SOLIDAR Briefing 46: Protecting low wage workers

Protecting low wage workers

MAKING INDUSTRIAL RELATIONS WORK FOR DECENT WORK BRIEFING ON THE SITUATION IN THE NETHERLANDS

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Introduction The working poor At first sight public debate in Holland would have you believe that in the Netherlands, only those who do not work are poor. However, a recent report by the Netherlands Institute for Social Research (SCP) seemed to prove quite the opposite. In 2009 more than half a million people lived in households run by the ‘working poor’. Despite employment being the family’s primary source of income in the past year, they earn less than the minimum needed to meet what the institute calls “all necessary and highly desirable expenses” (€930 for a one-person household; €1,750 for a two-parent family with two children in 2009). Secondly, the institute reported that over half of the 7-8 per cent of the Dutch population that is poor, do effectively work in the formal economy1. The combination of work and poverty, the institute thus concludes, is a very real phenomenon in the Netherlands.

Most working poor in the Netherlands are either self-employed or employed in low wage sectors, such as for example agriculture, cleaning, temporary agency work and (some branches of) care. Women are more likely to work and live in poverty than men, especially when they run single parent households. Lowly educated people are more likely to have low wages than the highly educated, the young more than older persons, workers from an immigrant background more so than natives. Most characteristic of the Netherlands is the difference between flexible and permanent workers, part-timers and full time employees2. After all, even if your hourly wage isn’t very low, insecurity continues to exist when you might not have work next month, or when you can only work 20 hours.

In some low paid sectors, like domestic care and cleaning, it has become almost impossible to work full time in a single job. Work is organised around morning and evening shifts (when office buildings and restaurants are empty or patients need to be dressed and undressed). Furthermore, continuity of work depends on the employer’s contracts with client companies being renewed through tenders and contracting processes in which service providers compete for the lowest price. To minimise losses when losing tenders, companies prefer to hire flexible workers they do not have to retain in periods when there is no work.

Trade unions, politicians and employers alike have recognised the pressure to reduce costs and its adverse effects on wages and working conditions. However, the complicated nature of labour relations (between employer, client company and employee) makes it difficult to pinpoint who is responsible. This report will highlight the proceedings in two branches that are heavily affected by the trend toward costreduction: cleaning and domestic care.

1 “Armoedesignalement 2010”. (2010). Den Haag: SCP. 2 Salverda, M. Laagbetaald werk, deeltijdwerk en loonmobiliteit. In: CBS (2011). “Dynamiek op de Nederlandse arbeidsmarkt. De focus op kwetsbare groepen”. Den Haag/Heerlen.

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“Trade unions report that cleaners, who complain that the scheduled time simply does not allow them to clean the room, are told to “clean only where it’s dirty”5. In 2011, cleaners in one hospital mounted successful actions against cut backs that left them with only 6.5 minutes to clean a room with en-suite facilities.”

Overview The cleaning and domestic care sectors The cleaning sector The cleaning sector is a relatively young industry that has grown strongly in the last decades, as businesses started to save costs by contracting outside companies to clean their properties. In 2011, around 85 per cent of declared cleaning work in the Netherlands was performed by cleaning companies, who employed around 150,000 people and had an annual turnover of roughly 4.3 billion euros. Traditionally, the unionisation of the sector has been low. The biggest trade union in the sector is FNV Bondgenoten, which had 14,000 members. The Ondernemersorganisatie Schoonmaaken Bedrijfsdiensten (OSB) organises 650 employers in the sector, representing around 80 per cent of the sector’s total turnover.

About two thirds of employees in the cleaning sector are women, almost half (46 per cent) are first or second generation immigrants, 54 per cent are between 35 and 54 years of age and two thirds of employees have attained at most a diploma from the lowest highschool level (preparatory vocational education, VMBO). Only 43 per cent of employees work 24 hours or more per week.3 In 2011, the hourly wage for cleaners in their first year (the “learning year”) was 103 per cent (€9) of the minimum wage, 118 per cent (€10.28) for those who’d completed the initial training and up to 121 per cent (€10.59) for those who had been cleaning for more than seven years. Trade unions estimate, however, that in 2011 only 8 per cent of the new employees actually took part in the basic training for cleaners exam4. Most employees work on flexible, short-term contracts.

The sector has always been characterised by low levels of pay but in recent years cleaners have reported that their workload has increased while pay has remained the same. Employers point at the cut-throat-competition in the industry and have stated that the market does not allow them to pay higher wages or hire more people on a job.

Cleaning companies are dependent for their work on winning procurement and public tendering procedures, which often secure contracts for no more than two years, only to then enter another procurement procedure. In many cases, the client even hires an intermediary company (broker) that negotiates the terms of the procurement and cleaning companies recruit large shares of their staff via temp agencies to keep maximum flexibility.

In the competition for contracts, cleaning companies attempt to offer the cheapest package. Because virtually all of them already pay the lowest wage allowed under the collective agreement, the time allowed for each activity has been cut down instead, increasing work stress. Trade unions report that cleaners, who complain that the scheduled time simply does not allow them to clean the room, are told to “clean only where it’s dirty”5. In 2011, cleaners in one hospital mounted successful actions against cut backs that left them with only 6.5 minutes to clean a room with en-suite facilities.

Domestic care sector The domestic care sector traditionally employs a lot of women from so-called one-anda-half earner households: families with children where one parent (most often the man) works full time and the other part time. In the big cities, though, an increasing number of domestic care employees are single mums. Many employers in the sector are social services and community building organisations, who operate under comprehensive

3 http://www.osb.nl/schoonmaaksector/ 4 FNV Bondgenoten. “Let’s Get Real!” http://dl.dropbox.com/u/53605257/lets per cent2520get per cent2520real_definitiefste_lores.pdf 5 FNV Bondgenoten. “Let’s Get Real”.

“Most of the employees work part time, which corresponds to the daily rhythms of the people receiving the care.

As a result, many employees work two jobs in order to reach acceptable monthly income levels. Employers discourage the choice but are unable to offer better hours due to the lack of work during large parts of the day and European legislation regulating the minimum hours between shifts in order for them to be considered separate working periods.”

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visions of societal cohesion, including decent work. Their patients receive help ranging from cleaning the house to complex wound care, mainly through publicly funded schemes. The core of the patients are elderly or people with chronic physical or mental limitations, however, people recovering from accidents or operations can also apply for the domestic care schemes for the brief period of time they have need of them.

The most basic help in the household (level 1 domestic carers, “huishoudelijke hulpen” in Dutch) is done by workers who have often not completed more than primary or secondary education. The employees walk regularly changing routes on which they visit the different houses to clean. Any other tasks outside cleaning, such as checking whether mail is still opened regularly, are performed by colleagues in higher job levels.

Job grades are relatively flat and most organisations are moving towards more horizontal forms of organisation, in which management layers are kept to a minimum through increasing automation of the scheduling.

Most of the employees work part time, which corresponds to the daily rhythms of the people receiving the care. As a result, many employees work two jobs in order to reach acceptable monthly income levels. Employers discourage the choice but are unable to offer better hours due to the lack of work during large parts of the day and European legislation regulating the minimum hours between shifts in order for them to be considered separate working periods.

The domestic care sector used to be a fairly integrated sector in which clients moved up from limited help in the household to more intensive assistance as their need of care increased. A legal change, however, split the care work between assistance intended to facilitate people’s independent lifestyles as long as possible (aid in the household, changes to make homes wheelchair friendly, transport, etc.) and another part focused on more medical assistance (washing, wound care, assisted living, home care, etc.). The former part of the work is allocated through public tendering procedures, in which municipalities publish calls that care organisations can apply to with projects and detailed budgets. In addition to the new uncertainty about continuity of work, budgets made available by the municipalities during the financial crisis were rarely sufficient to maintain former salary levels and working conditions.

Initially, most organisations in the sector opted for strategies to deliver care for subsidies under the cost level, counting on increased incomes from clients flowing into the more intensive care trajectories that would still be profitable. The big losses incurred by some organisations that won the tenders have resulted in a number of bankruptcies and caused others to withdraw from this part of the market preventively or to create separate holdings for the domestic cleaning services in order to limit the impact of bankruptcies on the organisation as a whole. New employers with a background in the cleaning rather than care sector have entered the market, driving prices down further. The resulting split in the work force, some of whom now work under the collective agreement of the cleaning sector, has divided trade unions.

While the effects of public tendering in the care sector are not dissimilar to those of procurements in the cleaning industry, the domestic care sector lacks the level of organisation of the cleaners and neither unions nor employers have managed to take an effective common stance against low-cost tendering. The only collective resistance has come from the municipalities themselves, who have mounted protests against further government cut backs on their budgets. Surprisingly therefore, the much less antagonistic relations between care workers, employers and municipalities have yielded fewer results than the open conflicts in the cleaning sector.

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“Both the cleaning and care collective agreements are sober covenants with the lowest wage scales hovering just above the minimum wage”

The legal and industrial relations framework In the Netherlands, sector-wide collective agreements are declared nationally binding and therefore official coverage is virtually universal. Large differences exist, however, between sectors as well as in compliance. The cleaning industry has its own collective agreement, whereas domestic care falls under the collective agreement for nursing homes, care homes and domestic care. While the cleaning collective agreement is closed between only employer organisations and trade unions, in the care sector the representation of employees encompasses both unions and professional associations.

The clients (companies that contract out their cleaning work and municipalities that invite tenders for care work) are not partners in the negotiations of either sector.

Both the cleaning and care collective agreements are sober covenants with the lowest wage scales hovering just above the minimum wage. At the time of writing this report, the cleaners have started a nationwide strike rejecting the modest wage increase proposed by employers, who in turn condemn union demands as unrealistic and destructive to employment in the sector. It is the second strike by cleaning employees, after the first strike in 2010 that lasted nine weeks and was the longest since the railway personnel strikes in 1933.

Using an American-based model of organising, the trade union movement managed to mobilise a highly activist group of previously out-of-reach cleaners in a campaign called SchoonGenoeg (a wordplay, meaning both “clean enough’ as well as ‘fed up’) that targeted client companies as well as employers. The cleaners protested against the lack of wage increases, decreasing personnel numbers for a constant workload, lack of proper facilities like toilets and canteens for the cleaners, the lack of respect, and intimidation on the work floor. Above all, however, they objected to the industry logic wherein employers blamed clients for poor working conditions, arguing client companies were unwilling to pay prices that would allow for higher wages and better conditions; while client companies denied all responsibility, stating the cleaners are not employed by them.

The result was a new collective agreement as well as the establishment of a Commission for responsible market behaviour, in which both cleaning and client companies committed themselves to more sustainable market relations. The members of the commission subscribe to a code in which they pledge to avoid a race to the bottom and engage in procurements that are based on price, quality and decent working conditions, rather than solely on price. Client companies promise to provide sufficient facilities, respectful relations and a realistic view of the time and money needed to do the job; cleaning companies commit to a respectful treatment of their employees, the training of all employees in the first year for health and safety standards, to reduce the workload per employee and to not offer their services for bottom prices; employees promise to work hard and effectively; brokers commit themselves to transparent procurement procedures and to take quality and working conditions into account when assessing the offers from cleaning companies. The commission monitors implementation of the code by its subscribers and aims to convince more companies to adhere to it.

Despite numerous violations of the code and corresponding union actions, the establishment of the Commission for responsible market behaviour has put the responsibilities of client companies on the agenda and the actions resulted in much greater social awareness of the plight of previously invisible cleaning staff.

PHOTO: © UGT

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In 2012, after stalled negotiations over the new collective agreement, the cleaners are on strike again. In addition to the wage demand, the cleaners ask, amongst other things, for the deletion of the “two waiting days” rule, which states that employees that who are ill will only be paid sick leave starting the third day of their absence. Trade unions also demand the removal of the “learning year” (in which employees are paid 85 per cent of the regular wage in exchange for training on health and safety standards) from the collective agreement, claiming that employers have not complied with the training requirement in the last few years and were using the measure, instead, to keep down expenses.

In the care sector, both employers and employee representatives are more divided.

Additionally, the care work is divided as different parts fall under two separate laws and corresponding procedures. The exceptional medical expenses act (AWBZ) covers the care of people that because of chronic mental or physical disabilities require long term medical assistance that would be unaffordable for an individual and is not covered by insurance packages. It includes, for example, residence in care homes, assistance with dressing, wound care, assisted living schemes and so on. Another law, the social support act (WMO) offers mostly non-medical assistance meant to facilitate patients’ participation in society, such as cleaning the house, adjustments for wheelchair accessibility, social care and transport for disabled.

PHOTO: © ISCOS

The collective agreement for nursing homes, care homes and domestic care makes a note of the difficulties entailed in the operation of a sector that is split in two by legislators and problems springing from the public tendering of the market share governed by the social support act. Many of the employers continue to offer both social and personal or medical services at home. New parties, however, specialising in social care only, have won a number of public tenders and begun to enter the market. The former universally operate under the collective agreement for nursing homes, care homes and domestic care but some of the latter adhere to the collective agreement for the cleaning sector, which has worse arrangements for nightshifts and weekend work.

Although wage scales are relatively flat, the sector does allow for more career development; that is, when the employer in question offers not only cleaning services but also delivers medical and personal domestic care. Unskilled cleaning aides can be trained for higher level care tasks, which primarily are helping people dress and undress, shower, and so on. In an effort to raise quality standards, the government has made funds available to train the lowest skilled employees for higher job grades in those non-hospital care services governed by the Exceptional Medical Expenses Act (AWBZ).

For the lowest paid workers in the domestic care sector, up-skilling is both a path towards higher wages as well as more job security. The training of a substantial amount of the sector’s workers in the coming years will require strenuous efforts from employers and workers alike, to make changes in a low-budget and tight schedule business.

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Good practice Getting organised in the cleaning sector The cleaning sector traditionally has a low level of unionisation, which has impeded the unions’ negotiating position in collective bargaining. In 2006, the biggest trade union in the sector set about organising the cleaners, following examples from the USA. Socalled “organisers” from the trade union head office were sent to the work places of cleaners to talk about their problems and identify local leaders. To consolidate the base they built with these workers, the local leaders were asked to organise small actions around concrete improvements (for example, a place for the cleaners to drink their coffee and eat lunch). With the small, local successes, the potential for further action grew and the local leaders were organised by the trade union in a national “cleaners’ parliament”, which now coordinates the actions and strikes of the local activists during the period of collective agreements. Starting off with small actions by around 100 people, the 2009 national strike that lasted nine weeks mobilised 700 cleaners and in the current 2012 strike, 2,500 cleaners stopped work.

The committee for responsible market behaviour The 2009 cleaning strike led to the establishment of a ‘committee for responsible market behaviour’. The strength of the committee is that it involves not just unions and employers, but also client companies and their brokers. Responding to the modern market dynamics, in which relatively unknown employers from the cleaning sector compete to offer the cheapest package to client companies and institutions, the union strike had targeted the much more PR-sensitive client companies like the national airport and Railways Company, and made public their role in driving down prices. As public opinion started to shift in favour of the cleaners’ plight, client companies became more willing to take measures. Employers, client companies and unions signed the code for responsible market behaviour described in the previous chapter and established a committee to monitor its implementation. While many problems continue to exist and compliance is not perfect, the code has managed to put the responsibility of the client on the political agenda.

Career ladders in care As work in the domestic care sector is becoming increasingly segmented and workers thus become more and more tied to performing tasks on a single level (the level 1 aid can only clean, not open the post; the level three aid can only attend to wound care, not wash the dishes), the domestic care sector is facing large changes in which pressures to reduce costs make the work on the lowest wage levels increasingly precarious. At the same time, however, employers indicate a shortage of skilled workers for the higher care levels and the national government has made a budget available for the up-skilling of lower level workers for the more complicated tasks. Together with regional adult education centres, a number of employers have started to train people to go from jobs that are cut in cost-reduction efforts, to others on levels where shortages still exist or are expected.

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About the project “Making Industrial Relations work for Decent Work” is a one-year project which looks to intensify the cooperation and mutual learning of relevant actors - employers, unions, NGOs, think tanks and workers – to identify the role as well as the tools and models needed for effective industrial relations, with the ultimate aim of combating precarious employment and realising decent working conditions and quality jobs for all.

This briefing, coordinated by SOLIDAR, was produced by SOLIDAR partner Amsterdam Institute for Advanced Labour Studies (AIAS) in The Netherlands. www.uva-aias.net All “Making Industrial Relations work for Decent Work” pilot studies are available on www.solidar.org SOLIDAR is a European network of 56 NGOs active in over 90 countries working to advance social justice in Europe and worldwide. SOLIDAR voices the concerns of its member organisations to the EU and international institutions across the policy sectors social affairs, international cooperation and lifelong learning.

Conclusions Responsible behaviour, the path to decent work In the Netherlands, trade unions and employers organisations alike have signalled increasing social problems due to so-called triangular labour relations: the employee works for one employer, but performs her or his tasks on the work floor of a third company. The employers are dependent on the client companies for jobs, yet employees remain legally tied only to their direct employer. The resulting race to the bottom caused by public tendering and private contracting processes has greatly increased the pressure to cut costs and resulted in worse working conditions.

The sectors that fall victim to these new market dynamics are mainly low paid, low skill sectors. In the case of the two sector studies in this report, cleaning and domestic care, workers additionally tend to work part time and on flexible contracts, which makes them even more vulnerable.

Employers and unions of both sectors have recognised the undesirable effects of this competition and, in the case of the cleaning sector, established a code for “responsible market behaviour”, which involves both employers, employees and client companies in an effort to turn the tide and respect working conditions. The logic of the code is simple: costs must not be reduced so drastically that is becomes impossible to perform the work under decent conditions or to acceptable quality standards.

In the domestic care sector, employers and unions have sought the cooperation of regional education centres to up-skill those employees that presently fall victim to the downward pressures on wages and other costs.

Thus, while it seems that the phenomenon of triangular labour relations is there to stay, employers have started to recognise the adverse effects on working conditions and work together with unions to tackle those problems or moderate their effects, that previously were seen as an outside and unchangeable “market dynamic”. Although there is a long way to go, the efforts of social partners have put this problem on the political agenda and the unions’ organising methods have made visible a group of workers that previously operated in the unseen margins of the labour market.

Recommendations Author: Janna Besamusca (AIAS)

To social partners:

Responsible editor: Conny Reuter

• Invest in organising. Social dialogue is only strong when social partners are strong.

Editor: Sara Hammerton Project Coordinators: Adeline Otto and Francesco Zoia Bolzonello Publication Coordinator: Abigail Goundry Printed on recycled paper ©SOLIDAR March 2012

Organising is a proven method in which unions mobilise those workers that were previously out of reach and give both voice and face to disadvantaged workers.

• Target all those involved. In triangular labour relations, targeting not only the employers

but also their client companies, can yield more results because it concerns all partners involved and because it connects the plight of the disadvantaged worker to the image of the client company or institution.

• Encourage responsible behaviour. A covenant or code that enterprises can subscribe

to, can work as a kind of ‘fair trade’ label at home and reward responsible market behaviour. While immediate compliance seems to be too much to be expected, the code can function both to organise social partners in a common quest for better regulation as well as serve as a good practice for other businesses.

This publication has been produced with the assistance of the European Union. The content of this publication is the sole responsibility of SOLIDAR and can in no way be taken to reflect the views of the European Union.

Supported by DG Employment, Social Affairs and Inclusion.

decent work decent life