A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Bovenberg, Lans; Wilthagen, Ton; Bekker, Sonja Article Flexicurity: Lessons and Proposals from the Netherlands CESifo DICE Report Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Bovenberg, Lans; Wilthagen, Ton; Bekker, Sonja (2008) : Flexicurity: Lessons and Proposals from the Netherlands, CESifo DICE Report, ISSN 1613-6373, ifo Institut für Wirtschaftsforschung an der Universität München, München, Vol. 06, Iss. 4, pp. 9-14 This Version is available at: http://hdl.handle.net/10419/166947 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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PROPOSALS FROM THE October 2008 showed, however, a sharp decline in NETHERLANDS both consumer and producer confidence. In the Netherlands, contractual diversity, including part-time work, fixed-term work and agency work, is ANS OVENBERG L B *, widespread. In 2007, 46.8 percent of the employed TON WILTHAGEN* AND Dutch labour force worked part-time, which repre- sents a significant increase compared to the 38 per- SONJA BEKKER* cent part-time employed in 1997 (Eurostat). It is also much higher than the 18.2 percent part-time Dutch flexicurity: the “normalisation” of employed in the EU-27 in 2007. In the Netherlands, atypical work working part-time is even regarded as a normal and desired type of employment, illustrated by the high amount of part-time workers who report that they Labour market performance voluntarily work in this type of employment. Especially women work part-time (75 percent in the In the European flexicurity discourse, the Nether- Netherlands compared to 31 percent in EU-27 in lands and Denmark are often referred to as flexicu- 2006). Furthermore, the percentage of employees rity examples (European Commission 2006). Dutch with a contract of limited duration increased from flexicurity policies have been developed rather 12.3 percent in 1997 to 18.1 percent in 2007, which is deliberately and can generally be reconstructed as higher than the EU-27 average of 14.5 percent in the normalisation of atypical work while preserving 2007 (Eurostat). Moreover, it is estimated that cur- flexibility in the labour market. This approach, com- rently nearly 1 million workers conduct their activi- bined with the relatively good labour market results ties outside the traditional employment relationship over the past years, served as an example at the (self-employed), which is about 12.4 percent of the European level in the early stage of the flexicurity working population. In some sectors, this type of policy-making process. employment is growing rapidly. In the construction sector, for instance, the number of self-employed Recent performance indicators show the following: workers has increased by 31 percent over the past in 2007, the Dutch employment rate was 74.3 percent two years (Statistics Netherlands 2008). and the unemployment rate 3.2 percent, compared to 64.5 percent and 7.1 percent respectively in the Regulating and negotiating flexibility 27 EU member states (EU-27). In August 2008, the unemployment rate decreased even further to 2.6, Given the rather large number of atypical workers, a and is now among the lowest in the European Union very relevant question is how the needs for the secu- (Statistics Netherlands 2008). In recent years, eco- rity of these workers are met. Security is provided in nomic growth has been modest to good and the several ways, depending on the type of flexibility a inflation has been rather low at 2.0 percent com- worker faces. For part-time workers, the pro rata pared to the EU average of 3.2 percent. Even now, in temporis principle (in proportion to the time the context of a world-wide financial crisis, the econ- worked) is strictly applied by law.1 This holds true omy still grew by 3 percent in the second quarter of not only for the position of the employee under civil * Tilburg University, the Netherlands. 1 See more comprehensively Visser et al. (2004). 9 CESifo DICE Report 4/2008 Forum law, but also for social security legislation and enti- Labour was asked for its advice on this matter. The tlements. Two laws are particularly relevant not only Foundation of Labour is a consultation and advisory to part-time workers but also to fixed-term workers: body at the central level, which was established at the Prohibition of Discrimination by Working Hours the end of the Second World War. Its members con- Act (Wet Verbod onderscheid arbeidsduur; WVOA) stitute the largest confederations of employers’ and and the Adjustment of Working Hours Act (Wet workers’ organisations. Unlike the Socio-Economic Aanpassing Arbeidsduur; WAA). The former act Council, the Foundation of Labour has no indepen- came into effect on 1 November 1996. One of the dent members or representatives appointed by the consequences of its introduction was the addition of crown. The Foundation of Labour is central to the Article 7:648 to the Dutch Civil Code.This article for- Dutch “consultation” economy, or the “Polder Mo- bids employers to discriminate between employees del”, as it is called nowadays. It is an institution that on the basis of a difference in working hours in the is remarkable for its strategies of positive-sum bar- conditions under which those employees enter, gaining. The pursuit of so-called “win-win” strategies extend or terminate a contract of employment, unless and results, as perceived from the point of view of there is objective justification for such discrimina- both workers and employers, is at the core of the tion. Clauses that conflict with this ban are void. If foundation. the employer terminates the contract in contraven- tion of the ban or terminates it because the employ- Under the umbrella of the foundation, employees’ ee has invoked this ban, the termination is subject to and employers’ confederations managed to draft a annulment. The same ban also applies to government detailed agreement on flexibility and security. employers, now that a stipulation to the same effect Moreover, at the same time, the employers’ organi- has been incorporated into Article 125g of the sations, the trade unions and the non-profit-making Central and Local Government Personnel Act. employment agency START reached an agreement on regulating the legal position of temporary agency The Adjustment of Working Hours Act came into workers after the new laws would come into force. force on 1 June 2000. This act is the result of nearly This collective agreement would run for five years. nine years of political negotiation. It represents a On March 7 1997, the Flexibility and Security Bill very high-profile piece of legislation, as it gives was submitted to the lower house of the Dutch par- employees the right (albeit under certain conditions) liament, together with the Allocation of Workers via to unilaterally alter the terms of an already existing Intermediaries Bill, which provided for the abroga- employment contract. tion of permits for temporary work agencies. Without much further debate, the new legislation With regard to agency workers, on-call workers and came into force on 1 January 1999. the like, a new approach to labour market flexibility and security was adopted at the end of 1995. At that The new law abolished the permit system for oper- time, the Dutch Minister of Social Affairs and ating temp agencies. On the one hand, more rights Employment made a deliberate attempt in a memo- were attributed to flexible workforces. On the randum called “Flexibility and Security” to strike a other hand, more leeway was created for (prolong- better balance between flexibility and (social) secu- ing) fixed-term contracts. A key role was and is rity. This memorandum contains an interrelated set being played by the collective labour agreements of starting points and proposals for modifying the in the temporary agency sector, concluded for the dismissal protection enjoyed by employees in stan- respective periods of 1999–2003 and 2004–09. dard employment relationships, abolishing the per- Temporary agency workers have, depending on te- mit system for temporary work agencies with respect nure, a right to a fixed-term or permanent contract to their placement activities and enhancing the legal with the agency, to training facilities (individual position of temporary agency workers, whose rela- budget) and pension entitlements. After 26 weeks tionship with the agency is to be considered, in prin- (or earlier) of working for the same company, they ciple, a standard employment contract. are entitled to the same wage as the employees of that company. The hiring company saves on hiring The Dutch coalition government (a coalition of and firing costs, but pays more for a temporary Labour, Liberals and Social Liberals at that time) worker than for their own employees (as the costs was unable to reach agreement on the flexibility and for the agency are added to the wage costs of the security proposals.