Flexibility is a key factor in revitalising the Dutch labour market

By Bastiaan Starink - people & organisation specialist PwC.

Technological breakthroughs are transforming the workplace. Organisations must be able to adapt quickly and reinvent their business model to remain competitive. To stay relevant, individual workers must invest in constantly improving their capabilities and competencies. To be able to do this, a considerable flexibility in contracts and arrangements at work is needed and the ability to make the switch to other types of work relatively easy.

How flexible is the Dutch labour market actually?

The Dutch labour market is the most flexible in Europe, but its flexibility has reached the maximum.

In more than half of the EU member states the number of self-employed professionals has significantly increased over the last decade, but nowhere as significant as in the Netherlands. The share of employers using temporary contracts has doubled in the last twenty years. In addition to temporary contracts, employers use other forms of flexible work: self-employed workers, temporary agency staff, on-call workers and payrollers. Currently, there are about 1.5 million self-employed workers in the Netherlands on a total labour force of some 11 million.

But the tide is turning. In sectors with a shortage of qualified candidates, such as health care and tech, flexibility is declining. And then there’s the rigidity of the regulatory framework.

In the Netherlands, working conditions are heavily regulated by a framework of employment laws, collective labour agreements (CLAs), rigid pay structures and pension systems. Employment law rules and regulations protect employees, historically considered the weaker party to an employment contract. Most sector-specific CLAs include highly detailed mandatory provisions that do not offer sufficient flexibility. Pay structures and pay scales are often based on rigid job rating systems. And the Dutch pension system, although still one of the best in the world, is under pressure.

Necessary fundamental changes in employment conditions are hampered by the conservative attitude of most trade unions. All in all, the Netherlands’ score on regulatory flexibility is poor, which means that the amount of flexibility to freely negotiate pay and pay structures is low. Seniority still determines the size of a person’s base salary and, accordingly, the demotion of older workers is a taboo. Opting out of this rigid regulatory framework is quite a challenge.

Questions asked

So, in the Future of Work 2030 we ask ourselves on your behalf: how will the labour market develop over time? How can organisations prepare for a future that few can predict? What type of flexibility is needed to become agile and foster continuous agility? How can individuals shape their own future career and take ownership of lifelong learning and development? And foremost, how can our government and social partners change the current legal and regulatory framework in order to facilitate both agility of organisations and mobility of individual workers (employagility)?

Key solutions and calls to action

These are some of the possible solutions and calls to action:

Make work contracts and pay structures more flexible;
Introduce different types of contract (employment/entrepreneur (ZZP); fixed/temporary, etc.);
Explore fixed term contracts in combination with transition and development opportunities;
Introduce customised working arrangements for employees and other workers;
Individualise pension rights;
Widen the definition of retirement plans and broaden their access;
Introduce deferred income solutions;
Strengthen the position of Works Councils (OR);
Empower individuals to take ownership and responsibility for lifelong learning and development and help them to invest in social networks;
As a worker, prepare for a multi-stage career and be aware of the need to continuously upgrade the competencies and capabilities these various career roles require;
As a worker, remain flexible and agile, keep on investing in your market value and ensure your market profile stays attractive, vivid and relevant;
As a policy maker, legislator or social partner, relax the legal and regulatory framework to allow more flexibility in work conditions.

Lead by example

By addressing flexibility in a robust way NOW, the Netherlands create a huge opportunity to reclaim its role as an international trendsetter in balanced work relations. In order to do so, political policy makers and social partners have to choose a common approach to the big future work themes first and develop, in co-creation, a clear set of rules to facilitate organisations and people in shaping different types of work contracts. Secondly, they have to promote a uniform interpretation and application of such rules, set new guidelines for the international playing field and create a competitive edge in today’s war for talent. Obviously, legislators should not act in isolation, but cooperate with other jurisdictions and learn from best practices and solutions that work. Trade unions and employer organisations must redefine their traditional roles and focus on how to create a sustainable future for all workers.

By doing this, flexibility will be deployed for the benefit of organisations and workers irrespective of their contract form. If this succeeds, we will rewrite the rules for the future of the international labour markets and take the lead in the worldwide search for scarce talent.

*This is the third blog of a series of four based on the publication 'The future of work 2030 - a wake-up call for organisations, people and government' by PwC People & Organisation. Earlier we published our vision on the revitalisation of the labour market and a blog in which the perspective of inequality was highlighted. A blog about the third key theme technology will follow. Download the full report here.