Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) - Netherlands (RATIFICATION: 1950)

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A Government representative recalled that discussion of this case had gone on for some years and stated that in March 1991 the Government had asked the Social and Economic Council to give advice on the way to amend the Wage Determination Act, 1970 (WAGGS Act) so as to bring it into conformity with the Convention. This was in accord with standard practice as the Council's advice is sought when far-reaching changes in social or economic legislation are envisaged. His Government believed that this was quite an appropriate body for consultation on this matter as the same group had been consulted when the WAGGS Act was originally adopted in response to criticism by the Committee of Experts to previous legislation in the field and as two thirds of its members are representatives of the social partners. Advice from the Council is expected to be given at the beginning of 1992; after receiving this advice the Government will be able to introduce a bill before Parliament.

The Workers' member of the Netherlands recalled that this case had a history of about 15 years before the Committee, although the Government had not made use of the provisions in questions since the 1970s and 1980s. In 1989 the present Committee expressed the hope "that the Government would be able to show complete consistency of its legislation with the Convention by next year". The speaker indicated that this case was being discussed by the current Committee because the Government had not taken any noticeable action during the period covered by its report ending June 1990. He observed that the action which had been taken by the Government during the intervening two years had been less than expedient and that his organisation had repeatedly asked the Government for reasons for their delay. No response to this question had been received and the speaker asked for a response before the present Committee.

A second reason for the current discussion, according to the speaker, was that the Government had not kept the promise it made to the Committee in 1989 to consult with workers' and employers' organisations directly as to the way to resolve the matter. The workers had asked for consultations in 1989, 1990 and 1991 but these requests had been ignored. A response came only in May 1991 when the Government stated that they did not have a practice of consulting with trade unions before they had made up their mind on the legislation in question. The speaker found this odd in view of the Government's ratification of Convention No. 144 on Tripartite Consultation and its prior consultations concerning fulfilment of reporting obligations. The speaker asked the Government representative why the Government did not wish to consult the workers' organisations, contrary to its previous promise. The speaker asked that the Government give a firm commitment that the legislation would be brought in line with Convention No. 87 by June 1992 and that answer be given to the two questions which had been posed.

The Employers' members were not sure that those present understood the crux of the case; they wished to reformulate the case into the basic issue. There was no question that the WAGGS Act made possible unacceptable Government interference with collective bargaining. There was agreement that the Act had to be changed but the question was how. Certain parameters needed to be placed on the possibility of government intervention and the Government's concern for the economic impact of the Act's amendment needed to be considered. Apparently a source of irritation was the area of consultation; the Employer's members observed that it was precisely in this area of collective bargaining where the need for effective tripartite consulation was the greatest. They urged the social partners to consult in order to find a solution to their problems and hoped that dialogue on the matter would not be such hard going in the future.

The Government representative hoped that the impression had not been given by discussions before the present Committee that there had been a general complaint made about the level of consultations between the social partners in his country. To the contrary, there had been criticism of the excessive consultation which was usual in the country. The speaker addressed himself to the charge that a long time had passed since the case was first brought before the present Committee. He observed that the matter was a difficult one and in need of very close examination. In considering the modalities of amending the WAGGS Act, the Government had to take into account its concern for the rise in public expenditure and resulting government deficit. Considering that 10 per cent of the total working population is covered by the WAGGS Act, any amendment of the Act would have considerable repercussions. Accordingly, no fewer than eight government departments had been consulted prior to the request for advice from the Social and Economic Council, including the Ministry of Finance. The necessary examination process was going on. With respect to the issue of consultation, the Government said that it had, in fact, consulted organisations of employers and workers directly concerned prior to seeking advice from the Social and Economic Council and subsequently, the social partners were kept advised of developments.

The Workers' member of the Netherlands assured the Government representative that he had not complained generally about the consultation of the Dutch Government, but rather in respect only of this particularly difficult case where it was apparent that the Government had ignored requests for formal consultation. Furthermore, the speaker urged that meaningful consultation was needed, not simply the giving of information by governments. Lastly, the speaker asked for a firm commitment as to when the legislation in question would be brought into order.

The Committee took note of the Report of the Committee of Experts, of the information provided by the Government, and the discussion which took place in the Committee. The Committee noted that the Government had still not amended the WAGGS Act concerning the fixing of conditions of employment in national insurance and the subsidised sectors in order to bring it into complete accordance with the principles contained in the Convention. the Committee expressed the firm hope that the appropriate measures would be rapidly taken in consultation with the employers' and workers' organisations and that it would be in a position to record significant progress in this field in the very near future.

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A Government representative expressed his satisfaction with the comments of the Committee of Experts that the 1985 WAGGS Act appears to be a market improvement upon its predecessors; clearly its basic elements are in conformity with the principles of free collective bargaining. In drafting the Act, the Government tried to strike a balance between its responsibility to manage public funds, the level of service to be delivered and the principles of freedom of association.

As regards sections 10 and 11 of the Act, the Dutch authorities were carefully studying the conclusions of the Committee of Experts, which have been sent to employers' and workers' organisations, as well as to parliament. Sections 10 and 11 form part of the bargaining system and were important issues during the discussions which led to the final legislative text. Furthermore, the measures provided for by these sections were meant to be taken in very exceptional situations; this was illustrated by the fact that until now such measure had never been taken and, he trusted, would never be. The observations of the Committee of Experts would be studied carefully but, because of the rather complex and legal nature of the issues, discussions were necessary with the social partners and this would take time.

The Worker member of the Netherlands stated that the observation of the Committee of Experts was a fine example of the objective, impartial work style of that Committee. However, recalling his earlier comments about the necessary feedback which should link the work of the various supervisory bodies, he wondered why this case had not been dealt with earlier, since various efforts had been made in 1985, 1986 and 1987 to draw attention of the Committee of Experts to the inconsistencies between the WAGGS Act and the Convention, and in view of the fact that this legislation was to be evaluated by the Dutch Parliament in late 1988. This legal opinion of the Committee of Experts certainly would have changed the Parliament's decision to extend that Act. The three Dutch trade union confederations found the text of the Committee of Experts' observation very helpful and hoped that it would be a strong stimulus for the Dutch Government to bring its legislation in line with Convention No. 87. While it was fair to give the Government some time to implement the recommendation of the Committee of Experts, and hopefully, of the present Conference, it should be able to report progress next year on this matter.

The Employer member of the Netherlands emphasised that the present Committee was now faced with two recommendations; one by the Committee of Experts, the other by the Committee on Freedom of Association. The speaker emphasised the distinction between comments made by a union on reports to be examined by the Committee of Experts over several years, and a complaint presented to the Committee on Freedom of Association. A complaint was a much stronger instrument and yet the recommendations made by the Committee on Freedom of Association were "softer" than those of the Commitee of Experts. While both recognised that "budgeted negotiating" is permitted, their recommendations differed as regards the possibility of government interference in the negotiating process (sections 10 and 11 of the Act), with the result that the Government was faced with an alternative: repealing articles 10 and 11 or amending the WAGGS Act. The speaker emphasised that the "trend following" sector was financed by the ordinary citizens and, for that reason, has to negotiate within a given budget. Both Committees had accepted this principle, while underlying the necessity to negotiate and conclude agreements in full freedom. The two recommendations would have to be studied carefully and a choice made; consultations with the social partners will be necessary and, in the end, the parliament would have to decide, all in accordance with national rules. The opinion of all sectors of industry have to be heard as their interest is linked with the interest of this sector. While urging the Government rapidly to take action to avoid any further delay and uncertainty, the speaker expressed the Employers' preference for the recommendation made by the Governing Body Committee on Freedom of Association, which would permit the Government to control wage cost development in this particular sector well within the limits of its responsibilities in the financial field. It would be possible at the same time to stay within the principles of freedom of collective bargaining.

The Workers' members stated that with economic upturn and certain financial restrictions there was a risk that the wages in the public and subsidised sector would fall behind the private sector. The Government should put an end to a situation which was supposed to be exceptional and of a short-term nature, and trust that the workers' and employers' organisations are mature enough to freely negotiate with due regard to what is possible and what is not.

The Employers' member underlined that in this case and in earlier situations, the Committee of Experts said that an intervention in collective bargaining may be justified for urgent reasons due to the economic interest of the country. It was of course very difficult to draw the line and decide whether such an emergency situations existed. This evaluation needed to be made not at the level of the sector concerned, but at the national level and on a tripartite basis.

The Committee took note of the information provided by the Government representative, and the different comments and opinions expressed during the discussion. The Committee noted the conclusions of the Committee of Experts concerning the persistence of divergences between the law and practice on the one hand, and the requirements of the Convention on the other hand. The Committee requested the Government to take all necessary measures to ensure that the legislation and practice are in full conformity with the Convention. The Committee hoped that the Government would be able to show complete consistency of its legislation with the Convention by next year.

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A Government representative said that his Government was surprised to find itself included among the countries invited to appear before this Committee. Nevertheless, it was willing to provide information on the events that had recently taken place in the field under consideration. As points 1 and 2 of the observation of the Committee of Experts showed, the Government was taking that Committee's comments very seriously, since in both cases the Government had arrived at a satisfactory settlement of the problems mentioned.

As regards paragraph 3 of the Committee of Experts' report, in the Netherlands there was, in fact, an area called the national insurance and subsidised sectors, which employed approximately 500,000 workers in institutions and organisations concerned with health care, social welfare, public libraries and transport, etc. Those institutions were financed either by social security contributions or by the Government itself. Although they organised and performed their duties quite independently, the Government was nevertheless responsible for the services which they provided. It could therefore be concluded that they belonged neither to the public nor to the private sector, but rather to an intermediate sector. Since the legislation governing conditions of employment in the sector had been considered to be rather unsatisfactory by both the Government and the social partners, not to speak of the Committee itself, new legislation had been drawn up based, inter alia, on the recommendations made in 1984 by the direct contacts mission that had visited the Netherlands. The new legislation, a copy of which had been communicated to the Office, made it possible for workers and employers to negotiate freely without any government interference, although within certain financial limits, which was where the problem lay. The institutions and organisations in question provided public services: they were non-profit making, and did not run the risk of going bankrupt. In them, negotiations between employers and workers could take place, but whatever they agreed upon, it was the Government that had to foot the bill. That was why the Government had considered it necessary to fix certain financial limits.

The new legislation had been adopted by Parliament at the end of 1985 and had come into force on 1 January 1986. It had been decided that in 1987 it would be reviewed in close co-operation with the workers and employers concerned. The results of the review would be submitted to Parliament at the beginning of 1988 and would be communicated to the attention of the Committee of Experts without delay. The review would be mainly concerned with the question of whether the new legislation had attained the objectives set for it. He requested the Committee to await those results-a request which was justified by the last paragraph in the corresponding point of the Committee of Experts' observation.

The Worker member of the Netherlands expressed surprise at the fact that so far the Committee of Experts had not examined the Act concerning conditions of employment in the national insurance and subsidised sectors (WAGGS). In 1984, the conclusions reached by a direct contacts mission had indicated that the Government had not been willing to reduce its role in determining wages and conditions of employment in the non-profit sector to the same limited dimensions as in the market sector and that, consequently. it was a tangible prospect that the Government would not be fully meeting its obligations under the Convention in the (then) envisaged permanent legislation (Para. 52 of the report of the direct contacts mission). In view of that finding, of the great interest which the Committee of Experts had shown over many years, and of the comments submitted by the Netherlands Confederation of Trade Unions (FNV) and subsequent comments by the Employers' Federation and the Federation of Christian Trade Unions (CNV), when the Bill had been submitted to Parliament, the failure to examine the Act in question was inexplicable.

In some aspects, the Act of 1985 represented progress compared with the so-called "temporary" legislation of 1979-86, which the Committee of Experts had repeatedly considered to be contrary to the Convention. All the analyses that had been published in academic and specialised publications agreed in assuming that the law would once again lead the Government into conflict with the ILO. Firstly, under the Act the Government unilaterally fixes the limits for the development of employment conditions before negotiations between workers and employers have started. Secondly, the Government can "freeze" employment conditions if the outcome of negotiations does not please them. No publication agreed with the Minister of Social Affairs that the matter was settled in conformity with the Convention. In that connection, it was useful to draw the Committee's attention to the position adopted by the Government with regard to the four criteria formulated by the Committee of Experts on what could be called "tolerable" interference with collective bargaining. In the government memorandum presented on the occasion of the submission of the Bill to Parliament, the Minister of Social Affairs had categorically denied that those criteria were relevant for the 500,000 workers whose conditions of employment were covered by that legislation. In adopting that position, the Minister of Social Affairs confirmed his previous statements to the effect that the ILO ought to consider the sector concerned to be a "special case" and that some of the rights guaranteed by the Convention should be interpreted flexibly.

This position was in contradiction with the conclusions reached by the 1984 direct contacts mission, in so far as the workers concerned should enjoy the same rights as other workers.

With regard to the fourth criterion (namely, that when the Government intervened in collective bargaining, measures should be taken to safeguard the standard of living of the workers concerned), it should be pointed out that during all those years the Government had restricted the workers' right to collective bargaining in the sectors in question without adopting such m That had had serious consequences on the standard of living of the workers, as was shown in the information and statistics which the Government itself had provided in 1986. The "trend-followers" had suffered setbacks varying between 7 and 31 per cent when compared to the market sector. In 1988 the Netherlands Parliament would review the operation of the Act in question, and it would be a great help if the Committee of Experts could examine it in the light of ILO Conventions and of its practical application. The Committee of Experts had all the facilities to deal with ILO Conventions, and it would be very useful if it could invite the Government to supply all the necessary information on the practical application of the Act, so that the Committee could formulate its comments in its report to be submitted to the next session of the Conference.

The Employer member of the Netherlands said that the employers had not been particularly satisfied to find that the Conference Committee was still discussing the application of this Convention in their country. The objections formulated by the employers and workers to the measures taken by the Government went back to 1980. In 1984 an ad hoc commission which had visited the Netherlands had concluded that the situation had improved. It therefore had to be recognised that the Government had changed its Position and that collective bargaining was now taking place at a decentralised level, without government interference and in accordance with the Convention. There seemed to be no justification for the Committee to continue its discussion of the matter at the present stage. There was, however, one point on which the employers still wished to express reservations regarding the way in which the Convention was being applied. The provisional legislation being implemented in the so-called "national insurance and subsidised sectors" did not fully secure freedom of collective bargaining, which was limited by the budget allocated to the sector by the Minister concerned. That left practically no room for freedom of collective bargaining, to which the employers were very attached. Although they recognised that the provisional legislation constituted an improvement on the previous legislation, it was not fully in accordance with ILO standards. Nevertheless, as the Government had promised the social partners and Parliament that it would make a thorough review of the legislation, the employers considered it premature to discuss it.

The Workers' members stated that although it was still too early to draw conclusions, the discussion in the Committee was useful because it had provided an opportunity to show that it had been possible to settle conflicts concerning freedom of collective bargaining in the Netherlands. In recent years, the wage situation in industrialised countries had changed considerably, and in the case of civil servants, particularly in the subsidiary sectors, the situation had become especially difficult. The workers in those sectors found it difficult to understand why they did not enjoy benefits accorded in the private sector. In the case of the Netherlands, the Committee of Experts would have an opportunity to see what the situation was when it received the results of the review. That would be the right time to resume the discussion, if necessary.

The Employers' members noted that the Employer member of the Netherlands had just explained the position of the Dutch employers. The report of the Committee of Experts had indicated that the situation was evolving satisfactorily and that it was merely a question of seeing whether the new Act concerning conditions of employment in the national insurance and subsidised sectors took into account the reservations and observations that had been made. In the Employers' members' opinion, it was almost certain that the Government would give satisfaction to the Committee of Experts.

The Government representative noted that the speakers who had followed him, particularly the Worker member of the Netherlands, had mentioned certain points which would be covered by the questions to be examined at the national level when the legislation was reviewed. Workers' and employers' organisations would then have the possibility of expressing their views. Referring to the statement made by the Worker member of the Netherlands, he wished to make it clear that he had not stated that the Government was already certain that the new legislation was in conformity with the Convention. The Government representative had full confidence in the Committee of Experts and was sure that, when it was in possession of all the information, it would formulate appropriate conclusions.

The Committee took note of the detailed information supplied by the Government representative and of the subsequent discussion. It requested the Government to communicate information regarding the practical application of the legislation on collective bargaining in the sectors concerned, so that the Committee of Experts could assess the situation as soon as possible.

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The Committee takes note of the observations received on 31 August 2021 from the Netherlands Trade Union Confederation (FNV) and the National Federation of Christian Trade Unions (CNV), which refer to matters examined by the Committee in the present direct request. The Committee further notes the Government’s detailed reply to the 2017 observations from the FNV, the CNV and the Trade Union Federation for Professionals (VCP).

Article 3 of the Convention. Right of workers’ organizations to organize their activities in full freedom. In its previous comments, the Committee requested the Government to provide its comments on the use in practice of agency workers to break strikes – as alleged by the FNV, the CNV and the VCP. The Committee notes the Government’s indication that: (i) article 10 of the Dutch Posting of Workers by Intermediaries Act (Waadi) prohibits temporary employment agencies to provide workers to a company during a strike within that company; (ii) in the event of suspicion of non-compliance with this article, social partners or other parties concerned can submit a formal request to the Social Affairs and Employment Inspectorate (Inspectorate SZW) which conducts an extensive investigation regarding all facts and circumstances relevant for the specific situation and working relationship; (iii) the Inspectorate SZW has no legal means to enforce article 10 Waadi apart from conducting an investigation and issuing a report. It is up to the reporting party or parties to go to civil court and to make use of the facts presented in the report by the Inspectorate SZW.

The Committee also takes note of the 2021 observations of the FNV and the CNV according to which the Inspectorate SZW does not always have immediate access to the workplace to detect a violation of the strike-breakers ban, as evidenced by various collective actions that have taken place in recent years at Schiphol Airport, where many ISZW inspectors have no direct access behind customs due to the specific regulations on the Schiphol territory. They allege that, after a violation has been established, it takes a year or longer before ISZW issues a report and that, when a trade union subsequently starts legal proceedings against the offenders, the civil court imposes damages of no more than 5,000 euros per offender, which are not dissuasive. Moreover, the Committee notes that these two workers’ organizations denounce the so-called “intra concern exception” contained in the Waadi, which makes it possible for a subsidiary to fly in employees to serve as strike-breakers with impunity in the event of a strike. Finally, the Committee takes note of the complaint lodged in July 2021 by the European Trade Union Confederation (ETUC), the FNV and the CNV before the European Committee of Social Rights in which they allege, inter alia, that the manner in which Dutch higher and lower courts impose restrictions on collective actions is not in conformity with the European Social Charter. In view of the above and in particular the last observations from the FNV and the CNV according to which the strike-breakers ban lacks effectiveness, the Committee requests the Government to continue to provide detailed information on the application in practice of article 10 of the Dutch Posting of Workers by Intermediaries Act (Waadi) which prohibits temporary employment agencies to provide workers to a company during a strike within that company.

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The Committee notes the observations received on 31 August 2017 from the Netherlands Trade Union Confederation (FNV), the National Federation of Christian Trade Unions (CNV) and the Trade Union Federation for Professionals (VCP), referring in particular to the alleged use in practice of agency workers to break strikes. The Committee requests the Government to provide its comments in this respect.

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The Committee notes the Government’s report. It recalls that it had previously asked the Government to transmit its observations on the comments submitted on September 2004 by the National Federation of Christian Trade Unions (CNV) and the Trade Union Federation for Middle and High Level Employees (MHP). The Committee will address these matters in its observation on the application of Convention No. 98.

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The Committee notes the information provided in the Government’s report. It notes the observations of the National Federation of Christian Trade Unions (CNV) and the Trade Union Federation for Middle and Higher Level Employees (MPH) and requests the Government to supply its comments in this respect.

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With reference to the comments it has been making for several years on the need to repeal sections 10 and 11 of the law governing terms and conditions of employment in the national insurance funded and subsidized sectors - known as the "WAGGS" Act - so that employers and workers would be permitted freely to conclude collective agreements in relation to their terms and conditions of employment in these sectors, the Committee notes with satisfaction that the sections in question have been repealed by Act No. 557 of 27 October 1993.

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The Committee takes note of the information supplied by the Government in its report, the information given by a government representative at the Conference in 1991 and the comments of the Confederation of the Netherlands Trade Union Movement (FNV).

With reference to the comments it has been making for many years on the need to repeal sections 10 and 11 of the law known at the "WAGGS" Act so that employers and workers in the national insurance-funded and subsidized sectors would be permitted freely to conclude collective agreements in relation to their terms and conditions of employment, the Committee takes due note of the information contained in the Government's report to the effect that the Economic and Social Council of the Netherlands is in favour of repealing the above sections.

The Committee also notes that the Government has decided to follow the advice of the Economic and Social Council and that the Minister of Social Affairs and Employment submitted in September 1992 the Government's proposal to Parliament with a view to the repeal of the above provisions. The Committee expresses the firm hope that in its next report the Government will indicate that sections 10 and 11 of the "WAGGS" Act have indeed been repealed and asks it to provide a copy of the repealing legislation as soon as it has been adopted.

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The Committee notes the information supplied by the Government in its reports. It also notes the comments provided by the Federation of Netherlands Industry (VNO) and the Confederation of the Netherlands Trade Union Movement (FNV).

In its 1989 observation the Committee asked the Government to repeal sections 10 and 11 of the so-called "WAGGS" Act so that employers and workers in the national insurance and subsidised sectors would be permitted freely to conclude agreements in relation to their terms and conditions of employment. In making this observation, the Committee drew attention to the fact that the Wage Determination Act, 1970 (as amended), gives the Government powers to intervene in the bargaining process in the face of compelling reasons of national economic interest.

The Committee notes that the Government had indicated that it was considering whether it might be possible to repeal that part of the WAGGS Act (section 11) which provides for the freezing of terms and conditions of employment in the "budgeted" sector - what the Government refers to as the application of the "ultimate remedy". It was also considering whether section 10, which applies to those sectors where there has not been a budgetary agreement in accordance with section 2 of the Act, might be amended in such a way that the "ultimate remedy" could be used only while taking account of the criteria described by the Committee in its 1989 observation. The Government further indicated that it would be holding consultations with the relevant organisations of employers and workers in relation to these proposed amendments, and that it would also be seeking the advice of the Socio-Economic Council (SER) on the matter. It anticipated that this would take place in the autumn of 1990.

In its comments, the VNO quotes from a letter it had sent to the Government in which it indicated that it would prefer that sections 10 and 11 be amended rather than repealed. It also urged that a final decision be taken as soon as possible, and that that decision be communicated to the ILO so as to enable the Committee of Experts to consider the matter at its meeting in March 1991. The FNV expresses its dissatisfaction with the follow-up given by the Government to the recommendations of the Committee on Freedom of Association in relation to Case No. 1469, and of the Conference Committee in June 1989. According to the FNV no proposed amendments had been presented to it in writing, and the Government had not engaged in any consultations with organisations of employers and workers in relation to the repeal, or amendment, of sections 10 and 11.

The Committee can only note that the Government has not yet introduced any legislation to bring the WAGGS Act into conformity with the requirements of the Convention. It once again urges the Government to introduce such amendments as soon as possible, and to keep the Committee informed of all relevant developments.

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In a communication dated 6 February 1990 the Confederation of the Netherlands Trade Union Movement (FNV) addressed certain comments to the Committee concerning the application of the Convention in the national insurance and subsidised sectors. The Government supplied its observations on these comments in a communication dated 23 February 1990.

In its 1989 observation the Committee asked the Government to repeal sections 10 and 11 of the so-called "WAGGS" Act so that employers and workers in the national insurance and subsidised sectors should be permitted freely to conclude agreements in relation to their terms and conditions of employment. In making this observation, the Committee drew attention to the fact that the Wage Determination Act, 1970 (as amended), gives the Government powers to intervene in the bargaining process in the face of compelling reasons of national economic interest.

In its communication of 6 February 1990 the FNV states that its repeated attempts to be consulted on the necessary changes to the WAGGS legislation had been unsuccessful. The FNV also pointed out that to the best of its knowledge no proposals for change had yet been developed, and that they certainly had not been presented to the Socio-Economic Council (which must be consulted before such legislation is presented to Parliament).

In its communication of 23 February 1990 the Government states that it is carefully investigating the possibilities of amending sections 10 and 11 of the WAGGS Act. The conclusions of the Committee of Experts and of the Governing Body's Committee on Freedom of Association (265th Report of the Committee, approved by the Governing Body at its May-June 1989 Session, paras. 161-209) will be taken into account in the course of this investigation. The Government also hopes to take account of experience in some other European countries in this context.

The Government attributes some of the delay in relation to this matter to the recent appointment of a new Minister of Social Affairs and Employment. However, it intends to inform the Second Chamber of the Parliament of the way in which the legislation may be amended in May of this year. It is hoped, therefore, that there will be substantial progress in relation to this matter before the next session of the International Labour Conference.

The Committee takes note of the information provided by the FNV and by the Government. It asks the Government to keep it informed of further developments on the matter, so that it can examine the operation of the Convention in detail at its next session.

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The Committee notes the information supplied by the Government in its report and by the Confederation of the Netherlands Trade Union Movement (FNV), the Federation of Christian Trade Unions (CNV) and the Federation of Middle and Senior Staff Personnel (MHP) in their joint communication dated 14 March 1988.

The Committee recalls that in 1985 the Parliament adopted new legislation relating to conditions of employment in the "trend-following" or national insurance and subsidised sectors (the WAGGS Act). In its 1987 observation the Committee requested the Government to supply detailed information on the practical operation of this new legislation in its next report.

The Committee notes that a copy of an Interim Report on the Evaluation of the WAGGS Act was transmitted to the Office on 19 February 1988 and that an English translation of the final report of the review was transmitted to the Office on 17 June 1988. The Committee records its thanks to the Government for its co-operation in this matter.

The Committee notes that in their letter of 14 March 1988 the FNV, CNV and MHP expressed a number of concerns about both the content and the practical application of the 1985 legislation, and alleged that it constituted an impermissible interference with the rights guaranteed by Article 3 of the Convention. The Committee has also taken note of the Government's response to these allegations.

The WAGGS legislation

According to section 2(1) of the 1985 Act, the legislation applies to the conditions of employment in force between such workers and employers and categories of employers as may be designated in accordance with section 2(2). Essentially, this means employers whose labour costs are met (wholly or partly) out of grants from public funds, or out of social insurance funds. Section 2(3) of the Act also contemplates that the Minister of Social Affairs and Employment may conclude "a settlement concerning the payment of costs" with certain employers - this constitutes the so-called "budgeted sector".

Section 4(1) of the Act requires the Minister to "promote" annual, centralised, discussions on "the development of conditions of employment and consequent labour costs" of workers in the trend-following sector. This entails the Minister informing all employers, employer organisations and worker organisations whom (s)he considers appropriate of her/his "provisional view" of the bargaining parameters which are to be set for the coming year. This is to be done at least two months before the Government presents its annual budget to the Parliament.

The relevant worker organisations are then given an opportunity to "express their standpoint" on the Minister's provisional view (section 4(3)). After that, the Minister invites the employers to participate in "consultations ... to see whether agreement can be reached as to the standards which are to be set by virtue of section 5" (section 4(4)). The Minister is obliged to present a report on these discussions, and her/his conclusions thereon, to the Parliament (section 4(6)). At least 20 days after this report has been submitted, the Minister, acting with the agreement of any other relevant ministers, is required to "set standards with regard to the financial scope for the development of labour costs to be made available within the framework of cost coverage and setting of rates of contribution resulting from the modification of the conditions of employment" (section 5(1)). In setting these standards the Minister is obliged to take account of: the effect of wage increases in the private sector; the Government's views on appropriate public expenditure levels, and the extent to which the development of labour costs has departed in previous periods from the pre-determined standards for that year.

Once the parameters have been set, the employers/employer organisations and worker organisations are then free to enter into negotiations on the terms and conditions of employment which are to apply over the next year.

Section 4(1) of the Wage Determination Act, 1970, requires the parties to a collective agreement to notify the Minister "of its conclusion and of any amendments thereto". The Minister is then required to "inform the parties in writing as soon as possible of the date on which the notification is received". The 1985 Act uses this provision as a means of securing compliance with the pre-determined bargaining parameters in the trend-following sector. It does this by stipulating (section 6(1)) that an agreement "shall not enter into force until six weeks have elapsed" after the transmission of the section 4(2) notice by the Minister. This six-week period can be extended by up to four further weeks by written notice. Within this six/ten-week period the Minister, acting in agreement with any relevant ministers, may make a written declaration to the parties that their agreement "will meet with objections if the labour cost development resulting therefrom will not, according to reasonable expectation, conform to the standards set on the subject" (section 7(1)). The effect of such a declaration is to prevent the agreement becoming operative "for the time being", and the terms and conditions of employment of those covered by the agreement remain as they were before it was concluded (section 7(2)). Once a declaration has been issued, the Minister is required to promote the holding of further consultations between the parties (section 7(3)). These consultations are to take place not later than three weeks after the making of the declaration. After these consultations, the parties to the agreement may make a joint, written declaration to the effect that "they still deem desirable the coming into operation" of the agreement (section 7(4)). The Minister is obliged immediately to affirm the receipt of this affirmation, and the agreement is to enter into force on the day following its transmission.

If the Minister, and any other relevant minister, are of the joint opinion that the operation of an agreement which has been affirmed by the parties in accordance with section 7(4) creates either a threat to the level of service provided by the employer, or a danger that maintenance of the necessary level of service would entail "an unjustified increase in costs at the public expense" then (s)he may "order that those conditions of employment shall apply ... which were effectively in force immediately before his decision came into effect" (section 10(1)). In other words, the Minister can freeze the terms and conditions of employment of workers covered by the agreement. Before exercising these powers the Minister must first notify both houses of the Parliament (section 10(4)). The "freeze" does not become operative until ten days after service of this notice.

Section 11 makes similar provision in relation to the "budgeted sector".

Even where there has been no freeze under section 10, a cost overrun in any given year may be taken into account in setting the parameters for the next year (section 5(3)). In addition, grants, etc., which are intended to cover labour and/or operating costs are calculated on the basis of the parameters laid down under section 5 (section 12), rather than upon costs actually incurred (or budgeted).

The Committee's analysis

The Committee has now conducted a detailed examination of the legislation in the light of the information on its practical operation set out in the Review Report.

The Committee recalls that Article 3(1) of the Convention provides, inter alia, that workers' and employers' organisations shall have the right to organise their activities and to formulate their programmes, whilst Article 3(2) enjoins the public authorities to refrain from any interference which would restrict these rights, or impede the lawful exercise thereof. The Committee has consistently taken the view that the right freely to participate in collective bargaining is an important part of the activities in which such organisations may engage in order to protect and to promote the interests of their members. Indeed, as was indicated in the preliminary work for the adoption of the Convention on freedom of association, "one of the main objects of the guarantee of freedom of association is to enable employers and workers to combine to form organisations independent of the public authorities and capable of determining wages and other conditions of work by means of freely concluded collective agreements" (Freedom of Association and Industrial Relations, Report VII, International Labour Conference, 30th Session, Geneva, 1947, page 52).

It follows that interference in the bargaining process by the public authorities (through legislative or other means) is, in principle, not in conformity with the guarantees provided by the Convention. Nevertheless, the Committee has recognised that some degree of interference with the autonomy of the parties may be warranted in certain limited circumstances - namely for compelling reasons of national economic interest. However the Committee has also made clear that any such restrictions should be imposed only as an exceptional measure and only to the extent necessary, without exceeding a reasonable period; further, they should be coupled with appropriate guarantees for the protection of workers' standards of living (General Survey, 1983, paragraph 315).

The Committee notes from the Report on the Review of the WAGGS legislation that both employer and worker organisations have expressed concerns about the timing of the annual parameter-setting process under sections 4 and 5 of the Act, and about their lack of impact upon the outcome of that process. The Committee notes with interest that the Government has undertaken to amend the legislation to permit earlier consultation with the parties, and asks the Government to keep it informed of developments in this regard.

The Committee notes that section 6 of the Act requires that agreements in the trend-following sector must be submitted to the Minister before they become operative. It also notes that section 7 enables the Minister to delay the commencement of an agreement pending consultations with the parties, but that the parties retain the right by virtue of section 7(4) to reaffirm their agreement notwithstanding any concerns raised by the Minister. The Committee is of the view that these provisions are not inconsistent with the approach set out at paragraph 314 of its 1983 General Survey:

It might also be prescribed that a collective agreement would come into force only a reasonable length of time after being filed with the competent public authority. If this authority considered that the terms of the proposed agreement were manifestly in conflict with the economic policy objectives recognised as being desirable in the general interest, the case could be submitted for advice and recommendation to an appropriate consultative body, on which the workers' and employers' organisations were represented; this body could indicate to the parties the considerations of general interest that might call for further examination by them of the agreement in question, provided always, however, that the final decision on the matter rested with the parties to the agreement.

In this respect, the 1985 Act appears to the Committee to constitute a marked improvement upon its predecessors.

Sections 10 and 11 of the Act raise more difficult issues. These provisions enable the Minister to override any "declaration" by the parties under section 7(4), and to "freeze" the operation of an agreement where (s)he is of the opinion that it creates either a threat to the level of service provided by the employer or a danger that maintenance of the necessary level of service would entail an unjustified increase in costs at the public expense. The Committee notes that to date these powers have never actually been used in practice. However, the Committee is of the view that if the Government were to impose a freeze on the basis of sections 10 and 11 that would constitute an interference with the rights which are protected by Article 3 of Convention No. 87 - unless that interference could be shown to be justified on the basis of compelling reasons of national economic interest, and that the legislation incorporated the safeguards which are considered essential even where interference with the right to negotiate is permissible.

The Committee recalls that the so-called Temporary Act which preceded the WAGGS Act operated for a period of six years. The Committee notes that the 1985 legislation has already been in operation for a period of three years, and that in May 1988 the Government announced that it would be extended at least to the end of 1992. A measure of this nature cannot be regarded as "exceptional", as remaining in force for only a "reasonable period", or as operating only to the extent necessary to protect the national economic interest.

The Committee notes that according to the report of the review of the legislation, the earnings gap between the trend-following and market sectors has widened appreciably during the currency of the WAGGS Act. This inevitably raises doubts as to whether the Act contains adequate safeguards to protect the living standards of those to whom it applies. The three federations who have directed observations to the Committee clearly feel that it does not. Employers in the trend-following sector also appear to be unhappy about the overall effect of the legislation - as is evidenced by their stated desire to narrow the earnings gap between employees in this sector and those in the market sector if they were permitted to do so.

The Committee has commented upon this legislation, and its predecessor, several times. The matter has been discussed by the Committee on the Application of Conventions and Recommendations of the Conference on a number of occasions. The Committee considers that it must now ask the Government to repeal sections 10 and 11 of the WAGGS Act, and that employers and workers in the trend-following sector be permitted freely to conclude agreements on terms and conditions in this sector. In making this observation the Committee is mindful of the fact that the Wage Determination Act 1970 (as amended) gives the Government powers to intervene in the bargaining process in the face of compelling reasons of national economic interest. It is also mindful of its 1984 observation to the effect that even before the Temporary Act became operative the Government had ready access to indirect means of encouraging responsible bargaining in this sector.