How will the new labor regulations in the Netherlands affect expats?

Expat news
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Published on 2023-05-09 at 10:00 by Asaël Häzaq
According to Karien van Gennip, the Dutch Minister of Labour, many workers with flexible contracts and self-employed are uncertain about their employment status. Having a job is a good thing, but it's even better to have job security and career prospects. With this in mind, the government proposed new rules in April to ensure a more stable and balanced labor market. Here are some of the key details.

Greater job security and a more balanced Dutch labor market

The Dutch labor market is still under pressure, with the ongoing labor shortage forcing companies to be more creative in attracting and retaining skilled employees. To meet this challenge, the Dutch government announced in April a series of new measures to be implemented over the next few years. The aim is to create a more secure and balanced labor market, which in turn will lead to greater resilience. Within a more secure labor market, workers will feel more protected, and this will lead to higher productivity and growth.

More support and flexibility for employers

The Dutch and global economies are still grappling with the Covid aftermath, creating several ongoing challenges for businesses. To address these challenges more effectively, the Dutch government has proposed a 'Crisis Staff Retention Program', which will provide support to employees affected by major crises such as Covid-19.

The program will simplify the process of transferring employees to other jobs in the event of an emergency. In addition, employers will be able to reduce working hours at an hourly rate for a maximum of six months without affecting employees' eligibility for unemployment benefits. Overall, this program should make companies more flexible and better equipped to adapt their work organization to withstand crises and will offer more support to both employers and employees.

Despite the challenges posed by the pandemic, the Dutch economy has been relatively resilient. In March 2020, the government introduced the NOW Act, a temporary emergency employment maintenance measure to support businesses. The new regulations aim to provide more comprehensive protection for employers, going beyond the temporary framework. Considering the post-crisis recovery and fragile labor market, even the extended absence of a single employee can be costly. Currently, companies are only allowed to replace an employee after two years of sick leave. However, the new rules will reduce this to one year for small businesses with up to 100 employees, who will be able to "obtain clarification on the possibility of structurally replacing the employee after one year of illness".

Measures for employees

Are the Netherlands the land of the self-employed? There are currently 1.2 million self-employed people in the country, excluding employees who have a combination of a job and self-employment. This number is constantly growing and is expected to increase further. The government is proposing a new insurance scheme (for 2027) to protect them better. It is intended for self-employed people without employees and will guarantee their protection during periods when they are unable to work (due to illness or accident). Self-employed people who are already insured will not have to switch to the new system.

The protection of workers remains a top priority, with the introduction of stricter rules for temporary contracts. Currently, many companies take advantage of the system's flexibility by repeatedly employing the same worker on a temporary contract (only a six-month break is required before the worker can be re-employed in the same job on a temporary basis). Under the new measures, companies will have to wait five years before re-employing a former employee on a temporary contract. The government hopes this measure will break the cycle of temporary and part-time work (as half of all employees work part-time) and encourage companies to offer permanent contracts. The same rationale applies to the planned abolition of 'zero hours' contracts, which are seen as a route to precarious work. The new regulations will ban them and replace them with a 'fixed base' contract that clearly specifies the number of hours worked. However, the 'on-call' contract will be retained for students working part-time.

The immigration solution and the brakes on the far right

There are currently 123 vacancies per 100 job seekers in the Netherlands, which is slightly lower than in 2022 (133 vacancies per 100 job seekers). However, the labor market is still under tension, and unemployment is expected to remain low. For businesses, immigration appears to be a solution, even if it provokes opposition from the far right. In June 2022, Karien van Gennip, the Minister of Employment, proposed to take in young French people from regions hard hit by unemployment. She saw this as a win-win situation, but the far right was vehemently opposed. Similar proposals have been made for young Spaniards.

Despite comments from the far right, the Netherlands has accepted a record number of immigrants (+277,000 by 2022). While this is a significant number, it is still not enough to meet the labor market's demands, leading to companies' calls for more government intervention. Meanwhile, the same companies have begun offering bonuses and wage increases, with security workers receiving a 40% increase and construction and railway workers receiving a 10% increase. But even with these wage increases, strikes have continued, including those by the FNV (Federatie Nederlandse Vakbeweging), the Dutch trade union confederation responsible for most strikes in the country. FNV workers mobilized on 1 May and called a strike the following day, demanding a wage increase in line with inflation.

An uncertain timetable for the Netherlands' new rules to attract foreign talent 

The government hopes its new rules will encourage workers to stay and attract new talent, including those from other countries. As foreign talent is a driving force for growth, the Netherlands wants to remain competitive in this race. However, it is still being determined when these regulations will be adopted, as no specific date has been set for them to come into force. The Minister of Employment expects the bill to be passed by the House of Representatives "next spring" and the entire system to be in place within the next 3-4 years. While these measures appear to be a step towards greater social justice, their implementation will need to be monitored over time.