New law shakes things up
The Balanced Labour Market Act (WAB) was established in 2020 and was intended to increase the position of flex workers and the self-employed. Although the law has resulted in flex work becoming less attractive, analysts from ABN Amro noted that the WAB also led to a decrease in the number of permanent contracts.
The Balanced Labour Market Act (WAB)
The WAB was intended to encourage employers to offer flexible employees a permanent contract. The law arranged benefits for employers doing so, like paying a lower WW (unemployment insurance) premium for employees that have a permanent contract.
In fact, the law made flexible work more expensive for employers and they therefore terminated employment contracts with flexible workers, rather than hiring them permanently.
Defining flex workers
According to Statistics Netherlands (CBS) there is no “standard definition” for a flex worker, as there are different categories. In the Netherlands, a flex worker is generally someone who has a flexible employment situation, given their income and job security. Therefore, all employees that do not have permanent, full-time employment contracts are considered flex workers by the CBS.
Taking this into consideration, the self-employed also fall under the flex worker definition, as they often have lower job and income security. However, within the self-employed category, the CBS recognises two groups. The first group is defined as self-employed who are entrepreneurs and run their own business, whether big or small. The second group are the “self-employed workers”; this group offers services that an employee in paid employment could also carry out, but for some reason do not have employee status. Obvious examples are food delivery workers who work for one company exclusively. Other examples are care workers, who are often self-employed, but have a rather low income. These people are considered flex workers, and it is them the WAB intended to help, by ensuring they received a contract rather than being paid by the hour or by the gig.
According to ABN Amro analysts, the implementation of the WAB has resulted in an imbalance in the labour market, as “self-employed workers” now face the same problems as flex workers. After the WAB was introduced, employers began to hire fewer flex workers, and did not give contracts to the flex workers they already employed. The ABN Amro analysts unveiled that a total of 77,000 of the 2.5 million flex workers in the Netherlands lost their jobs due to the law. Amongst flex workers, the ones most affected had less education and were young; thus, they were the most vulnerable workers in the market. In this group, young women were the most affected, with an estimated total of 62,000 becoming unemployed. The 16,000 men who became unemployed were more likely to return to work, due to “pregnancy discrimination” by employers.
“The WAB is intended to make permanent employment relationships more attractive to employers than flexible employment relationships,” explains Kamalika Patra, analyst at ABN Amro. “However, research shows that the terminated contracts have not demonstrably been replaced by permanent contracts and many people have ended up becoming unemployed. This shows that the WAB’s goal – more work and income security for employees and more flexibility for employers – has not been achieved.”
However, Wouter Koolmees, minister for Social Affairs and Employment has a different view of the WAB and its effect on flex workers. “Certainly the corona year has distorted the market a lot. What we can see for a long time is that flexible work is increasing more and more,” says Koolmees. “The shift to self-employment remains a concern. It is up to the next cabinet to continue with measures to help the labour market work better.”
Written by Nicole Kerr