WP 49 - The distribution of responsibility for social security in the Netherlands

High levels of unemployment, or high levels of social expenditures as well as the growing demand for a flexible labour force have given new impetus to the world-wide discussion on what model to use for an efficiently operating labour market and in particular on the role of institutions. Although there seems to be a growing consensus on the restricted governmental role in recent decades, this has not been translated into a unanimous appraisal of the role of intermediary organisations, such as trade unions. There is no clear view on an appropriate distribution of responsibility between government, social partners and the market. The research project ‘distribution of responsibility for social security’ aims to create a scientific basis for a clear and consistent view on the role and distribution of responsibilities between the different labour market institutions. As part of this research project, this paper provides an elaborate country study of the Netherlands, on the organisation of unemployment insurance, employment protection and active labour market and the performance of the labour market with respect to these fields. Both first-order effects (e.g. coverage rates, expenditures, replacement rates) and second-order effects (e.g. flows in and out of unemployment insurance) are analysed in this paper. It is shown that national legislation for social insurance is set by the national government. The intermediary organisations, among which are the trade unions, mainly have an advisory role with respect to national legislation. The advice, however is not binding. Yet, national law leaves some room for sector level legislation, in collective labour agreements. Here, the trade unions do play an important role and it depends on their collective bargaining power what kind of provisions are established in collective labour agreements. The administration of social insurance is also left to public institutions. In the past decades, the role of the trade unions has been reduced drastically in this field. On the market for reintegration of the unemployed, some competition is introduced with the outsourcing of activities to private reintegration companies. As for the performance of the Dutch labour market, this is characterised by relatively high levels of employment, job security, income security during unemployment spells and growing activation policies.