EUROPEAN PAPERS ON THE NEW WELFARE

4. Outcome of the most recent negotiations between the government and the social partners: Social Accord November 2004

In the autumn of 2004, Dutch employees went on strike to express their dissatisfaction with the government’s efforts to reform the social security system, and the trade unions jointly managed to organize the second largest post war demonstration in the Netherlands. (On 2 October, in Amsterdam alone, 200,000 demonstrators gathered. See European Employment Observatory Monthly Newsletter, No. 19). The government, realizing that it is hard to implement changes in the social security system without trade union support, started searching for ways to re-open the debate. On 5 November 2004, the government and the social partners finally managed to reach an agreement. The main items of the Social Accord are the following (cf. European Employment Observatory Monthly Newsletter, No. 20):

Early retirement, pre-pension and life course arrangement
The government’s decision to abolish the fiscal advantages of early retirement and pre-pension arrangements as of 1 January 2006 remained unchanged. The life course arrangement will serve as an alternative whereby employees, if they wish, may build up a savings account. This means that employees can save up to 3 years of leave at 70% of their wages. Thus, employees who make full use of the life course arrangement can retire at the age of 62. Moreover, employees who have contributed to a pension fund for over 40 years will be able to lower their retirement age to 63 years, without making use of the life course arrangement. If these employees also make full use of the life course arrangement, they will be able to stop work at 60.

Disability benefit scheme
The regulations for the new disability benefit scheme have become less stringent, and are now more in line with the advice of the Social and Economic Council. The Disability Benefits Act (WAO) will still be replaced by the Act on Work and Income by Labour Capacity (WIA: Wet werk en inkomen naar arbeidsvermogen) on 1 January 2006. According to the earlier rules, the Regulation on Income Provision for Fully Disabled Persons would have only been available to people totally unable to work. The new agreement gives full income security to people who are totally unable to work as well as to people who have minor chances of recovery. This latter group will undergo an annual re-examination during the first five years of receipt of the disability benefit. The age limit for re-examination of current disability benefit recipients will be lowered from 55 to 50 years.

Unemployment benefit
The measures aim to abolish unemployment entitlements for people who have only worked for a short period of time. In addition, the plan to subtract employee’s dismissal compensation from their unemployment benefit will be put on hold.

References
Dalen van, H. and Henkens, K. (2002): Early-Retirement Reform: Can It and Will It Work? in: Ageing and Society 22, 2002, pp. 209-231.

Delsen, L. (2002): Active Strategies for Older Workers in the Netherlands, in: Jepsen, M., Foden, D. and Hutsebaut, M. (eds.): Active Strategies for Older Workers, European Trade Union Institute, Brussels, pp. 299-344.

European Employment Observatory Monthly Newsletter, No. 21: The Netherlands – Participation of Older Workers Increases and Disability Rates Go Down, December 2004, URL:

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European Employment Observatory Monthly Newsletter, No. 19: The Netherlands – Second Largest Trade Union Demonstration in Dutch History, October 2004, URL: