Budget SZW 2011

End of crisis necessitates measures against shortages in the labour market

Unemployment in the Netherlands has increased less than had been anticipated, partly due to the crisis measures introduced by the government and also the input from employers and employees. Structural economic recovery will only be possible if we are also prepared to take measures in the coming years for the future of the labour market. Otherwise there is a danger that the labour market will become the Achilles heel of the economic recovery.

Minister Donner of the Ministry of Social Affairs and Employment (SZW) writes this in the policy agenda for the SZW budget for 2011. There is a decrease in the working population in the Netherlands and a growing shortage of workers, partly due to the ageing population. The growth in the number of employees will stagnate as from 2015 and from 2021 it will decrease structurally.

The agenda for the future is to take care that, partly by raising the pensionable age to 67 years old, more people will be available for longer in the labour market. Also in terms of social security it is necessary to get more people working. The recovering economy and the ageing population both offer opportunities here. This will contribute to the recovery of the government’s finances as well.

Crisis measures: partial reduction, partial continuation

The budget also gives the state of affairs for the crisis measures in the area of the labour market. The measures have had a visible effect: 100,000 employees have made use of the reduction in working hours and part-time unemployment benefit and 68,000 youth who, due to the increasing youth unemployment were likely to fall through the nets, have been helped into a job or trainee position.

Now that there are signs that the economy is starting to recover and the unemployment is decreasing, some of the crisis measures will be reduced in 2011, so that the mobility in the labour market will not be hampered. This means that the part-time unemployment benefit will stop in July 2011 and the action plan addressing youth unemployment will end in 2011.

Other crisis measures have a purpose for the further strengthening of the labour market and will continue without reduction. Their main purpose is to stimulate the mobility. Hence the mobility centres that were set up under the crisis policy will become part of the permanent provision of services.

Measures to eliminate setbacks

The Dutch economy is recovering from an unprecedented reduction of almost 4% in 2009. In a short space of time this reduction put the government’s finances in a serious situation. SZW has experienced overrunning of the budget and will take measures in 2011 to cover the shortfall of more than EUR 400 million.

The old age pension compensation will be changed to a cost-of-living compensation exclusively for people who pay taxes in the Netherlands; this will provide EUR 105 million. This compensation for older taxpayers and the compensation for next of kin and the disabled will be nominally reduced; this will provide EUR 54 million. The budget for the social work provisions can be reduced by EUR 120 million in 2011 because the average wage costs will themselves go down. The reintegration budget will be maintained in 2011 due to management agreements, but it must provide savings of EUR 190 million in 2012 by using the available means more selectively and specifically.

Cutback measures relating to setbacks in SZW budget

  • Replacing old age pension compensation with cost-of-living compensation: Old age pensioners will receive a cost-of-living compensation from 2011; the current old age pension compensation will lapse. The new cost-of-living compensation is only for Dutch taxpayers and will not be paid out in foreign countries. The savings here, after deduction of the extra costs of implementation, will amount to EUR 105 million in 2011, rising to EUR 120 million in 2015.
  • Reduction of reintegration budgets:Reintegration means must be used more selectively and specifically. The reintegration budgets of the UWV and the local authorities will be maintained in 2011 because of management agreements, but will be reduced by EUR 190 million from the start of 2012.
  • Reduction Wsw budget: More people with limited working abilities must be helped in gaining work with a normal employer. Through this, the average labour costs will be reduced in the coming years and will therefore require a lower budget. In 2011 a reduction of EUR 120 million will be made to the budget.
  • Lowering compensation for older taxpayers, next of kin and the disabled: The compensation for older taxpayers (MKOB), next of kin (Anw) and the disabled (WAO, WIA, WAZ and Wajong) will be reduced from 2011 by EUR 14 annually. This will lead to savings of EUR 54 million in 2011, rising to EUR 58 million in 2015.
  • Extra reduction old age pension partner bonus: The old age pension partner bonus will be reduced by 8% from 2011. Thereby it was decided to allow the introduction of an age limit to the partner bonus to lapse, leading the reduction to increase from 6% to 8%. This will provide extra savings of EUR 35 million, rising to EUR 50 million.

Crisis measures

  • Reduction in working hours and part-time unemployment benefit: More than 100,000 employees have made use of the reduction in working hours and part-time unemployment benefit. These arrangements have made an important contribution in limiting the increase in unemployment. Part-time unemployment benefit will stop on 1 July 2011.
  • Youth unemployment: Since the action plan for youth unemployment was introduced in September 2009, 68,000 youths have been assisted in gaining a job or work training programme or work practise. The cabinet will spend EUR 250 million over the period 2009-2011 on countering youth unemployment.
  • Mobility centres: The thirty mobility centres for help in case of (threatened) redundancy have, up to and including May 2010, helped 141,000 people to gain other work within 3 months after their redundancy and 18,000 people who were able to move to another job directly from their old one. These will become part of the normal provision of services.
  • Retraining bonus/EVC: The use of retraining measures is increasing, but still limited. A total of 177 retraining bonuses have been awarded on account of the crisis and 160 experience certificates. The general use of EVCs is much greater and is still increasing: from 9,000 in 2007 to 12,500 in 2008 and 15,700 in 2009.
  • Sector funds for unemployment benefit: The economic crisis has led to high premium costs in those sectors, such as the building sector, that were hardest hit. Sector funds will have five years instead of three years in order to make up their shortfalls.