STRIKES AND PROTESTS IN THE NETHERLANDS - A BREACH

UNCLAS SECTION 01 OF 02 THE HAGUE 002667

SIPDIS

STATE FOR DRL/IL, EUR/ERA, EUR/UBI
DEPT OF LABOR FOR ILAB
USEU FOR LABOR ATTACHE

E.O. 12958: N/A
TAGS: ELAB PHUM NL
SUBJECT: STRIKES AND PROTESTS IN THE NETHERLANDS - A BREACH
IN THE POLDER?

REF: The Hague 2569

INTRODUCTION/SUMMARY


1. On September 21, the Dutch government introduced a set
of budget reforms to abolish pre-pension and early
retirement schemes and cut expenditures for many social
programs, including social security and disability (reftel).
The reforms, an effort to address the problem of an aging
society where the average employee stops working at the age
of 59, will reduce budget expenditures by 2.5 billion euros
(USD 3.1 billion). Strikes by firefighters, port workers,
garbage workers, airport employees, ambulance drivers and
tram operators in opposition to the reforms reached a climax
on October 2 when Dutch trade unions mobilized more than
200,000 people in a demonstration in Amsterdam. This burst
of activity emboldened the unions, who continue to call for
strikes (rail and transit workers staged a nationwide strike
on October 14) and for a national referendum on the early
retirement and pre-pension plans. After tinkering with its
reform package, the government currently refuses to revisit
its pre-pension/early retirement plans.

THE PROTEST


2. The Dutch traditionally shy away from labor
confrontation. In the past decade, an average of 19 days
per 1,000 employees has been lost to strikes in the
Netherlands, fewer than half the level of the United States
and one-sixth the level of Italy. The 200,000 plus turnout
for the October 2 Amsterdam protest impressed organizers,
who hoped for only 100,000 demonstrators. Some have
described it as the largest labor rally in Dutch history; it
was the fourth largest political rally on record.

REVIVAL OF THE LABOR MOVEMENT?


3. Lodewijk de Waal, chair of the FNV, the largest labor
union federation (and generally supportive of the opposition
PvdA party),admitted to Global Officer the rank and file of
his federation have for the past 10 years become complacent
as steady economic growth made most union members
comfortably middle class and they have acquiesced to the
consensus/polder model of economic cooperation with
management and government. He acknowledged the leadership,
generally more "radical"/confrontational than the
membership, needed a rallying issue. The government, by
proposing these reforms, may have given it to them. Unions
taking part in the protest announced a surge in membership
applications in the days leading to the event. In the last
six weeks, membership in the public service workers' union
Abvakabo, for example, has enjoyed a tenfold increase in
applications, with 5,000 new members.


4. In an attempt to address trade union concerns, the
coalition government scaled back 1 billion euros of cuts to
jobless benefits and dropped plans to raise tuition fees.
Wouter Bos, parliamentary leader of the PvdA, said he
thought unions could achieve further reductions to the
budget cuts if they maintained pressure. The government,
however, said it would make no further concessions. On
October 4, it rejected union demands for a referendum on the
early retirement and pre-pension changes and declined to
reopen discussions with unions on the issue.


5. The coalition government is nonetheless exploring
avenues to reinitiate dialogue and reach a compromise with
labor forces on other points of contention. D66 (a center-
left member of the governing coalition) parliamentary leader
Boris Dittrich spoke October 6 with FNV vice-chairman Agnes
Jongerius. While stressing that tax breaks for early
retirement should be abolished, CDA (center-right senior
member of coalition) parliamentary leader Maxim Verhagen
conceded there was room for talks on shaping early
retirement schemes for professions characterized by hard
physical labor and under the "life-cycle savings" plan,
which allows workers to use accumulated leave hours to
retire early. Labor Minister Aart Jan De Geus (of the CDA)
has suggested letting CDA State Secretary for Defense and
Prime Minister Balkenende confidant Cees van der Knaap
explore how the unions and the Cabinet might begin talks.
Chairman of the Social Economic Council Herman Wijffels has
expressed his willingness to mediate such discussions, if
interim PM (and Finance Minister) Gerrit Zalm calls for his
participation. Zalm, of the Liberal Party (VVD, the free
market, conservative member of the three-party coalition)
and the principal proponent of the budget reforms, has said
van der Knaap's involvement is a CDA initiative, not a
Cabinet one, implying that VVD ministers see no need for
mediation. Even so, Zalm approved of van der Knaap's
probing efforts to see whether there is a basis for talks
with the unions. Van der Knaap has started talking to the
FNV and employers federation, even as PvdA leader Bos calls
the government's handling of this "non"-mediation effort
"clumsy."

WHAT'S NEXT?


6. The labor federations could join with opposition parties
and seek to force a referendum on the early retirement and
pre-pension changes. They would have to wait until
parliament adopted the budget (sometime after November 18)
and then collect more than 600,000 signatures by year's end.
This is unlikely. The FNV threatens to continue strikes,
particularly in the healthcare, public transport, metal,
construction, and municipal public service sectors.
Although supportive of repeal of the government's proposed
reforms, the two other main trade union federations, the CNV
and FNH, oppose "political strikes," arguing they victimize
employers in a dispute between unions and the coalition
government. Furthermore, Wijffels predicted labor unrest
would damage the country's competitive power, arguing, "if
in the end, the early retirement and pre-pensions plans
remain unchanged, employers will have to pay for them, and
labor costs will only rise." The government could also
negotiate. It has indicated its willingness to enter into a
dialogue with labor and management, one restricted, however,
to "new" subjects such as youth unemployment and innovation.


7. Negotiations could forestall strikes (which are already
diminishing public support for the unions). Negotiations,
however, would succeed only if the coalition, and Finance
Minister Zalm in particular, changes its position against
revisiting the early retirement and pre-pension proposals.
This is unlikely given Zalm's strong support for the
reforms. Trade unions, management, and the coalition
government, therefore, may fall back on the Dutch "polder"
model, where conflicts are resolved via consensus. The
trade unions may agree to the coalition government's plans
to transform the early retirement and pre-pension schemes in
return for amendments to the life-cycle scheme to reflect
the alternative early retirement plan tabled by the economic
policy agency (CPB). Such a resolution would give the
scheme a collective element and expand the transition period
for full implementation of the reforms by approximately five
to ten years. The government would save the core of its
life-cycle plan and shore up its position in recent
political polls. Such a resolution would provide the
government an opportunity to address criticism from banks,
pension funds, insurers and economic forecasters that in the
reform's current form only 5 per thousand workers would opt
for the plan and the current short transition given is
likely to create chaos. A resolution reached with the
polder model would likewise give trade unions the impression
that the strikes have not been in vain.

POLITICAL IMPLICATIONS/COMMENT


8. A Dutch opinion poll conducted after the October 2
demonstration exemplifies the event's political potential.
The Maurice de Hond poll shows if parliamentary elections
were held now, Prime Minister Balkenende's coalition
government would retain only 49 of its 77 seats in the
parliament (of 150 seats). Opposition parties with ties to
labor - most notably the PvdA - would enjoy a substantial
gain with the PvdA winning 55 seats (up from 42). The
governing coalition believes significant changes need to be
made to Dutch social policy in order to survive in the
current competitive global economy. Therefore, the cabinet
has currently ruled out negotiations over parliament-
approved, OECD- and IMF-endorsed changes to early retirement
and worker disability schemes. Since the government does
not have to hold elections until 2008, it hopes taking these
steps now will lay a foundation for economic growth in the
future - and the voters will reward it then.

SOBEL