Should the Netherlands make its workforce more flexible? The Dutch government has been looking into ways of making it easier for employers in the Netherlands to fire people.

The Dutch government has been looking into ways of making it easier for employers in the Netherlands to fire people.  

However a proposal to this effect met strong opposition and a few months ago the cabinet almost fell. A long-awaited report by a special commission made up of politicians and entrepreneurs barely mentioned ways of making it easier to dismiss employees, even though this was supposed to have been the report's central theme.

The problem

Although Dutch employers are having trouble filling vacancies, at the same time they hesitate to take on new employees. They argue that it is hard to get rid of workers when the economy slows down. Firing employees is always a matter for the courts. They would like to see a reduction in job security.

 
Trade unions and the Labour Party, on the other hand, want to preserve workers' rights. This flies in the face of the prevailing market-economy wisdom that the rigid economies of continental Europe should loosen up.

 
Happy workers
Economist Alfred Kleinknecht says the Netherlands should not make its labour force more flexible. Reducing job security may help to create jobs in the short run, but he believes that in the long run it is a bad idea. The Netherlands is one of a number of European economies facing an imminent labour shortage, and Mr Kleinknecht says that it is a better idea to increase productivity rather than create more jobs. He says this is where a high level of security comes in. Employees with high job security perform better; the happy worker is a productive worker. Mr Kleinknecht says people are motivated to work well because they like the work they do, not because they make money doing it.. He is convinced that increased productivity per worker will keep European economies growing, even as the populations age and the number of workers declines.

 
This argument goes against the trend towards more flexibility. Mr Houwers, an account manager who has worked for the same company for nearly 30 years, agrees that good job security leads to better productivity. He does not want Dutch politicians to chip away at job security. "The idea makes me nervous. Now I'm not afraid of losing my job. But if I were, I wouldn't do it so well."

 
However, the younger generation of Dutch employees is already adjusting to a lower level of job security than their parents had. Some job hoppers who seek out new challenges feel just as productive as their more stable colleagues. Selina Van Panhuys, on her third job in six years, says:

 
"To be honest, I'm not looking for more job security. I have the feeling that if it doesn't work out I can always move on to another place. Time will tell if that's the right way to do things. But for now I'm enjoying myself."

 
Should the Netherlands keep going in the direction of more labour market flexibility? Or maintain a relatively high level of job security? If the government follows the recent commission's recommendations, Dutch politicians will do what they do best: take the middle road.

Job security in the Netherlands

Employers must:

• Offer a permanent contract after three years
• Get permission from a judge before firing someone
• Pay a percentage of an employee's salary after letting the person go

Employees receive

• A high level of insurance against getting fired
• Strong rights of appeal
• Good unemployment benefits (e.g. 90% of salary for as many months as years worked)

Commission recommendations on creating more jobs

• Create an additional 400,000 jobs by 2016
• Companies who fire employees must help them look for new ones for 6 months 
• Employers to receive subsidies to pay for worker training
• Retirement age to rise to 67 by 2040

23 June 2008

 By John Tyler

[Copyright Radio Netherlands]