US embassy cable - 04THEHAGUE2667

UNCLAS SECTION 01 OF 02 THE HAGUE 002667 
 
SIPDIS 
 
STATE FOR DRL/IL, EUR/ERA, EUR/UBI 
DEPT OF LABOR FOR ILAB 
USEU FOR LABOR ATTACHE 
 
E.O. 12958: N/A 
TAGS: ELAB, PHUM, NL 
SUBJECT:  STRIKES AND PROTESTS IN THE NETHERLANDS - A BREACH 
IN THE POLDER? 
 
REF:  The Hague 2569 
 
INTRODUCTION/SUMMARY 
 
1.  On September 21, the Dutch government introduced a set 
of budget reforms to abolish pre-pension and early 
retirement schemes and cut expenditures for many social 
programs, including social security and disability (reftel). 
The reforms, an effort to address the problem of an aging 
society where the average employee stops working at the age 
of 59, will reduce budget expenditures by 2.5 billion euros 
(USD 3.1 billion).  Strikes by firefighters, port workers, 
garbage workers, airport employees, ambulance drivers and 
tram operators in opposition to the reforms reached a climax 
on October 2 when Dutch trade unions mobilized more than 
200,000 people in a demonstration in Amsterdam.  This burst 
of activity emboldened the unions, who continue to call for 
strikes (rail and transit workers staged a nationwide strike 
on October 14) and for a national referendum on the early 
retirement and pre-pension plans.  After tinkering with its 
reform package, the government currently refuses to revisit 
its pre-pension/early retirement plans. 
 
THE PROTEST 
 
2. The Dutch traditionally shy away from labor 
confrontation.  In the past decade, an average of 19 days 
per 1,000 employees has been lost to strikes in the 
Netherlands, fewer than half the level of the United States 
and one-sixth the level of Italy.  The 200,000 plus turnout 
for the October 2 Amsterdam protest impressed organizers, 
who hoped for only 100,000 demonstrators.  Some have 
described it as the largest labor rally in Dutch history; it 
was the fourth largest political rally on record. 
 
REVIVAL OF THE LABOR MOVEMENT? 
 
3. Lodewijk de Waal, chair of the FNV, the largest labor 
union federation (and generally supportive of the opposition 
PvdA party), admitted to Global Officer the rank and file of 
his federation have for the past 10 years become complacent 
as steady economic growth made most union members 
comfortably middle class and they have acquiesced to the 
consensus/polder model of economic cooperation with 
management and government.  He acknowledged the leadership, 
generally more "radical"/confrontational than the 
membership, needed a rallying issue.  The government, by 
proposing these reforms, may have given it to them.  Unions 
taking part in the protest announced a surge in membership 
applications in the days leading to the event.  In the last 
six weeks, membership in the public service workers' union 
Abvakabo, for example, has enjoyed a tenfold increase in 
applications, with 5,000 new members. 
 
4. In an attempt to address trade union concerns, the 
coalition government scaled back 1 billion euros of cuts to 
jobless benefits and dropped plans to raise tuition fees. 
Wouter Bos, parliamentary leader of the PvdA, said he 
thought unions could achieve further reductions to the 
budget cuts if they maintained pressure.  The government, 
however, said it would make no further concessions.  On 
October 4, it rejected union demands for a referendum on the 
early retirement and pre-pension changes and declined to 
reopen discussions with unions on the issue. 
 
5.  The coalition government is nonetheless exploring 
avenues to reinitiate dialogue and reach a compromise with 
labor forces on other points of contention.  D66 (a center- 
left member of the governing coalition) parliamentary leader 
Boris Dittrich spoke October 6 with FNV vice-chairman Agnes 
Jongerius.  While stressing that tax breaks for early 
retirement should be abolished, CDA (center-right senior 
member of coalition) parliamentary leader Maxim Verhagen 
conceded there was room for talks on shaping early 
retirement schemes for professions characterized by hard 
physical labor and under the "life-cycle savings" plan, 
which allows workers to use accumulated leave hours to 
retire early.  Labor Minister Aart Jan De Geus (of the CDA) 
has suggested letting CDA State Secretary for Defense and 
Prime Minister Balkenende confidant Cees van der Knaap 
explore how the unions and the Cabinet might begin talks. 
Chairman of the Social Economic Council Herman Wijffels has 
expressed his willingness to mediate such discussions, if 
interim PM (and Finance Minister) Gerrit Zalm calls for his 
participation.  Zalm, of the Liberal Party (VVD, the free 
market, conservative member of the three-party coalition) 
and the principal proponent of the budget reforms, has said 
van der Knaap's involvement is a CDA initiative, not a 
Cabinet one, implying that VVD ministers see no need for 
mediation.  Even so, Zalm approved of van der Knaap's 
probing efforts to see whether there is a basis for talks 
with the unions.  Van der Knaap has started talking to the 
FNV and employers federation, even as PvdA leader Bos calls 
the government's handling of this "non"-mediation effort 
"clumsy." 
 
WHAT'S NEXT? 
 
6.  The labor federations could join with opposition parties 
and seek to force a referendum on the early retirement and 
pre-pension changes.  They would have to wait until 
parliament adopted the budget (sometime after November 18) 
and then collect more than 600,000 signatures by year's end. 
This is unlikely.  The FNV threatens to continue strikes, 
particularly in the healthcare, public transport, metal, 
construction, and municipal public service sectors. 
Although supportive of repeal of the government's proposed 
reforms, the two other main trade union federations, the CNV 
and FNH, oppose "political strikes," arguing they victimize 
employers in a dispute between unions and the coalition 
government.  Furthermore, Wijffels predicted labor unrest 
would damage the country's competitive power, arguing, "if 
in the end, the early retirement and pre-pensions plans 
remain unchanged, employers will have to pay for them, and 
labor costs will only rise."  The government could also 
negotiate.  It has indicated its willingness to enter into a 
dialogue with labor and management, one restricted, however, 
to "new" subjects such as youth unemployment and innovation. 
 
7.  Negotiations could forestall strikes (which are already 
diminishing public support for the unions).  Negotiations, 
however, would succeed only if the coalition, and Finance 
Minister Zalm in particular, changes its position against 
revisiting the early retirement and pre-pension proposals. 
This is unlikely given Zalm's strong support for the 
reforms.  Trade unions, management, and the coalition 
government, therefore, may fall back on the Dutch "polder" 
model, where conflicts are resolved via consensus.  The 
trade unions may agree to the coalition government's plans 
to transform the early retirement and pre-pension schemes in 
return for amendments to the life-cycle scheme to reflect 
the alternative early retirement plan tabled by the economic 
policy agency (CPB).  Such a resolution would give the 
scheme a collective element and expand the transition period 
for full implementation of the reforms by approximately five 
to ten years.  The government would save the core of its 
life-cycle plan and shore up its position in recent 
political polls.  Such a resolution would provide the 
government an opportunity to address criticism from banks, 
pension funds, insurers and economic forecasters that in the 
reform's current form only 5 per thousand workers would opt 
for the plan and the current short transition given is 
likely to create chaos.  A resolution reached with the 
polder model would likewise give trade unions the impression 
that the strikes have not been in vain. 
 
POLITICAL IMPLICATIONS/COMMENT 
 
8.  A Dutch opinion poll conducted after the October 2 
demonstration exemplifies the event's political potential. 
The Maurice de Hond poll shows if parliamentary elections 
were held now, Prime Minister Balkenende's coalition 
government would retain only 49 of its 77 seats in the 
parliament (of 150 seats).  Opposition parties with ties to 
labor - most notably the PvdA - would enjoy a substantial 
gain with the PvdA winning 55 seats (up from 42).  The 
governing coalition believes significant changes need to be 
made to Dutch social policy in order to survive in the 
current competitive global economy.  Therefore, the cabinet 
has currently ruled out negotiations over parliament- 
approved, OECD- and IMF-endorsed changes to early retirement 
and worker disability schemes.  Since the government does 
not have to hold elections until 2008, it hopes taking these 
steps now will lay a foundation for economic growth in the 
future - and the voters will reward it then. 
 
SOBEL