should have a legal personality and that its rules should give it authority to bargain. This lack of restrictions on trade unions' freedom to negotiate is matched by similar freedoms for the employers.  Dutch employers and employers' organisation have no legal obligation to negotiate with trade unions. Collective agreements between unions and employers depend entirely on both sides' willingness to negotiate. Normally bargaining is conducted on the union side by the full-time trade union officials, with the involvement of lay union representatives.

 

There are no rules on which unions have the right to take part in negotiations and sign agreements. It is for the parties to decide who they want to negotiate with. In recent years, there have been reports that some employers have bypassed the FNV to reach less onerous agreements with smaller unions. A study by the Ministry for Social Affairs and Employment looking at 600 industry and company agreements in effect in August 2018 found that 80% had been signed by the FNV and FNV affiliates, 60% by CNV affiliates and 21% by De Unie, a union covering a range of industries which is now part of VCP.[10] Around a tenth (9%) of the agreements in force had not been signed by any of these unions but had involved other unions, both specialist occupational unions, such as VNV, the pilots’ union, and smaller unions like the AVV and LBV. Asked about this development the Ministry suggested that this was not a concern and that “experience has shown that unions that did not participate earlier are often sitting round the table again during the next collective bargaining negotiations”. However, it did undertake to look at the issue further.[11]

 

Works councils do not normally negotiate pay increases with employers, although they are involved in negotiations to implement elements of industry level agreements such as pay structures and the organisation of working time. The 2018 report on collective bargaining by the Ministry for Social Affairs and Employment referred to media reports that some companies preferred to negotiate with works councils and listed two retail chains – Action and Jumbo as examples.[12]

 

The same report also provides information on the length of time that agreements normally last. The legislation limits the maximum length to five years, but the report shows that only 5% run for five years, with the most common period for a collective agreement being 24 months: – 39% of agreements last this long. Around one in six agreements (17%) last for a year; 9% last for three years and 3% last for four years, with the remaining 27% of agreements having other durations. On reason why two years is the most common duration may be that two years (subject to a one-off one-year extension) is the maximum length of time that an agreement which has been declared generally binding can last.

 

There is often a gap between the end of one agreement and the start of another, although agreements maintain their validity over this period. On average 97% of agreements are registered after the previous agreement has expired and the average length of time before a new agreement is registered is nine months.

The subject of negotiations

 

Collective agreements in the Netherland cover a wide range issues. Normal pay and conditions agreements deal with pay, hours and holidays, as well as linked topics like salary systems, overtime and shift rates, working time arrangements and special leave. However, they also cover broader issues like early retirement, educational leave, the organisation of leave over the whole of an employee’s working life, the position of women, protecting those with disabilities and the environment. In addition, increasingly agreements provide for a range of benefits, from which individual employees can choose. Agreements also cover procedural issues like the powers and status of members of works councils and union groups at the workplace.

 

The 2018 report on collective bargaining by the Ministry for Social Affairs and Employment shows that as well as 651 normal pay and conditions agreements there were also 255 specific agreements covering other issues, primarily pensions and early retirement, education and training and social funds at industry level and more specific company issues at company level.

 

The Netherlands has a national minimum wage which is increased twice a year, in January and July, in line with the average increase in negotiated pay.

[1] For a detailed examination of collective bargaining in the Netherlands see The Netherlands: decentralisation and growing power imbalances within a stable institutional context by Wike Been and Maarten Keune, in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[2]CAO-afspraken 2018  Ministerie van Sociale Zaken en Werkgelegenheid, May 2019 https://www.rijksoverheid.nl/documenten/rapporten/2019/06/20/rapportage-cao-afspraken-2018 (Accessed 06.05.2020)

[3] Figures for employees from Employment; economic activity, quarterly, National Accounts, 2020 CBS

[4] Toetsingskader algemeenverbindendverklaring cao-bepalingen (AVV) 2019

[5] CAO-afspraken 2018  Ministerie van Sociale Zaken en Werkgelegenheid, May 2019 https://www.rijksoverheid.nl/documenten/rapporten/2019/06/20/rapportage-cao-afspraken-2018  (Accessed 06.05.2020)

[6] Karakter van bedrijfstakCAO’’s by Ad van den Ameele and Martin Schaeps Ministerie van Sociale Zaken en Werkgelegenheid September 2015 https://www.uitvoeringarbeidsvoorwaardenwetgeving.nl/mozard/document/docnr/52967 (Accessed 06.05.2020)

[7] Naleving van de Wet op de Ondernemingsraden: Stand van zaken begin 2017 – Eindrapport, by Ignas Wajon, Paul Vlug and Elsbeth Enneking, June 2017 https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/rapporten/2018/03/05/eindrapport-onderzoek-naleving-wet-op-de-ondernemingsraden/eindrapport-onderzoek-naleving-wet-op-de-ondernemingsraden.pdf (Accessed 06.05.2020)

 

[8] FNV legt hoogste looneis in dertig jaar op tafe, FD.nl https://fd.nl/economie-politiek/1270647/fnv-schroeft-centrale-looneis-op-tot-5 (Accessed 06.05.2020)

[9] Council members https://www.ser.nl/nl/ser/raad/raadsleden  (Accessed 06.05.2020)

[10] Included in the 2018 report on collective bargaining: CAO-afspraken 2018  Ministerie van Sociale Zaken en Werkgelegenheid, May 2019

[11] Antwoorden op de schriftelijke vragen van het lid Van Kent (SP) van de Tweede Kamer der Staten-Generaal aan de Minister van Sociale Zaken en Werkgelegenheid over het bericht dat werkgevers in zee gaan met kleine vakbonden om cao’s te sluiten met voor hen gunstige voorwaarden https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/kamerstukken/2020/04/20/beantwoording-kamervragen-over-cao-afspraken-werkgevers-en-kleine-vakbonden/beantwoording-kamervragen-van-het-lid-van-kent-sp-over-het-bericht-dat-werkgevers-in-zee-gaan-met.pdf (Accessed 06.05.2020)

[12] CAO-afspraken 2018  Ministerie van Sociale Zaken en Werkgelegenheid, May 2019 https://www.rijksoverheid.nl/documenten/rapporten/2019/06/20/rapportage-cao-afspraken-2018   (Accessed 06.05.2020)

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.