Social dialogue and the public services in the aftermath of the
economic crisis: strengthening partnership in an era of austerity the case of The Netherlands
Peter Leisink, Ulrike Weske, Eva Knies
Utrecht University School of Governance, The Netherlands
European Commission project: Industrial Relations and Social Dialogue VP/2011/001,
November 2012
Executive Summary
Introduction
The research aims to understand the particular challenges facing the social partners, what
strategies they are putting in place to manage change and what contribution forms of
employee consultation and involvement i.e. social dialogue can make in maintaining high
quality public services in an era of austerity . A key goal is to encourage the adaptation of
these systems of consultation and involvement to deal with new challenges.
The analysis builds on a series of broader underlying research questions:
1. What have been the main drivers and measures of austerity adopted in each country?
2. How have these changes been implemented and to what extent has social dialogue
contributed to the change process at national, sectoral and workplace level?
3. How have institutions of social dialogue influenced industrial relations processes/
outcomes in the public services?
A particular strength of the research has been to build on and extend our understanding of
macro level developments by researching workplace change. This has involved detailed case
study work in local government to identify how local employers are affected by, and are
responding to, national austerity measures.
This report addresses how austerity measures and other drivers of change have impacted on
public sector employment relations in the Netherlands, and how government, employers
and trade unions have attempted to shape those policies and to deal with their
consequences. The report presents an overview of recent changes in public sector
employment relations, illustrating the degree of diversity by including central government,
primary education and hospitals. A detailed analysis of local government is included.
Measures
Public management reform programmes aimed at creating a smaller government that
provides better public services for citizens date back to the 1990s. The economic and fiscal
crisis has added an extra impulse to these reform programmes. This impact manifests itself
first in quantitative measures aimed at cuts in public sector employment and wages, and
second in structural reforms such as the decentralization of public services to local
government.
In the Netherlands, successive governments have implemented austerity measures. First the
Balkenende IV government in 2010 (3.2 billion Euros), and then the Rutte I government that
decided on 105 austerity measures which would save 18 billion by 2015 in order to comply
with the requirements of the European Stability and Growth pact by 2013. It is estimated
that as a consequence about 10 per cent of total government jobs will disappear. Because
the economic crisis affected government finances more than foreseen extra austerity
measures were required by the European Commission before 30 April 2012. An ad-hoc
parliamentary majority agreed upon a new package of austerity measures amounting to 12
billion Euros. These cutback decisions included a wage freeze for public sector employees for
2 years and a rise of the pension age. A new coalition cabinet took office in November 2012,
which announced new austerity measures topping earlier measures with an extra 16 billion
Euros. Measures include efficiency cuts, legislation concerning harmonization of dismissal of
public sector employees with regulations for private sector employees, caps on dismissal
compensation, and raising the pension age more quickly. The implementation of austerity
measures taken by central government for the public sector in general is left to the
respective sectors and organizations. Employer and trade union representatives at sectoral
level add their own agendas to the negotiations over the implementation of centrally
decided measures, which often involve structural reforms.
The goals of these measures are quantitative as well as structural. The quantitative goals are
evident from measures to achieve more efficiency, for instance through outsourcing and the
creation of shared service centres, and from measures cutting employment and wages.
Structural reforms can be summarized as ‘service-oriented government’. Previous
governments have implemented their own reform programmes from the 1990s onwards
with structural reforms called ‘better government’ or ‘another government’, which should
provide better service to citizens and firms. The present structural reforms involve for
instance the decentralization of public services to municipalities.
While the focus of the report is on austerity measures as a consequence of the economic
and fiscal crisis, demographic changes are another important driver of change that should be
taken into account. Demographic trends (ageing, fewer children) have been a factor
influencing public sector employment policy for more than a decade. The combined
consequence of demographic changes and the economic and the fiscal crisis is manifested
by the decision of successive governments to raise the retirement age.
Social Dialogue
The institutions of social dialogue involve:
- at sectoral level: negotiations between employer and trade union representatives
over the collective agreement covering all employees in that sector
- at organizational level: negotiations between employer and trade union
representatives about organizational issues such as reorganizations/collective
redundancies, and other issues that have been decentralized by the sectoral
agreement
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at organizational level: consultation and negotiation between the works council and
the employer/top management of the organization dealing with issues according to
the Works Council Act.
In relation to local government social dialogue union representatives have had a role not so
much in the decision-making over the austerity measures but in their implementation. Wage
negotiations at sectoral level were especially difficult. When employers and unions
continued to disagree, unions organized demonstrations and strikes, which eventually
resulted in a collective agreement. The agreement that was concluded in April 2012 provides
a fairly normal wage rise, flexibilisation of working hours, and an arrangement replacing job
security by two year work-to-work support for redundant employees.
Overall, the social dialogue is a stable institution in the Netherlands. The economic crisis
does not impact the central institutions of the collective agreement, the consultation and
negotiation mechanisms at sectoral level, and the works council at organizational level. It
also appears that the Dutch culture of cooperation is quite resilient and supports social
dialogue. However, it appears that the effectiveness of the social dialogue varies by sector,
partly reflecting the differential impact of economic and demographic circumstances. The
social dialogue at sectoral and organizational level is able to generate innovative
arrangements. So it appears that social dialogue institutions in the Netherlands facilitate
balanced outcomes that take into account the interests of various stakeholders.
Local Government
The economic and fiscal crisis prompted central government to introduce austerity measures
that affect local government in two ways. First, the general financial contribution from
central to local government has been reduced. Second, central government decided to
decentralize the provision of specific welfare arrangements, such as providing sheltered
workplaces, to local government with a simultaneous ‘efficiency saving’ on these budgets.
Apart from central government decisions, local government has suffered financially because
of losses on ground exploitation and social assistance payments. Consequently local
government employers feel the need to cut back on employment conditions.
The dominant driver of change in the case studies in Leeuwarden and Zwolle is the existing
trend towards a smaller and service-oriented government. Austerity measures have
contributed to this process by putting extra pressure on this trend. In both municipalities,
the works council demanded strategic personnel planning which would enable the
organization to react better to social changes. In Leeuwarden the works council controlled
that staff reduction was effectuated according to the rules but offered no active support in
finding alternative employment opportunities whereas in Zwolle the works council
collaborated with the employer in arranging job opportunities in the private sector and in
other public organizations. Because the Leeuwarden municipal employer decided at a later
moment to cut more jobs than initially foreseen and expected forced redundancies, a
conflict between employer and works council arose including court proceedings. In both
cases, the role of the social dialogue involves the works council monitoring the process of
change. In both cases the works councils and HR directors also acknowledge the need to
collaborate in the current situation which requires change towards a more flexible
organization.
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Conclusion
The current economic and fiscal crisis has provided an extra impulse to public sector reforms
aimed at creating more efficient and service-oriented public services. However, these
reforms have a longer history going back to the 1990s well before the current economic
crisis emerged and also stem from other longstanding trends (e.g. demographic change).
The effectiveness of social dialogue varied, partly reflecting the differential impact of
economic and demographic circumstances. In some sectors collective bargaining is able to
produce moderate or even normal results. Nevertheless, austerity measures have had a
significant impact on employment relationships in central and local government and in
primary education but hardly any impact in hospitals. This impact is manifest in a
government decided wage freeze in central government and primary education, where
government ministers act as employer and is evident in the decline of public sector
employment in all sectors except hospitals. Local government felt the impact of austerity
measures because central government reduced its funding to municipalities. In local
government negotiations were more difficult than before, however eventually collective
agreements were reached which provided a modest wage rise and measures to support
employees made redundant. The local government employer association made use of its
relative autonomy to conclude a collective agreement, which includes a modest wage rise.
When it comes to job losses unions and works councils take the role of controlling that the
process proceeds according to established rules. On the level of local municipalities, social
dialogue is more actively supported in the case of Zwolle and a long trust-based relationship
exists, supporting the creation of alternative employment opportunities through publicprivate partnerships and mobility networks. The case of the Leeuwarden works council
shows that legally institutionalized rights help the works council to enforce its control role.
Second, the social dialogue at sectoral and organizational level is also able to generate
innovative arrangements, such as the work-to-work support scheme which is regarded by
both employers and unions as a modernisation of employment relations that is better fitted
to today’s permanent change. They take the view that measures to support employees’
employability reflect employer’s social responsibility, and feel that the social dialogue has
been able to contribute to developing such arrangements. So it appears that social dialogue
institutions in the Netherlands facilitate producing balanced outcomes that take into
account the interests of various stakeholders. Overall, social dialogue is a stable institution in
the Netherlands. The Dutch culture of cooperation, which is also referred to as
‘poldermodel’, is quite resilient and supports the continued functioning of social dialogue.
Key sources/ references
 Kickert, W. (2012). State responses to the fiscal crisis in Britain, Germany and the
Netherlands. Public Management Review, 14(3): 299-309.
 Steijn, B. & P. Leisink (2007). Public management reforms and public sector
employment relations in the Netherlands. International Journal of Public Sector
Management, 20(1): 34-47.
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