De Geus: wage rises set for 2006

17 January 2005

AMSTERDAM — Pay and social security benefits will start rising again in the Netherlands in 2006 after the current period of wage moderation, Social Affairs Minister Aart Jan de Geus said on Sunday.

De Geus said 2006 would be the first year in which the government’s social welfare reforms would start to bear fruit. He admitted that the reforms had initially exerted a negative impact on the economy.

“We are holding a large clean-up in social welfare, the likes of which are unmatched. Besides the reforms — that were in any case necessary — we have encountered an economy that is not going so nicely, also in the countries around us,” he said.

The outgoing chairman of Christian trade union confederation CNV, Doekle Terpstra, said the comments from the minister were primarily designed for the election, planned for 2007.

He also said it was too early to look towards 2006, urging De Geus to concentrate on the present because there were still important issues to address, news service NOS reported.

A spokesman for employers association VNO-NCW also said it was too early to start looking towards incomes in 2006. “We must first agree on wise CAOs [Collective Labour Agreements] for this year so as not to nip the economic recovery in the bud,” he said.

De Geus’ comments came after Finance Minister Gerrit Zalm last week rejected tax cuts in coming years if they came at the expense of reducing the budget deficit. He thus dismissed demands to help stimulate the ailing Dutch economy.

The economy slipped into recession last year and the Dutch government has embarked on a massive cost-cutting exercise over the past couple of years to boost government finances. Everyone will suffer a fall in purchasing power this year.

Massive union-led strikes and protests in 2004 won government budget cut concessions in terms of WW unemployment benefits, the WAO worker disability scheme and retirement savings schemes.

But the government will still abolish the tax breaks on early retirement schemes and reached an agreement in November with trade union confederations FNV, CNV and MHP to moderate wage rises in 2005.

Subject: Dutch news