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Trade unions try another tactic

When Mao Ze Dong

announced his

‘great leap forward',

he probably had in

mind equal rights

and duties for all the hundreds of

millions of Chinese, based on solidarity.

The Cultural Revolution that

followed turned out to be a disaster

which cost millions of Chinese their

lives and destroyed the intellectual

assets of a whole generation. Fortunately

things have improved in

China nowadays, although there

still much room for improvement.

Looking at the Dutch pension system,

the trade unions have realised

that their position in society has

weakened during the last decade,

and to maintain their position as a

‘social partner' they are preparing

their own great leap forward. For the

good of the unique but vulnerable

Dutch pension system it is essential

that they succeed. Even employers

can benefit from the unions' success,

perhaps setting an example for

the rest of Europe.

The pension system in the

Netherlands consists of three pillars,

the so-called ‘Cappuccinomodel'.

The state pension (AOW)

is the basis for all Dutch inhabitants

from the age of 65. Pension

payment is equal for everyone and

is financed through tax (pay-asyou-

go). It is the coffee in the cappuccino.

The second pillar is made up of the

additional pension schemes operated

by more than 800 pension

funds and financed by funding, currently

totalling more than €600bn.

Participation is compulsory and

therefore applies to almost all

employees, providing them with an

additional pension based on their

personal careers and salaries.

The second pillar is the responsibility

of social partners - the organisations

of employers and employees.

Second pillar pensions are based on

solidarity and are executed in collective

schemes, which have proved to

be the most efficient and cost-effective

method. It the cream in the cappuccino

The third pillar is purely individual,

and intended for those, for

example, who have not save enough

in the second pillar. This is the

domain of the insurance companies.

Individual pension products are the

cocoa on top of the cream in the

cappuccino. The Dutch three pillar

system is unique in Europe and

the rest of the world. It depends

on the specific role of social partners.

What makes it unique is the

tradition of constructive negotiation

between employers and

employees, the so-called ‘polder

model'.

The minister of social affairs is

responsible for pensions but has delegated

the establishment and operation

of pension schemes to the

social partners, provided they can

prove that they represent their sector,

branch or company. They can

then make the participation in the

scheme compulsory. It is this compulsory

participation that is the

backbone of the Dutch system.

Trade unions traditionally play

an important role in establishing

collective arrangements for workers

and have been quite successful

in that role. Almost all industries,

sectors and bigger companies

nowadays have a collective labour

agreement, the so-called CAO, in

which all details about the terms

of employment from wages to

education, are set out. All

employees benefit from this agreement,

whether or not they are

union members.

Another achievement has been the

collective second pillar pension

schemes, which are on average of

high quality. Most employees do

not realise that these schemes are

the result of negotiations between

the social partners.

With the typically Dutch approach

of constructive dialogue, which usually

leads to a positive outcome, and

without a tradition of continual

conflict and repeated strikes, it is

understandable that a growing

number of employees do not feel

they need to join a union. These socalled

‘free riders' nevertheless benefit

from collective agreements.

The growing trend of individualisation

in society, a logical effect of

prosperity, is also a factor. Increasingly,

people feel they can look after

themselves and no longer need collective

strength and provisions. For

younger generations in particular,

the word ‘solidarity' is associated

with the past.

The young are looking for value for

money and behave like demanding

clients. They do not feel any obligation

to strengthen the position of

trade unions, any more than they

expect any individual benefit from

the unions. They may even suspect

that the unions operate only on

behalf of older generations.

This suspicion was fuelled by the

social agreement 2004 which

ruled that that pre-pension

arrangements, which were to be

repealed, were secured for people

aged 55 and over. The young considered

this one-sided solidarity.

For the young, unions are associated

with past generations, problems,

strikes and rearguard actions.

Recent research found that over

50% of all employees are dissatisfied

to some extent with their present

jobs, although only 14% are

actively search for another job.

Considering the current perception

of trade unions it is unlikely

that they will ask them for help as

the perceived guardians of their

present jobs. But this situation is

about to change.

ABVAKABO FNV, the trade union

representing members in civil and

public service and the healthcare

and welfare sector and the second

largest union in the Netherlands,

has realised that a drastic change in

strategy is essential if it is to maintain

a strong and significant position

in society.

ABVAKABO FNV has more than

350,000 members, and is a member

of FNV, the confederation of some

20 Dutch unions. It holds leading

positions on the boards of trustees of

ABP and PGGM, the two largest

Dutch pension funds. More than

anyone else they are aware that the

unique balance of power and influence

between social partners

requires at least equal and strong

partners.

It is essential, therefore that unions

succeed in reversing the loss of

membership most of them are experiencing.

Current membership as a

proportion of potential members is

now on average, between 20% and

25%.

With the current image of Dutch

unions that will not be an easy task.

However, the board of ABVAKABO

FNV is determined to succeed. There

is much at stake. A large number of

their members will retire within 10

years and with an unchanged policy

they will not be replaced by younger

members.

The new strategy, which is now in

its final stage of construction, has a

strong focus on making a renewed

contact with the younger generations.

Effectively, ABVAKABO FNV

has to re-introduce itself. The opportunities

are within reach, but it will

not be easy. There are few things

more difficult than changing an

image.

The FNV and some sister unions

within the confederation are showing

considerable interest in this

development, and the need for

change extends beyond ABVAKABO

FNV. FNV covers all sectors

and branches across society.

The first combined communication

initiative has already been

introduced, offering assistance to

workers looking for a change. The

initiative is an interactive internet

programme called GoNoGo

(www.gonogo.nl ), which encourages

people to find out whether

they are content with their present

position or whether they would

find another job more interesting.

By answering a battery of questions

online they get an instant advice: go

or no go. In every case, people are

directed towards organisations that

can help them to improve their

position. This includes the FNV,

one of the sponsors of the programme.

The initiative helps FNV position

itself in an area of opportunities.

These are only the first steps

towards a stronger position for the

FNV unions in the Netherlands.

Their challenge is to convince

younger workers in particular that

they can find individual added

value in a union. Membership of a

strong union, for example, ensure

that they belong to a solid pension

scheme.

The new strategy forces unions

to have an outside-in focus, looking

through the eyes of their ‘customers'.

One interesting side

effect is that it stimulates cooperation

between the various unions

within the FNV confederation.

They can learn from each others

experiences and it is cost-efficient.

The first steps are promising. Other

Dutch unions like CNV also face

lower membership rates and difficulty

to reach younger generations.

They, too, are thinking about

changes in strategy.

The pension world will benefit

from the ‘great leap forward' of the

unions, at least if they succeed. The

result will be a long-lasting foundation

for the unique Dutch pension

system. As long as the social partners

continue to build and

improve good pension schemes,

either DB or collective DC, the

minister of social affairs will continue

to give approval for compulsory

participation.

The future survival of the Dutch

unions could set a good example for

the rest of Europe. In that case it

could become a new and promising

export of that small ‘polder country'

behind the dikes.

Alfred Kool is managing partner

Kool Corporate Communication,

and former communication

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