As I already argued in my last article, regarding the
optimism of chairman
Hans de Boer of the employers’ organization VNO/NCW with respect to the
Dutch economy, there are indeed some clear greenshoots, which could point at a
much more prosperous future.
As far as I’m concerned, there is however one factor which
could soon spoil the party and trigger another, prolonged period of disappointing
economic growth: the (youth) unemployment.
Lately, especially the youth unemployment seemed to reluctantly
drop after more than five years of almost steady growth; especially after 2011
this growth soared until the second half of 2013. In the 1.5 years since, youth
unemployment started to drop very slowly until the current level was reached.
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| Unemployment development from 2003 until 2015 for gender and age category Data courtesey of: www.cbs.nl Chart created by: Ernst's Economy Click to enlarge |
However, at this moment I suspect that this slow drop in the
youth unemployment could soon come to an end. The cause for this expected disruption
of the favourable unemployment trend will be the deployment of the new labour
legislation on the first of July, by Minister of Social Affairs Lodewijk Asscher.
This legislation has been deployed with the best intentions by
Lodewijk Asscher, in order to
do something about the unfavorable position of flex workers and workers:
(the following excerpt
of this new law has been acquired from De
Volkskrant):
Per 1 July 2015, the
difference between fixed and so-called flex workers becomes smaller. This is
agreed by employers and labour unions in the so-called Social Agreement. It
will become cheaper to dismiss fixed employees and the duration of the Dutch
unemployment benefit (i.e. WW) will be restricted.
On the other hand,
starting from July 2015 flex workers will be entitled to a ‘transition
payment’, when they have worked in excess of two years for the same employer.
This payment is at least one-third of a monthly salary per service year at the
employer, capped at €75,000.
At the same time,
these flex workers are entitled to a fixed contract earlier: after three
contracts in two years (was three contracts in three years). In order to
protect employees against ‘revolving door’ constructions – the employee goes
away and magically reappears after a few months for a new series of temp
contracts – the employee from now on is only allowed to return to the same
company after six months, instead of three.
For the 230,000
temporary employees (acquired through an official temporary employment agency),
things remain more flexible: six contracts in four years. The first
one-and-a-half years, the temporary employee can be sent away at one day’s
notice.
In spite of these good intentions by Lodewijk Asscher, this
legislation seemed to work at large employers as a red cloth to a bull.
First, ING Bank started with their scheme to dismiss
long-term flexible workers and workers from temporary labour agencies before
the 1st of July, in order to avoid the mandatory payment of transition fees. Only
after the minister stepped in personally, the flexible layer of personnel, that
would be dismissed from their long-term work relation with the bank, received a
kind of transition fee after all. Their dismissal itself, however, became an
undeniable fact of life for these workers.
And soon, the bank was followed by the large insurance
company Nationale-Nederlanden (NN). The following snippets also were printed in
De Volkskrant:
Nationale-Nederlanden
is currently dismissing loyal temporary workers, in advance of new labour legislation,
to be deployed on the 1st of July. This new labour legislation should offer
more certainty to flex-workers and temps. Just like ING earlier this month, Nationale-Nederlanden
tries to avoid the so-called transition fee that it would have to pay to its
temporary workers, after a future dismissal in the period after July 2015. This
has been disclosed by an internal memo of this insurance company, which is in possession
of De Volkskrant.
Temporary workers at Nationale-Nederlanden
informed the newspaper that their contracts will not be prolonged, in order to prevent
them from unwantedly acquiring a steady job at the company. “We had been
promised that we could stay longer at the company than legally allowed, when we
would switch to another temporary labour agency”, according to a temporary
worker, who spoke on the basis of anonimity, as he still works at NN. However,
this revolving door-principle has been explicitely forbidden by the new
legislation. At NN there are workers who have worked at the company for more
than ten years, using this modus operandi.
The insurance company
leaves the dismissal of their temporary workers to the temporary employment
agencies themselves. Only when these agencies offer their temps a fixed contract
eventually – which happens almost exclusively with specialists who are in very high
demand – they are allowed to stay at Nationale-Nederlanden, according to a
spokeswoman of the insurance company. ‘When we really want to keep a very
talented worker in our service, we offer him or her a fixed contract, of
course.
Like I stated in my earlier article (see one of the
aforementioned links), this is a very unfavourable development, which could
have a substantial impact in the coming months; first and foremost on youth
unemployment, but also in other age categories with flexible contracts.
Especially youngsters work at large companies with temporary
and flexible contracts, in a majority of the cases. They could become the main
victims of this corporate behaviour in the eve of this new legislation.
On top of that, I am convinced that NN and ING are not
unique in this behaviour, but rather act as front-runners. They simply caught
the heat from the Dutch press, due to their size and importance for the Dutch
labour market. Other companies will soon follow in their footsteps and before
we know it, the Dutch youth unemployment is on the rise again.
It is impossible to see this development loose from the
growing disconnection between (large) employers and employees. Large employers
see their personnel more and more as a flexible force of FTE’s, which can be
deployed and dismissed at will. The following snippets are again from last week’s
article:
While many executives
and self-acclaimed leaders at large employers praise themselves for their
exceptional qualities and skills, and use this as an excuse for their
exceptionally high remuneration, they don’t really search for exceptional
qualities among their personnel.
The ideal workers are
people, whose knowledge and skills would always be fully up to date. They would
not be overly ambitious and would never become bored of their jobs, even when
their jobs would be boring, as a matter of fact.
They would be fully
skilled and trained at any given moment, and in possession of the latest
knowledge and techniques, regarding all important working areas and technical
developments. And companies would not have to invest one penny in them, with
respect to courses, workshops and trainings!
These workers would
only require a moderate salary or hourly fee and when their services would not
be required anymore, they would leave the company instantaneously.
Hence: the ideal
worker does not require anything special, does not ask for anything and gives
his very best on a daily basis, until his services have become superficial.
And an optimal labour
market – to the eyes of many entrepreneurs – would be akin to the physical Law
of Communicating Vessels: a labour force, which is so flexible that it always
appears at the place and time where and when it is needed most. High demand for
labour would immediately lead to high supply. Low demand would immediately lead
to a magical disappearance of the labour supply…
While I am an independent, flexible, freelance worker myself,
I am one out of my own conviction and at my own choice. Many youngsters,
however, do not have the luxury of such a choice: too often large employers
simply don’t want to offer them a fixed labour contract.
In order for them to have a job, they are bound to work under
a series of temporary or flexible contracts, either until their services are
not needed anymore or until maintaining them becomes too risky or expensive for
their temporary employers. This is an undesirable situation, which might
prevent this youngsters from developing a healthy career, that leads to a prosperous and financially
independent future for them and their future families.
Lodewijk Asscher, the Minister of Social Affairs did a brave
attempt to slow down this corporate behaviour, but this development can only really
change when the large employers themselves experience the disadvantages and disruptive
effects of this corporate behaviour in their own companies.
Until then, youth unemployment might be on the rise again
for quite a while…
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