NETHERLANDS - Despite the threat of impending industrial action, the Dutch cabinet has gone ahead and approved the abolition of tax-cuts for pre-pension schemes.
Although the official retirement age in the Netherlands is 65 years, only one-third of employees continue working between the ages of 55-65 years.
A recent IMF report had warned that unless worker participation is increased in Holland, it would be difficult to provide support to an ageing population without raising taxes taxes or increasing debt.
Endorsing legislation to establish a new tax framework to deal with early retirement, the cabinet also approved plans to introduce new leave provisions.
The government’s resolute stance follows a breakdown in talks with trade unions last month over disagreements on early retirement and pre-pension schemes.
The Dutch Trade Union Federation of the FNV is now calling for a series of strike actions, culminating into a “major campaign” in the autumn.
FNV president Lodewijk de Waal said: “In recent years we have been able to achieve a great deal through consultation, but we have now truly reached a cross-road.”
However the government said that it was “vital” to increase participation in the labour market due to the Netherlands’ increasingly ageing population and to ensure a sustainable social security
The government is now introducing a “life course plan”, whereby workers can apply for tax-cuts to save for unpaid leave, which they can use during different phases of their career.
The new measures which come into force on January 1, 2006.
Between 2006 and 2011, tax deductions for contributions to early retirement schemes will be cut to half the current level, after which this practice will be discontinued altogether.
The government said that life course plan allows workers to save a maximum of 12% of their annual income tax free.
“The maximum amount a worker can save corresponds with 2.1 years of leave with 70 percent of the last gross salary. If a worker goes on a leave-of-absence of less than two years, he can subsequently build up a full balance upon returning to work,” the government said in a statement.
It added that it wanted to increase the possibilities for taking leave during a worker’s entire career. The main aim is to share the financial burdens and perks more fairly between generations and to offer workers more freedom-of-choice.
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