Implications of the distinctive employee relation

Analyse the implications of the distinctive employee relations context of your assigned country (the Netherlands) for management seeking the best possible business performance.

The Netherlands is a small country with a limited internal market in the northwest of Europe, a lot of international companies, such as Shell Oil, Philips, Unilever, were born in its prosperous and open economy. The economy is noted for stable employee relations, low unemployment and inflation. The workforce in the Netherlands is internationally oriented, highly educated and multilingual. Unemployment is low at 4.4 percent, workers' rights are strongly protected (Expatica, 2009). In terms of strike activity, the level of strike action remains low in the Netherlands by international standards. There are some distinctive aspects in the Netherlands' employee relations which make it outstanding in the global market with a high productivity.

Employee relations in the Netherlands have remained relatively stable comparing to the other European countries. Union density has decreased to around 24%, but there are few changes in the past few years (EIRO and Eurostat, 2009). Union bargaining has become decentralised, two special aspects remain are wages and length of work per week. The predominant union structure in the Netherlands belongs to the industrial unionism (Vernon, 2009). Dutch employees have a strong need to state their opinions, and managers strive for consensus with subordinates before making final decisions (Sorge, 1992). Works councils are formed in the company level in order to review management decisions. It represents the interests of all employees and at the same time is obliged to operate in the interest of the company in general. It has extensive rights on a wide range of issues, such as working hours, holiday rules, pension plans and training, including all major strategic company decisions (van het Kaar, 2009). In 2005, 76% of these companies had set up a works council in the Netherlands (Engelen and Kemper, 2006). Works councils are largely accepted by companies and especially when organisations need to establish corporate policies, they are encouraged to take participation. Nowadays, works councils are taking on a number of issues concerning working conditions that were originally the domain of unions (Wiersma and van den Berg, 1999). Collective bargaining coverage is high in the Netherlands with Only 19% of employees are not involved in collective agreements, and the figure is about 21% in the private sector (EIRO and Eurostat, 2009). Problems such as work and care, employability, variable pay and working conditions are always covered in collective bargaining affairs. Although collective bargaining is increasingly organised on a decentralised level, the national level plays an important coordinating role by means of central agreements that are concluded within the Labour Foundation (Stichting van de Arbeid, STAR) (see section on 'Tripartite concertation'). Collective bargaining coverage remains high at more than 80%, because mandatory extensions of collective agreements (Wijnggaert, 1994). Once the agreement is reached in a collective bargaining, it will has legal effect that all the parties have to obey, even those are non-organised employees.

Since works councils play such an pivotal role in collective bargaining instead of unions, managers in the organisation should not occupy all the managerial posts in the works councils, it is important to involve all kinds of employees to join in, especially those with significant proposals in management. More important is, to select proper people to take charge in the works councils, work pressure in works councils may harm the effectiveness of the employee. Social experience, the ability of dealing with complicated works and a harmony relationship with the colleagues are more important than qualifications. To give them some support and certain training would be helpful. Although there is no research to support how well works councils function could improve organizational productivity (Wiersma and van den Berg, 1999), however, it is believed that the more the employees take participate in the management, the more concern they will pay; with more effort they put in and more problems been dealt, productivity in the organisation will rise eventually. It is quite distinctive that in the Dutch labour market, with a social market economy, the social partners-trade unions and employer organisations are extremely influential , they directly manage or control some major institutions such as the Industrial Insurance Boards (IIB) (OECD, 1993). Its views have considerable weights on all social and labour policies in the national debate with the government and other tripartite institutions (OECD, 1993), but as the actual administration is by the IIB, the intention of the legislation can be undermined at the stage of implementation. In the past, absenteeism was a major cause for concern in the Dutch labour market, because employees with emotional problems were permitted to remain at home but still could receive 70-100 percent of their salary from the government as welfare (Wiersma and van den Berg, 1998). So some of the employees took benefits from the legislation by claiming a work-related stress, as psychological related problems are hard to measure, it become very easy to stay at home by a headache. Because of the economic costs of absenteeism, the government passed the burden of compensating employees to the private sector (Wiersma and van den Berg, 1998), in order to avoiding the cost, companies would work hard to ensure the health condition of the employees.

Improving job design and corporate culture were recommended to companies to reduce absenteeism by Dutch academics (Van Yperen et al., 1996). Change the pay system in some Dutch organisations could be a good suggestion because it is said that within Western Europe, Dutch companies have been the least likely to use pay-for-performance in the past (Brewster and Hegewisch, 1993). Payfor- performance links pay with one's merit which will motive for a better performance in the future. During a economic booming period, the organisation would get a high productivity while the employee receive a reward; in the economic recession times, the system could also keep employees without of dismissal which increases the employees' loyalty. Emphasise 'being the host of the company' in the corporate culture will establish the sense of responsibility among the employees, which could reduce absenteeism with a pretended excuse. So employees would have a better environment to take their initiative.

Facing the ageing problem and low birthrate in the Netherlands, it seems that the country has the prospect of a serious shortage of labour in the near future, although the participation rate of old workers is rising. The rate of part-time work is exceptionally high in the Netherlands, at almost 25% for men and over 75% for women (CBS figures for 2008). Under this situation, labour migrants are welcomed in the Dutch labour market, but this at the same time causes the problem of managing with diversity employees. Expatriates on foreign work-contracts in the Netherlands often complain they have to work in the office while the Dutch are on vacation (van het Kaar, 2009). It is advised that to treat the expatriates as the local employees so that the foreigners would feel equal and settle down in the different country, which could deal with the labour shortage from the basic. Inside the organisation, giving more respect and help to those foreign employees could arouse motivation and innovation. It is a win-win outcome for both of the parties.

Another different thing is that the foreign employees may find having a Dutch meeting is ineffective and time-consuming, because they always want to make sure that everyone is heard and understood (Expatica, 2009). Most Dutch companies are horizontal structured, the relationship between managers and employees is more like parters, that may be a reason why the managers like to exchange opinions with subordinates in meetings. Informal meetings are held frequently, although they are generally held on fixed times and protocols and agendas are part of it. The Dutch managers intend to involve everyone into the process of decision-making in the organisation, but a tediously long meeting may ruin others' patient. Asking the employees to come to give suggestions forwardly instead of holding long meetings would save a lot of time. However, whenever the decision is made, the implementation is fast and efficient. women are considered to be more emotional intelligence and more sensitive for listening, training et al.

The gender pay gap is rather large in the Netherlands, although it is highly emphasised by the public in these years, the gap has decreased from almost 22% to nearly 19% (van het Kaar, 2009). Part of the gap can be explained by career breaks, educational level and especially the very high incidence of part-time work among women, but seven percentage points remain unexplained.

The subject of the gender pay gap has become a more prominent issue on the agenda of both the social partners and the government.

As there is a increasing need to recruit sufficient employees in the Dutch labour market, it is important for the HR department to have useful selection techniques. Some large multinationals, such as Philips, Shell and Unilever, are considering out-sourcing their recruiting and selection needs to external staffing bureaux. decentralizing their selection procedures and are providing line managers with the appropriate tools to conduct their own recruitment and selection. Thus, HRM practitioners facilitate rather than dictate practices. Dutch companies are seeking ways to tap into more flexible labour supplies, and are hiring greater numbers of temporary employees through employment agencies To a growing extent, gender equality is addressed in collective bargaining. The main issue in this regard is equal pay. The gender gap still stands at almost 19%, of which seven percentage points cannot be explained by other factors (see section on 'Pay and working time developments). Many agreements stipulate that employers should try to close the gender pay gap. To sum up, the employee relations are relatively stable in the Netherlands. Trade unions are not so strong as in other European countries with a coverage of 24%, but the coverage hasn't changed for quite a long time. Instead of the unions, works councils play an more important part in collective bargaining, representing employees to argue with wages, employment measures and social security. Social partners have a pivotal influence on the labour laws, which even can't be amended by the government.


  • Vernon, G. (2009). Comparative joint regulation and industrial relations systems. [lecture]. Employee Relations. University of Southampton. 2nd November.
  • Expatica, (2009) [on line]
  • Netherlands_13437.html, Netherlands_13058.html
  • Robbert van het Kaar, (2009) [on line]
  • Wiersma, Uco J., and van den Berg, Peter T., (1999) Employee Relations: Influences and trends in human resource practices in the Netherlands, Vol. 21 No. 1, 1999, pp. 63-79.

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