The new cabinet wants to build bridges, but faced with a shrinking economy it will be struggling, say Tilburg University labour market researchers.

The new coalition’s plans will make it easier for employers to make staff redundant while unemployment benefits are being pared down. These proposals form the end result, for now, of a long discussion about the influence of employment protection legislation on the Dutch labour market.

The government accord has this to say about it: ‘Labour market mechanisms will have to be improved for everybody. There are not enough job opportunities for older people and flex workers deserve better protection. A quick transition from job to job, with a minimum dependence on benefits, is what is needed. By reforming the redundancy law and modernising the unemployment benefit system the route from job to job will be shortened considerably’.

Top performing

According to labour market statistics, the Netherlands is still one of the top performing European countries. Unemployment is low and labour force participation and labour productivity are very high. It can only be said that the Dutch labour market is not working properly if you compare it to a theoretical ideal of a perfectly functioning labour market. Such a labour market doesn’t exist anywhere in the world, including the United States where unemployment is higher and job quality is not as good.

First, let’s tackle those older job seekers who take too long to find employment. It’s true, they do. That’s because their prospects of finding work are very bad. Only 2% of job vacancies were filled by a person over 55. From year to year, one in fifty older employees switches jobs voluntarily compared to one in every eight to ten youngsters.

The flex workers are up next. At the moment they are not properly protected, the accord states. What is probably meant by this is that they have no income security and therefore aren’t able to build up comprehensive social security rights. This is true, but the question is whether this is a problem for all flex workers. Highly trained flex workers still go on to steady employment although it takes longer, especially at the moment. For less skilled people it is very difficult to get a job offering more security and the number of people who are depending on a flex job long term is increasing. This is partly because of the crisis, but also because employers tend to favour flexible contracts more and more.

Employment security

The problem of the older job seekers and the flex workers has nothing to do with a job being attractive or not; it is to do with employment security. Older people don’t find new jobs easily, flex workers no longer automatically qualify for a long-term contract and the self-employed may see their work dry up ‘tomorrow’. The sacrifices the new cabinet is imposing can only be justified if it comes up with a policy to help people from job to job. This means a division of the risks and reciprocal risk management between workers, employers and the government, not landing the workforce with all the risks which jeopardises the income and job security of all workers, including the older ones.

Flex workers are being compensated in a small way for their inherent job insecurity. There is a transition budget which gives workers a certain amount of money when they are nearing the end of their contract. This money has to be spent on increasing their chances of finding a new job but the budget for this is limited. Benefit agency UWV is also facing cuts and its role as a jobs mediator is being marginalised. The work-to-work guidance process paragraph, set out in a social plan when big companies reorganise, will be pared down as well because the redundancy pay these plans are based on will effectively be halved.

Impulse

But the most important criticism of the government accord is its lack of specific measures to tackle the real problems of the older worker and the flex worker. These are mainly to do with lack of training and the bottleneck in the flow to ‘proper’ jobs. More needs to be done to compensate the lack of investment in the training of flex workers. Employers must invest more in career coaching and sustainable employment of older workers.

The labour market needs a new impulse to increase income and work security for older workers and flex workers. The emphasis should be on training for flex workers (young and old) and a new system of job to job coaching. For inspiration the government can look to Sweden where (regional) labour pools and/or sector-bound transition funds facilitate the transition from job to job, by, among other things, organising additional training. In both cases the risk is spread between the government, employers and workers through a joint contribution to training and coaching.

The work security agenda is the ultimate test for Rutte II but there is only a vague outline of a policy. The cabinet will have to offer something a lot more substantial if it wants the Netherlands to keep its top ranking in Europe.

Ton Wilthagen, Ruud Muffels and Ronald Dekker are labour market research specialists at Tilburg University.

This article was published earlier on Sociale Vraagstukken