Collective wage increases dropping much faster than in previous crises

The wages of employees covered by collective bargaining agreements are already increasing less rapidly due to the coronavirus crisis, while in the past wages always took some time to respond to economic developments. According to employers' organization AWVN, companies are now realizing much more quickly that there are tough times ahead. According to trade union FNV, employers are abusing the coronavirus crisis, NOS reports.

In the collective bargaining agreements concluded last year, wages increased by an average of 2.8 percent. This year that's an average of 2.5 percent so far, and that average is expected to fall further in the coming months. The coronavirus crisis hit the Netherlands in March of this year.

In the previous crisis, the credit crisis that started in 2007, it took much longer for the average wage increases to decline significantly. Declines weren't noticeable in 2008 and 2009, while the economy had already been deteriorating for a long time by then. 

According to Jannes van der Velde of the AWVN, this has to do with the nature of the coronavirus crisis, which dumped the Dutch economy into a recession basically overnight. Usually it takes some time for entrepreneurs to realize that the negative economic forecasts will affect their companies too, he said to the broadcaster. "Now overnight that question fell away. I've never seen that before, most of us haven't I think."

Trade union FNV also noticed this development. "The economy has been running well for years, but workers benefited from it late," Zakaria Boufangacha of the union said to NOS. "Now, since the coronavirus, workers can be the first to pay the bill, if it is up to the employers." According to FNV, employers are abusing the the crisis to moderate wages and worsen working conditions. 

Van der Velde of AWVN denies this. "There is absolutely no question of deterioration," he said to the broadcaster, pointing out that collective agreements are still being made. "Apparently employers' negotiators and the trade unions are reaching agreements. That does not indicate abuse."

Currently there are about 200 collective labor agreements, covering some 900 thousand employees, that have expired, but for which no new agreements have been made yet. These employees will get no wage increase, but an increase can later be implemented retroactively.