Netherlands: new extension of short-time working

Under pressure from the Parliament (see our dispatch No. 090955), Minister for Labor and Social Affairs Piet Hein Donner finally accepted to extend short-time working (Deeltijd WW) again. On December 8, he announced that the system introduced in April 2009 to cope with the crisis, would only end on April 1, 2010. The public powers allotted a first €200 million budget to an emergency system called “reduction of working time” (Arbeidstijdverkorting, ATV) between late October 2008 and April 2009, for businesses badly hit by the crisis. At the time, the businesses had to give proof of a 30% drop in sales over the last couple months. In April 2009, €375 million were allocated to short-time working, a more flexible system allowing businesses to put their employees aside and avoid appealing to layoffs. As early as June, the funds ran out. In July, the government added €575 million but, to avoid abuses, stricter criteria were added to the system (see our dispatches No. 090701 and 090744). Only businesses reducing working time for at least 20% of their workforce, for a minimum of six months, were allowed to submit their files as of July 20. Since then, the number of applications decreased and therefore funds are available. In total, 3,800 businesses enjoyed short-time working, allowing them to reduce working time for 40,000 employees, compensated by the unemployment insurance. The system, created to avoid workforce shortages at the time of the recovery, was criticized, in early September, by the managers of the Central Planning Bureau (CPB), which said it caused “inertia” on the labor market (see our dispatch No. 090799). Piet Hein Donner explained, in a column published on December 8 by the De Volkskrant daily, that a new extension after April 1, 2010 won’t be possible. Short-time working “slows down the dynamism” of the labor market, the Minister recognized.