DOING BUSINESS IN THE EU


Doing business in the EU

Dutch Labour Law for Managers #7

Dutch unemployment: the lost group
#dutchlabourlaw

Since the economic crises of 2008 the number of people in the Netherlands that receives welfare assistance increased dramatically. If it is considered that a household exists out a number of people, nearly 800 000 Dutch citizens are dependent on welfare income. Some households receive already for more than 15 year unemployment welfare grants.

The forgotten group that the Dutch Government and community ignore is plus minus 110 000 people strong. They are a quarter of all the longtime unemployed and are not physically or mentally handicapped. 65% of this group only have a starter qualification (below vocational training) and most didn’t even finish middle school.

The handicapped unemployed is catered for in terms of the Participation act (Participatiewet), and success stories where a long term unemployed was reintegrated are mainly from this group.

According to Ton Wilthagen, professor in Labour Market Studies at the Tilburg University there is almost no chance that these unemployed people will get a position in the normal job market because the requirements to be employed are just to high. The prescribed basic salary makes the employment of this group of unemployed people, just too expensive for employers.

The consultancy De ArgumentenFabriek  found that the position for people older than 45 years are especially dire as there is only a 13% change that they are going to employed within a year. Of this unemployed age group 20% is already more than 15 years on welfare.

The FD wrote an opinion piece on this lost group with the title: A welfare grant is silently an agreement to do nothing.

With the “do nothing” there are two aspects that are implied  :

  • The indirect message is that the Dutch Government is actually paying you not to work,
  • and secondly that the the Government is not planning to take remedial steps to address the predicament of the longtime unemployed.

The Dutch economy is steadily improving after the 2008 economic crises, but is it not reflected in the Dutch unemployment figures. According to the FD unemployment increased nearly with a half from 2008 to 2015. (304 000- 442.000)

netherlands-gdp-growth

Interesting enough the FD also highlights that there is one age group where the percentage that receive a grant is decreasing: the age group 15-27 years. The reason for this tendency is that the Government is actively involved with initiatives, legislation and rules where this age group must either work or get a job in the formal sector. The opinion piece suggests that this principle must be made applicable to all unemployed people in the Netherlands: they must either work or study, where passivity is not an option.

As not every person has the same ability to study I will substitute study with learning a skill that is needed in the workplace.

Implementation of official policy

As it can be seen from the graph below the reality is that from 2013 it is clear that the budget for welfare grants increased and the budget for reintegration to the workplace decreased.

Kan de Bijstand beter    De Argumentenfabriek

De ArgumentenFabriek

The decision of the Municipal Council of Amsterdam shed a bit of light on the direction that the management of the unemployment situation in Netherlands is heading. The rule is that unemployed people on welfare must provide proof that they applied on a weekly basis for work. The Council of Amsterdam decided in January 2016, that people on welfare that have a minimum chance to be employed may instead of applying for work also do volunteer work.

The Councils of Groningen, Leeuwarden, Wageningen, Nijmegen and Tilburg are also experimenting with a concept of a basic income. The basic income is a fixed (monthly) income that is provided to all citizens by the government, without a means test or work requirement. The basic income is high enough to ensure a life as full members of society. The idea is that an unconditional basic income, where people does not provide any counter action to receive it, end the concept of a “patronizing welfare state”.

Reasons why the lost group must be reintegrated in the work force

  • The welfare cliff. It is very difficult for the long term unemployed practically and emotionally to again join the workforce,
  • Children that grow up in a welfare home may have difficulty  breaking out of the system,
  • The FD commends that receiving long term welfare benefits is not a springboard to employment but a prison of unemployment,
  • People that receive long term welfare benefits have a small world and little hope for the future,
  • The benefits give a false feeling of security, as it is unsure if the Government will in the future be able to maintain the level of spending,
  • Working Helps You Stay Physically and Mentally Healthy
    Not only can working delay the onset of age-related diseases like dementia, but keeping mentally and physically active helps you feel younger longer. Working also keep you socially active and prevents isolation, and can provide a sense of purpose.

Can the Dutch community afford to not reintegrate this lost group in the workplace?

andre1

Andre Beukes LLM

 

 

Andre Beukes LLM

Andre Beukes LLM

I am an International human resources consultant to multinational companies in international employment law and employee relations.

Leave a Comment