Human Resource Management And Employment Relations Commerce Essay

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The Netherlands are situated in the north west of Europe. Its direct neighbors are Belgium, Luxembourg and Germany. The country is subdivided into twelve provinces. With a surface of around 34,000 square kilometers and around 16 million inhabitants it is a rather small country as compared to other European Union member countries such as Germany, France or Spain. However, the population density is with 470 inhabitants per square kilometer highest as compared to the Europe where the average is 118 inhabitants per square kilometer. The capital Amsterdam has 735,328 inhabitants. The national language in the Netherlands is Dutch, whereas English is considered as the additional business language. The economy in the Netherlands is characterized as an open economy with a high emphasis on foreign trade (Brewster et al., 2004). The GDP per capita is currently 131 with a real GDP growth of three percent. The inflation rate currently lies at 1.4 % (van het Kaar, 2009).

After the 1950, the Netherlands were characterized by clear separation of catholic, protestant and socialist parties, of which every party had its own trade unions and political parties. This phenomenon highly influenced the development of employee relations in the Netherlands, as many compromises in the legislation had to be found (Ferner & Hyman, 1998). This also involved the creation of the still today existing Social-Economic Council (SER) which is a council that consists of employers' representatives, union representatives and independent experts. It was conceived to find a social consensus and compromise in industrial relations (SER, n.d.).

As many other nations, the Netherlands were seriously hit by the oil crisis in 1979, which resulted in a recession characterized by a high rate of unemployment and a decline in national income and investment. Also, union membership seriously declined. However, after 1983, the country moved out of the recession and the unemployment rate declined to a more reasonable level (Ferner & Hyman, 1998). Today, the unemployment rate is with 4.6% considerably lower than the European average, although it has risen at a fast pace after the most recent economic crisis (van het Kaar, 2009). Since the 1980s, three topics have been of great interest in the Netherlands as they intensively influenced the labor relations situation: The wage moderation, the reform of the social security system and the introduction of the active employment policy. The wage moderation was introduced in order to reduce unemployment and to avoid the reduction of working time. Additionally, the wage moderation is crucial element to ensure the strong economic positions of the Netherlands, as it encompasses low labor costs which are therefore in the Netherlands are among the lowest in Europe. Within the social security reform, many benefits of for example unemployment or sickness were reduced as the costs of the social security system could not be covered anymore. Finally, the active employment policies aimed at creating more jobs and making as many people participate in the labor market as possible. Many of these policies specifically targeted underrepresented group in the workforce, like women or elderly people (Ferner & Hyman, 1998).

Today, the general employment rate of the people aged between 15 and 64 (74.8%) as well as the female employment rate is higher than the European average. These numbers can partially be explained by the particularly high amount of part-time workers in the Netherlands as compared to other European countries. Nonetheless, the gender pay gap in the Netherlands is with 18 % among the highest in Europe. Although participation in the labor market is rather high in the Netherlands, the number of self-employed people is with 6,5 % rather low in the European comparison. Considering the average rate employees keep one job, the Netherlands shows an average score of 9.9 years which corresponds to the overall European average.

Although temporary and more flexible labor contracts become more and more frequent in all European states, fixed employment contracts are still considered of major importance.

The Netherlands are one of those countries having implemented a minimum wage rate, which is differentiated for employees younger and older than 23 years. The minimum wage rate is adapted twice a year depending to collective agreements. In 2009, the minimum wage rate for employees that are 23 years old or older lay at 1398.60 € per month.

In general, the Netherlands are characterized by a rather high degree of homogeneity, whereas, when considering the economic situation of the country, it can be discovered that there are certain discrepancies between the eastern and the western part of the country. From an economic point of view, the west is more important and richer than the eastern part (van het Kaar, 2009). The political environment in the country is highly influences by the fact that the Netherlands have a constitutional monarchy where Queen Beatrix is the head of the state (Brewster et al., 2004).

Considering trade unions, the membership in unions of Dutch employees has been with 29% in 1995 relatively low as compared to some other European countries. Today, about one quarter of all employees are members of trade unions. Nonetheless, most employees support the viewpoint that trade unions are indispensable instruments to represent employee interests.

In the Netherlands, there is a variety of trade union organizations. The biggest, most influential and thus most important actors are the Dutch Trade Union Federation (FNV), the Christian Trade Union Federation (CNV) and the Federation of Managerial and Professional Staff (MHP). The FNV is a merger of around fifteen trade unions from the agricultural, service and transport sectors. With eleven affiliate trade unions, the CNV is the second largest trade union organization in the Netherlands. These eleven trade unions are among others coming from the manufacturing, defense and healthcare sector. The MHP, the third largest Dutch trade union organization, on the other hand, was established to represent older workers and nowadays also takes blue-collar workers' interests into consideration. On the countering side, one can find a range of employer organizations, too. Compared to the union density, the density of employer organizations seems to be rather high, although there are no figures that could serve as evidence. The three main actors on the employers' side are the Confederation of Netherlands Industries and Employers (VNO-NCW), which represent large companies from the industry and services, the Dutch Federation of Small and Medium-sized Enterprises (MKB-Nederland), which is obviously representing small and medium-sized enterprises (SME) and the Dutch Federation of Agriculture and Horticulture (LTO-Nederland), which is charged of companies operating in the agricultural sector. These three employer organizations hold a very solid position when trying to find agreements with employee representative organizations, as they created Council of Central Employers' Associations. In this council, all three employer organizations meet regularly and especially before policy debate in order to find a common agreement and position beforehand (van het Kaar, 2009).

The country mainly adheres to national policy where regional policies do not have a high impact. The main form of regulation for industrial and employment relations is law (van het Kaar, 2009). When it comes to industrial relations in the Netherlands, the main issues discussed are not only working time and wages, but also work and care, employability, variable pay and working conditions. Apart from these, gender equality, which includes not only pay but also staffing issues, is more and more included in collective bargaining discussions. Collective bargaining takes place on the national, the company and the sector level. However, collective bargaining at the national level has rather a coordination of agreements function. Also, issues agreed on at the national level are rather seen as recommendations and less as binding laws. Primarily, collective bargaining is decentralized and takes place mainly at the sector level. Due to this fact, some adaptations have to be made in order to render agreements applicable for every company within one sector. For this purpose, a certain degree of centralization is implemented. This can either take the form of dividing agreements into subcategories of which one category applies to the entire sector and another category does not apply to special cases within the sector. Another option is to create a common agreement with certain arrangements for special cases. Finally, nowadays it is becoming more common to design agreements to a certain extent more flexible that leave certain room for individual adaptations and choices.

Bargaining coverage in the Netherlands is constant and very high, as 81% of Dutch employees fall under and are affected by agreements found during collective bargaining processes. Once an agreement was found all members of the participating parties, which are the trade union organizations and the employer organizations, are legally bound to follow those agreements. The employers have to take care that not only union members, but also other employees, receive the same working conditions corresponding to an agreement.

In respect to industrial conflict, it can first of all be noted that strikes are rather infrequent in the Netherlands. However, the sectors affected most by strikes are for example the construction, the transport and the commercial services sectors. Usually, if there are strikes or other forms of collective action they are direct responses to restructuring measures which raised pay issues or a high amount of cancellations of working contracts from the employers' side (van het Kaar, 2009).

The most important tripartite body that can be found in the Netherlands is the earlier mentioned Social and Economic Council (SER) whose members are equally distributed from each the employer's and the employee's side. Another equal share is held by independent members who are chosen by the government. Issues like worker participation, labor market innovation, environment and social security are covered by this tripartite body (van het Kaar, 2009).

As in many other European countries, works councils are the main body to be in charge of employee representation while keeping the company's interest in mind. Work councils have to be implemented in every company that has more than fifty employees. Opposed to some other countries, works councils have a rather positive image in the Netherlands, also among the highest hierarchical levels in a company. On the other hand, employee representatives are only rarely part of the board of directors. As in Germany, the companies are governed according to a two-tier board structure (van het Kaar, 2009). This means that it is divided into the board of directors and the board of management (Tricker, 2009).

Instead of a specific labor court, the Netherlands have certain mechanisms in order to ensure and enforce employee rights. The application and choice of the mechanism depends to the nature of the issue (van het Kaar, 2009).

What is exceptional about the employment regulations in the Netherlands is that if companies want to end a working relationship with an employee it has to receive an official permit for dismissal from the public authorities. To avoid this, the only alternative is bringing the issue to court. This path is taken in about half of all the cases. This regulation is an often discussed and criticized issue in the Netherlands, especially as its past development has become increasingly disadvantageous for employees (van het Kaar, 2009).

Another trend and particularity about the Netherlands is the social security system. The Netherlands spend about 32 % of their GDP on social security issues. This situates the Netherlands on fourth place right after Sweden, Finland and Denmark (Ferner & Hyman, 1998). Nonetheless, regulations dealing with the benefits of unemployment are recently becoming stricter. A general trend within the country seems to be that according to active employment policies, regulations about unemployment, disability and sickness benefits are tightened. This is done in order to make the reintegration into working life more attractive than excluding oneself from it. Additionally, the social security system needed to be reworked in order to save costs (Ferner & Hyman, 1998).

As mentioned before, the trend in Europe goes increasingly towards more flexible working conditions. The same is also true for the Netherlands. This trend has advantages and disadvantages for both employers and employees. Companies claim that flexible contracts enhance competitiveness and for employees the benefits are that work-life balance can be increased and that a higher number of people can be integrated in the labor market. On the other hand, those flexible contracts might create uncertainty or a feeling of inequity amongst employees, which can also result in a decreased job satisfaction and therefore a decreased job performance (Brewster et al., 2004).

Considering working time, there is some trend that employees require a longer working time per week. Currently, the average lies at 37 hours per week (van het Kaar, 2009).

Still today, a major issue is the gender pay gap. Nowadays, the different parties try to work intensively on narrowing the gap. The topic has earned huge importance so that it became an issue for collective bargaining (van het Kaar, 2009; Brewster et al., 2004; Ferner & Hyman, 1998). In later sections, this issue will be discussed in detail, including reasons, the threats of the current situation, the development and suggestions or recommendations for the future.

Apart from the above mentioned trends, there are no noticeable important trends in respect to industrial relations in the Netherlands, as the situation has not faced major changes in recent years. When taking a longer time frame into consideration, it can be noticed that union density has decreased to 24%, although this figure stood relatively constant over recent years. A topic that might become an issue in the upcoming years might be the ageing of trade union, as members get older and only few new, younger employees join trade unions (van het Kaar, 2009).

As said before, the Netherlands are recently working hard on reducing the gender pay gap. In the past few the decades the gender pay gap was slowly reduced, recently from 22% to 18%. But the pay gap is still among the highest as compared to other European countries (Grünell & Sinzheimer, 2008; Grünell, 2010; Broughton, 1999; Grünell, 2002). The European average pay gap was 14.5% in 2008 (Chubb, Melis, Potter, & Storry, 2008). When considering the issue in detail, it can be noted that there are huge differences within different sectors. The wage gap between male and female employees is largest in the industry, manufacturing, banking and insurance sector. Opposed to this, the difference between wages of men and women is lowest in the care, education and retail trade sectors, whereby it has to be noted that the wages in these sectors are on average generally considered as the lowest. Additionally, the latter sectors are often seen as primarily providing "female" jobs (Grünell, 2002; Grünell, 2007). Generally, researchers found that it does not have an impact on the wages of women if they are employed under a multi-employer or a single-employer agreement (Grünell, 2010).

There are variety of reasons that explain the gender pay gap and why it is so high specifically in the Netherlands. First of all it has to be repeated that part-time work is very common in the Netherlands, as 25% of all male employees and 75% of all female employees are part-time workers (van het Kaar, 2009; Grünell & Sinzheimer, 2008). The exceptionally high proportion of female working part time explains a large part of the gender pay gap. Part-time workers are often excluded from benefits like training and development measures or bonuses and they are less frequently promoted than full-time employees (Grünell, 2008). Especially the lack of training results in a lower qualification as compared to those receiving regular training. This leads to lower opportunities to reach higher hierarchical levels which are usually linked to higher wage rates (Grünell & Sinzheimer, 2008). Generally, out of a variety of reasons, there is a limited number of women in higher management positions in the Netherlands. As higher hierarchical levels generally earn more than lower ones, this fact can also explain a part of the gender pay gap (Grünell & Sinzheimer, 2008). The low number of women in management position can partially be explained by the typical "glass ceiling" phenomenon. This means that superiors are often reluctant to promote women to higher management positions as the assumption persists that women have a higher family-work conflict than men do (Hoobler, Wayne, & Lemmon, 2009).

Another reason for the large pay gap is that women's working patterns are often discontinuous, by which is meant that they tend to interrupt their working life for a certain time when they stay home in order to care for their children. Still in the 21st century, some traditional role expectations persist, as women are often expected to have children and to stay at home to care for them, whereas the male would then traditionally be seen as the "breadwinner". At this point it has to be noted, that it is highly probable that this is not only resulting out of societal pressure but that women actually want and chose themselves to stay at home to care for their children (Davies & Thomas, 2000). This fact also goes in hand with research findings which underline that for women other factors, like flexible working hours and the proximity of the workplace to their home is much more important than pay (Grünell, 2002). For this reason it is probably more likely that women focus more on those aspects within wage negotiations whereas men would possibly give greater importance to reach the highest possible wage rate.

Furthermore, research often showed that women are often less courageous and less assertive when raising pay issues with their superiors. This fact may also come from the fact that there are much fewer female than male union members. As union members are used to negotiating labor law issues including pay issues, they are probably more assertive concerning wage issues and negotiations (Grünell & Sinzheimer, 2008).

Finally, many researchers argue that the gender pay gap also exists because women voluntarily chose to work in sectors where wages are generally lower than in other sectors, like for example the healthcare sector, where wages are relatively low as compared to the banking sector (Grünell, 2007; Grünell, 2008).

Apart from the above mentioned reasons, an average pay gap of 7% remains unexplained and cannot be justified by the above mentioned explanations (Grünell, 2002). It is possible that this gap exists because women do not participate in the labor market as long as men have and it is still some sort of a common way of dealing with the issue, which means that, maybe, women earn less because it has always been like this.

There can be different resulting problems of a huge gender pay gap. First of all, it might result in a serious feeling of inequity of female workforces if they compare their inputs and outputs to those of their male counterparts. This fact might lead to a decreased job satisfaction and therefore their performance might drop. In this case, a high amount of potential would be wasted.

Nowadays, more and more initiatives are taken in order to reduce the gender pay gap in the Netherlands. Already in the end of the nineties, the European Trade Union Confederation (ETUC) adopted an equality action plan which, beside increasing the number of female union members and achieving gender equality in trade union policy, aims at achieving equal pay. Within this action plan it is emphasized that it is the trade unions' task to fight harder for equal pay. The ETUC argues that this can be achieved if a higher proportion of women were representing employees' interests by joining trade unions (Broughton, 1999).

As the problem of unequal pay between men and women persists, there are also some recent initiatives. First of all, the government addresses the issue within its emancipation policy. This raises awareness for the issue and it could actually slightly reduce the unexplained proportion of the gender pay gap. Furthermore, within the Netherlands, specific bodies were created to deal with the issue. For example, there is the National Working Group of Equal Pay, which consists of social partners and experts from the Equal Treatment Commission. The body was implemented to act as an advice committee to raise awareness for the issue and to give companies and other actors support when trying to adjust wages in order to reduce the gender pay gap. Unfortunately, the initiatives taken by the government are mainly based on giving advice, raising awareness and finding recommendations. Recently, there were no specific policies introduced to fight wage discrimination (Grünell, 2010). The trade union federations on the other hand play a much bigger role in order to address the pay gap issue. First, the FNV has established a cooperating initiative with researchers in order to detect gender pay gaps, as this is an essential starting point to eliminate them. Additionally, several union federations offer trainings and a range of awareness-raising campaigns to increase the recognition of the problem. Furthermore, the Central Labor Commission implemented the wage indicator, which is a tool to objectively ascertain the right and adequate wage rate for a particular job. Apart from this, they created a framework called Equal Treatment and Equal Chances of Men and Women, which also aims at identifying the main reasons for the segregation of the labor market. Finally, they implemented a Day of Equal Pay in order to raise awareness and they created a Checklist of Equal Pay so that social partners can determine where to adjust payment systems. From the employers' side, there is only a low level of action to reduce the gender pay gap. They follow initiatives of other actors but usually do not create their own to specifically address the wage inequalities between men and women. The main initiatives taken by employer associations are linked to the promotion of diversity within organization (Grünell, 2010).

When considering the development of the gender pay gap it seems to a certain extent surprising that the gender pay gap between male and female employees is still so significant as women are nowadays undeniably a huge part and a natural phenomenon in the labor market. Ideally, every employee should receive a wage rate that is objectively determined without taking the gender into consideration (Van de Vliert & Van der Vegt, 2004).

To reduce the gender pay gap it might be advantageous if not only the trade unions engaged themselves in the fight against pay inequalities but if other actors supported their work more intensively. For example, the Dutch employers' side should also take over some responsibility to reduce the gender pay gap by adapting payment structures or changing the way of dealing with part-time employees. Rubery et al. (1997) emphasize that payment structures play a crucial role and that they have to be adapted in order to deal with the unequal pay issues. There are different approaches for payment systems and each of these imply certain advantages and disadvantages. Payment can be dependent to seniority, piecework and production-related bonuses, merit or performance-related pay or job-related and working-time supplements. In many of these, women often experience disadvantages which were partially already mentioned before. For example, interrupting careers decreases seniority and bonuses are as discussed before often denied to part-time workers (Rubery et al., 1997). Therefore, these systems have to be adapted and designed specifically to obtain as objective and fair payment structures as possible. At this point, the feasibility has to be questioned. In order to enable fair and objective pay structures the entire organizational culture and working norms have to be changed or adapted. This is a difficult process within a company, as change tends to be uncomfortable for employees. Another way to reduce unequal pay could be to enhance training for women or for part-time workers in general as a very large proportion of female employees in the Netherlands work part-time. This would give women better career advancement opportunities and give them a more competitive position as compared to their male counterparts.

Research showed that centralized or universal minimum standards, transparent pay structures and a tight dispersion of pay enhance gender pay equity (Rubery et al., 1997).

Finally, the government of the Netherlands could also find initiatives to narrow the gender pay gap. It could for example act by introducing quotas for women in higher management positions. In this way, the issue of the glass ceiling can partially be overcome. On the other hand, it is questionable if introducing such a quota would decrease the flexibility of organizations and it would first of all have to be analyzed if there are enough potential female skilled workers available for every industry to fulfill quotas. Additionally, the government could introduce legally binding policies that prohibit unequal pay, whereas the feasibility and controllability of such policies would be important issues to consider. They would have to be implemented carefully so that companies do not lose too much flexibility and that it can be controlled if companies really adhere to the law.

Generally, the future development of the issue has to be observed. It might happen that cultural values and norms change so that the gender pay gap is more and more reduced. On the other hand, research has shown that in countries where the participation of women in the labor market is high and where the frequency of strikes is low, like in the Netherlands, the problem of the gender pay gap is likely to persist and maybe even worsen (Van de Vliert & Van der Vegt, 2004). Therefore it is of great importance that all actors keep on dealing with the issue of pay inequality in order to find a way to reduce it to a minimum or even to eliminate it one day.