Wage freeze deal at risk as talks fail

19th May 2004, Comments 0 comments

19 May 2004, AMSTERDAM — The government, unions and employers failed to reach an agreement on Tuesday night over early retirement and pre-pension schemes, threatening the wage moderation deal reached late last year.

19 May 2004

AMSTERDAM — The government, unions and employers failed to reach an agreement on Tuesday night over early retirement and pre-pension schemes, threatening the wage moderation deal reached late last year.

Both the Cabinet and employers were in agreement on a compromise plan, but during the pre-budget talks (Voorjaarsoverleg) Dutch trade union confederations dismissed the proposal as unacceptable, news agency ANP reported.

Trade union confederations FNV and CNV have until Monday to reconsider their positions, but said they would urge trade union chiefs to reject the proposal. If the union heads also reject the government's offer, any hope of an accord will be dashed.

The unions also said the failure to reach a pre-pension agreement meant they were no longer be bound to the wage moderation accord reached during the October CAO labour agreement discussions (Najaarsoverleg). The October talks led to an agreed two-year wage freeze.

And if a pre-pension deal cannot be reached with unions and employers, the Cabinet will then revert to its original plan, under which fiscal support offered to workers wishing to avail of the VUT and pre-pension early retirement schemes will be scrapped from 2006.

Prime Minister Jan Peter Balkenende believes the three parties greatly narrowed the divide on Tuesday night, but Finance Minister Gerrit Zalm was openly pessimistic about the hopes for a pre-pension accord.

Faced with the costs of an aging population, the Cabinet wants the nation's labour force to continue working for as long as possible. Its original plan means that every employee will thus be required to continue working until the age of 65.

Workers may be able to stop working early, but only if they finance it themselves through savings accumulated in a special type of savings plan (levensloopregeling).

The age at which workers would be able to take up the pre-pension scheme was an important point of contention between the cabinet and the social partners, made up of the nation's unions and employers.

The government initially offered a compromise age of 63.5, but yielded to a proposal from employers to reduce the age to 62.5. Unions demanded an age of 62.

But the pre-pension age was not the only stumbling block in the pre-budget talks. Union confederations are also opposed to the plan put forward by the Cabinet and employers allowing workers to individually choose if they wish to participate in a pre-pension scheme.

Unions fear that a large number of people will drop out, making the collective system unaffordable, Dutch public news service NOS reported.

If the government and the social partners fail to reach an accord over the pre-pension, the wage moderation agreement reached in October 2003 — which paved the way for the two-year wage freeze — is thus also at threat.

Faced with a struggling economy and a worrisome budget deficit, the government is slashing EUR 17 billion from the budget by 2007 and pinpointed wage moderation as a key element in its plan. If unions move to demand wage rises, the budget deficit will increase.

Unions and employers agreed to the wage freeze on the condition that the Cabinet offered concessions on its plans to cutback the WAO worker disability scheme and early retirement schemes.

The government has fulfilled its promise to ease its cutbacks to the WAO scheme, but the pre-pension plans have remained a continued bone of contention. Recent talks failed to solve the stand-off heading into Tuesday night's official discussions.

The wage moderation agreement reached last year was hailed as another success for the praised Dutch Polder Model, which helped spark the Dutch economic boom of the late 1990s via policy forming by government, employer and union consensus.

But talk has again turned to the prospect that the polder model is starting to crumble — as it did ion October 2003 — raising the prospect of industrial unrest in the Netherlands.

[Copyright Expatica News 2004]

Subject: Dutch news

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