Direct Request (CEACR) - adopted 2012, published 102nd ILC session (2013)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Netherlands (Ratification: 1962)

Part XI (Standards to be complied with by periodical payments), Articles 65 and 66 of the Convention. With reference to the questions raised in its direct request of 2007, the Committee notes, from the Government’s 45th annual report on the European Code of Social Security, the explanation of the methodology of determining the reference wage of the skilled and unskilled worker used for assessing the replacement rate of the Dutch benefits. According to the report, the Ministry of Social Affairs and Employment uses as a proxy for the wage of the skilled worker the so-called “modal wage” (modal inkomen), which is calculated by the Central Planning Bureau. The modal wage is not the same as the average wage: the modal wage is the average of the statistical intervals which contain the largest number of cases. The Committee would be grateful if in its next report the Government would specify, with the help of the Central Planning Bureau and the technical advise from the ILO, if necessary, to what extent “the average of the statistical intervals which contain the largest number of cases” corresponds to 125 per cent of the average earnings of all employees in the country or to the other two options for determining the reference wage of the skilled worker mentioned in paragraph 6 of Article 65 of the Convention.

The report further indicates that the Ministry of Social Affairs and Employment uses as a proxy for the wage of the unskilled worker the legal minimum wage, which is determined by the same Ministry. The determination is not so much labour market related, but is predominantly determined by political factors, because the legal minimum wage is linked to the so-called “social minimum” in the Dutch social system. In most collective labour agreements the real sectoral minimum wages are considerably higher and lie around 120–130 per cent of the legal minimum wage. Because of this, the use of the legal minimum wage as proxy underestimates the wages of the unskilled workers. The Committee notes this explanation with concern, as underestimating the wages of the unskilled workers, which are taken by the Convention as a reference for assessing the replacement level of the Dutch social benefits, by as much as 30 per cent, might have led and continue to lead the supervisory bodies to false conclusions on whether the Dutch social benefits actually attain the minimum level fixed by the Convention.

The Committee further notes that one of the reasons why the Government continues to use the legal minimum wage as proxy for the reference wage under the Convention consists in that it is technically difficult and very time consuming and expensive to calculate an average minimum wage based on all the different wages used in more than 100 collective labour agreements. The Committee wishes to point out that the Convention does not require the Government to undertake such a cumbersome exercise: its requirements are much more simple and straightforward and, unlike the above approach, are based on the actual labour market data and not influenced by political factors. According to Article 66 of the Convention, the Government has an option to determine the standard wage of the typical unskilled worker by reference to collective agreements in only one sector of economic activity expressly specified in paragraph 4 of this Article – manufacture of machinery other than electrical machinery or such other industry which employs the largest number of male employees. In order to further simplify the task of the Government in this respect, the Committee considers that it could be enough for the Government at the present stage to supply with its next report, copies of the wage-related provisions of the collective agreements in the said sectors of economic activity together with any available statistical information on the wages paid in these sectors.

[The Government is asked to reply in detail to the present comments in 2013.]