Three recent trends in The Netherlands: Even if you don’t know what they mean, accept that they are there!

It’s just another week at the office: there is no real big news, except for the Q1 results of some large Dutch companies. Although these are interesting in their own right, I will ignore them for today to look into some interesting trends I noticed of late:

Mass Lay-offs

One glance at last months’ newspapers shows you a relatively new, but nasty trend: mass lay-offs. Although the general unemployment is dropping currently, there are a number of companies and organizations that are seriously cutting jobs (see table)

It could be that these job cuts are the beginning of a more serious trend towards less employment. I wrote a number of columns mentioning the Part time Unemployment Benefit (PUB). This was a 50% government subsidy on salaries for companies to keep people employed that had too little work. In this way the companies could keep experienced personnel on the payroll until better days arrived.

What I had against this PUB is that companies that made use of it, missed the chance to become ‘lean and mean’ again. They gathered their personnel in the 2000’s:  while there was a situation of excess consumption in the USA and Europe, this also caused excess production. This excess consumption came to a sudden halt in the year 2008 in Europe and it is improbable that this excess consumption will return within a few years.  By keeping your personnel on an excess level, you run the risk of returning to red marks as soon as the economy chokes again.


Update (April 28):
Although Panasonic is definitely not a Dutch firm, the following news fits perfectly in this topic: Panasonic/Sanyo is planning to fire 40,000 employees, mainly in factories outside Japan in order to cut cost and to better be able to fight the fierce competition. The amount of layed-off people is about 10,5% of the total amount of 380.000 employees for Sanyo and Panasonic combined.


That is a lot of unemployed people in one time: the crisis is far from over yet.

Pay increases for youngsters

Totally contradictive with the previous item is this one: youngsters are offered an increase in wages. The labor unions and the employers associations are currently reaching an agreement on getting rid of the ‘minimum youth salary’ and instead replacing this by the normal minimum salary, while looking at the years of experience of the youngster in question.

This is not as odd as it seems: there is a strong gulf of obsolescence ahead in The Netherlands and the generation that needs to capture this gulf is the generation that is currently in their teens and twenties. This is also a generation that needs to struggle for getting a good pension when they retire. The labor unions and employers decided not to wait for the salary demands of this group, but to anticipate it.

It is also a fair decision to raise the salary of experienced youngsters, instead of paying them the minimum youth salary: now a youngster of 19 with two years experience was paid less than a starter with no experience of 22.  Not only was it unfair towards the experienced youngsters, but it did lead in numerous cases to employers firing their youngsters as soon as they became 21 and hiring 16-year olds instead. Especially supermarket chain Albert Heyn (www.ahold.com) had a reputation for doing this.

SME-enterprises can’t find follow-up for their company

Small and Medium Enterprise (SME)  entrepreneurs have a very hard time in finding a follow-up for their companies. They are sometimes forced to ‘eat it up’ (liquidate it) instead.

The FD writes about this quiet drama for entrepreneurs (link in Dutch). Here are some pertinent snips of this very interesting article:

Thousands of aging entrepreneurs are “reduced to beggary”, because they can’t sell their company in time.

“They find the tenders of interested parties too low, continue their company against their desire and start to be ailing. As a consequence they eat up their pension and are forced to accept social security in the end” according to investigator Lex van Teeffelen, who got an assignment of the Dutch Chamber of Commerce to investigate this problem.

He speaks of a quiet pension drama that is threatening to happen for 17,500 baby boomers. The group contains entrepreneurs of 50 years and older, mainly active in SME who combined offer 50,000 jobs. They want to sell their company to retire from business, but notice that the value of their company has diminished as a result of the crisis. Instead of accepting a lower price, they continue hoping for better times. “An unwise decision”, according to Van Teeffelen, who is connected to Hogeschool Utrecht (Utrecht College) .

In many cases the entrepreneurs performance drops and the chances of a successful sale diminish accordingly. In the worst case the entrepreneur has to close-down his company without any yields. As far as transactions are accomplished, the price is 20% to 30% lower than the pre-crisis level, according to product manager Sevkan Cevirgen of the Dutch Chamber of Commerce.

For Dutch readers this article is an absolute must-read, as it also emphasizes the roll of the large banks (or lack thereof) in the quest for a good follow-up for entrepreneurs who are planning their retirement. Although the average success-rate for the restart of an existing company is much higher than a start-up, the banks are in general not interested: the reason for this? The amount of money they can make with it in comparison with the amount of work that needs to be done.

The article shows that the economic crisis in SME companies is far from over yet and the chance it will be over in 2011 is negligible, is my opinion. Although this situation could indeed lead to some silent dramas, stating that these people are “reduced to beggary” is a little bit exaggerated in a country where nobody starves and everybody still has a minimum amount of income to live from. No tent camps in The Netherlands!

ABN AMRO aiming to scrap “a few hundred jobs”: Making more possible… with less people? Or just `making less possible… with much less people´?!

The Dutch bank ABN AMRO is planning to scrap a few hundred jobs (all links in Dutch), according to Dutch newspaper DeTelegraaf (www.telegraaf.nl): 

“ABN AMRO scraps hundreds of jobs”  

State bank ABN AMRO will scrap ‘at least hundreds of jobs’.  This number is on top of the 6500 jobs there were already lost due to the integration of the bank with Fortis. This is stated by multiple sources. ABN CEO Gerrit Zalm sent all personnel members a memo, in which he states that costs within the bank are too high. Ten thousands of employees of the bank went into the Easter weekend with a miserable feeling.
 The chief executive is preparing the bank for a return to the stock exchange in 2014. According to multiple sources at least a few hundred jobs will disappear. Professor Jaap Koelewijn of Nyenrode Business University states: “a few hundred jobs seems on the low side. I rather think of thousand to two thousand jobs.

The Financieel Dagblad (www.fd.nl) adds up the following to this story: 

Gerrit Zalm didn´t mention any jobs to be lost. However, in the meantime the personnel has been informed of jobs that will be lost. The labor unions “FNV Bondgenoten” and “De Unie” were already taking this into account. “When I read that unnecessary procedures will be cut away and junctions will disappear, we can expect loss of jobs”, according to executive Erwin Rog of labor union De Unie.

In the aforementioned memo Gerrit Zalm mentions that the bank is not ambitious enough towards its customers: 

`It gives a feeling we could do better, especially in servicing our customers. Our service can be better, quicker, with less mistakes and less complaints. This requires more efficient processes, less junctions, more cooperation, the elimination of unnecessary procedures, the full usage of our knowledge on the shop floor and a head office that is considered ´supportive´. […]

Also financially we should perform better than in the initial plans. That is necessary for creating an as-strong-as-possible position in order to decide over our own future. Our current cost level is problematic: no matter how it is measured. Even after realization of the ´charcoal sketch´ and the savings coming from the merger, we are not yet ´up to standard´.

 This does not change the A of ambition in the C of cuts. We are also aiming at possibilities for yield raises. And with realistic proposals the cost may even go before the yield. But the A for ambition is also about efficiency […] Especially the combination of cost savings in combination with better customer service offers plenty of possibilities.[…] We do put an extra accent on `putting the customer in center´, efficiency and probably successful possibilities to raise the yielding potential of the bank.

It´s no wonder that personnel of the bank didn´t have a relaxed Easter weekend after reading this memo. If you read between the lines, you don't expect that Gerrit Zalm thinks very highly of yield raises or the ´realistic proposals´. You better get hold of your boots and sit still while you get a haircut…

I don´t know yet, as it has not been officially confirmed, how many jobs will be cut, but my guess is that professor Jaap Koelewijn of Nyenrode Business University might be more right than the guys that predict the loss of a few hundred of jobs.

The position of the bank is still very awkward: when ABN AMRO was sold to the troika of RBS, Fortis Bank and Banco Santander, the bank was a global player with global ambitions and a portfolio of derivatives that was ready for `outer space`.

Now the bank is especially aimed at servicing Dutch customers in The Netherlands and abroad, except for a few profitable and high-profile activities where the bank still is considered a global player. How´s that for a down-to-earth ambition.

And on top of that the bank is still in the middle of a merger with Fortis Bank in which at least 6500 jobs need to be scrapped before 2013, due to double manned positions and banking activities that are abolished.

If you then state as ABN AMRO that you are planning to return to the stock exchange in 2014, in my opinion you are busy with a ´mission impossible / implausible´:

·         The amount of state support that ABN AMRO received is estimated at about €25 bln, including the state support for rescuing Fortis Bank:

o    The chance that an IPO in 2014 will yield this amount of money for the state is about 0,00000000001%, especially if you read what the target customer groups of the bank are.

o    I don´t know if Jan Kees de Jager (finance minister) or PM Mark Rutte are ready to tell the Dutch taxpayers that they can wave goodbye to at least €15 bln in state support when the IPO is over and done?

o    Fact is that if the state remains a partial owner by majority of the bank, the other shareholders know they don´t stand a chance when the bank comes into trouble again. The state comes first.

·         The state support excludes the bank from being a price fighter or an interest stunter, due to European Commission regulation. This reduces the chances of the bank on becoming a national champion. This reduces also the value of the bank during an IPO.

·         The chance that the world economy is healthy and growing again in 2014 is very small, if you read the latest signs. This further reduces the chances for a successful IPO.

To be clear about it: the ABN AMRO is my personal bank and I´m quite satisfied with the services they offer. Besides that I have worked there as an ICT consultant. That means I am sympathetic towards that bank. But I wonder now if they will charge me more than the current €40 per year already for just keeping up my account and my internet banking. And I saw over the last years that the amount of service given at the banking shops has reduced strongly, instead of increased. And I am very doubtful towards the possibilities of the bank to yield more money from its customer, while at the same time keeping it in center.

Every attempt of ABN AMRO to earn more money from its customers is currently very suspicious: in The Netherlands still multiple lawsuits are running on the `usury policies´ (insurance policies with an extreme amount of hidden costs in it), the effects of the Madoff fraud and the Lehman bankruptcy. People are very suspicious against all kinds of derivative investments. On top of that, the bankers are in the current envious and resentful political climate considered to be at a level, somewhere between the fly and the cockroach, with their ´bonus culture´ and their ´heads, I win. Tails you lose´ attitude.

So as far as I´m concerned the chances of ”making more possible… with less people” are very slim. I think it will be “making less possible… with much less people”.

Vodafone already blocks the possibility for their customers to use VOIP and SMSoIP services

In my post of yesterday describing KPN, I mentioned that KPN was planning to block SMS and internet services for their mobile internet customers:

Yesterday afternoon, it became clear in which way KPN wants to compensate the losses it makes as a result of the social networks: the company wants to charge extra costs for the usage of social networks, like Facebook, Twitter, WhatsApp, Skype and Ping on their mobile internet subscriptions. It does this by putting access to the social networks in a special mobile portfolio.

Today proves once more that stinginess, stupidity and customer-unfriendliness are ubiquitous: Vodafone is already blocking VOIP and SMSoIP services. According to their conditions (translated to English by me):

With this subscription you can´t use VoIP en SMSoIP-services. Usage in combination with PC or Laptop and excessive usage of audio and videostreaming are also not allowed. If you want to make usage of VoIP services, then is that only possible from the `Calling + SMS + Web 275 subscription´ and higher with ´Internet Calling Blox`. 

It will be a good thing when other, more customer-friendly alternatives arise among the smartphone providers. Then we can show KPN and Vodafone the sole of our boots and kick them out.