NETHERLANDS - The government's wage moderation deal with trade unions was thrown into disarray following a failure to reach an agreement on early retirement and pre-pension schemes.
The wage agreement, which was struck between the government and social partners in the autumn last year, entailed a wage freeze for two years on the condition that the government would offer some concessions on early retirement.
With unions expected to conclusively reject the government’s offer on Monday, the prospect of industrial unrest looms.
The government is also expected to pursue its original plan of raising the retirement age to 65 and scrapping early retirement incentives.
The present stalemate was a result of the unions opposing the government’s proposal of fixing the retirement age at 62.5. Unions want the retirement age to be 62 years. The government had climbed down from its initial offer of 63.5.
Unions were also opposed to the government and employer’s plan of allowing employees to individually choose if they want to participate in a pre-pension scheme. They fear that if people are given a personal choice, participation will decline, increasing the cost of the scheme.
Budget deficits could rise if unions start demanding increased wages. The European Commission said on Wednesday that it was launching an ‘excessive deficit procedure’ against the Netherlands after finding the country's deficit exceeded EU rules.
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