Chapter 10: The Netherlands: Wage cuts no longer a constructive option
In the financial crisis many countries are taking policy measures aimed at lowering the wage bill of the public sector, often by drastically lowering pay rates. The Netherlands has gone down that road before. During the deep recession of 1980–85 nominal public sector pay rates were one-sidedly lowered by 3 per cent in 1984 and ‘frozen’ for most of the 1980s. That percentage may seem benign with hindsight, but at that time it was unique and high inflation affected purchasing power more strongly. It meant a one-time lowering of actual individual earnings and a permanent lowering of wage scales, but individual pay kept moving up because of tenure and did not necessarily remain frozen. In the end, the one-sided nature of the system of public sector wage negotiations was done away with – after unions had appealed to the ILO – while at the same time 12 decentralized wage agreements were instituted across the public sector in 1993 (Osmani 2011: 8). In the current crisis, public sector pay has been treated differently, and so far no pay cuts have been enforced though there have been suggestions and proposals for a freeze. That may be a matter of time – this took four years from the start of the recession in the 1980s. Currently, wage negotiations are long-drawn-out without reaching a conclusion, or their conclusion has been moderate or unsuccessful. Thus in practice there has already been a freeze of wage rates.
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