Employers must be able to fire simpler staff, flexible employment contracts must be reduced as much as possible and tax benefits for self-employed persons must disappear. That is a selection from the long-awaited report on the labor market of the Borstlap Commission, commissioned by the government, which will be presented on Thursday.
Hans Borstlap, former member of the Council of State and senior civil servant in the 1980s and 1990s, raises the alarm about the current labor market.
“If economic growth turns, we are not in order,” says Borstlap in conversation with NU.nl.
Under his leadership, a group of professors in economics and labor law, the Borstlap Commission, worked for a year and a half on the report that will be presented to Minister Wouter Koolmees of Social Affairs on Thursday.
Half a year ago, in an interim recommendation, Borstlap already threw a rock in the pond. He warned that the self-employed and people with a flexible contract will be hit hard if we are faced with an economic crisis. “And it will come once,” he said at the time.
That may sound silly in a period of low unemployment and where many people are working, but according to Borstlap the economic wind is hiding the dangers. “The wrecks only become visible at low tide.”
There are now a series of recommendations that should turn the tide.
Flex contracts bad for earning capacity
To start with, the number of flex contracts must decrease drastically, according to Borstlap. “Our share of flexworkers in the labor market is much higher than in other European countries. That is not good for our earning capacity.”
This is because this group generally does not invest in itself and neither does the employer. In addition, the costs of the risks, such as no insurance and no pension accrual, are passed on to the company.
Borstlap: “The beer at the beach bar in Scheveningen is actually too cheap. Because we all pay the costs if the employee falls ill and can no longer work. Normally those costs are included in a product.”
Flexible work is within fixed employment contracts
That does not mean that every form of flexibility has to go overboard. A certain degree of maneuverability, on the other hand, is also necessary, the committee also believes, only within an existing employment contract.
Borstlap gives an example. An entrepreneur has 10 percent less profit because of the Brexit. The entrepreneur will probably fire 10 percent of his staff, with the self-employed and flex workers first.
That ‘external flexibility’, as Borstlap calls it, must disappear in exchange for ‘internal maneuverability’. The entrepreneur from the example must be given the opportunity to offer his staff 10 percent less work and therefore 10 percent less pay.
Not a good message at a time when middle incomes are barely making ends meet, Borstlap realizes. “But the alternative is that people become unemployed.”
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Deliveroo employees went on strike in Paris (Photo: ProShots)
“An employer must be able to get rid of someone”
In addition to the reduction of flex work, a more flexible dismissal right is needed, according to the Borstlap Committee. This way, employers are less afraid to hire someone on a permanent basis.
The committee does not want to change its dismissal for reasons of business economics via the UWV benefits agency. But there is still a lot to gain in the event of dismissal on personal grounds, according to Borstlap.
A judge will now tell the employer in a dismissal case with a thin file that he must keep the employee employed. The grounds for dismissal must be substantiated to protect that employee. The committee recommends putting an end to this, because relationships are often disturbed in such cases. “An employer must be able to get rid of someone,” says Borstlap.
He ensures that an employer will soon feel free to dismiss someone just like that. If the case is poorly substantiated, the employer will be punished with a high severance payment that the court can impose. Borstlap: “That punishment, namely money, must have a preventive effect to easily fire people.”
End of tax breaks for the self-employed
The reason that so much use is made of flexible contracts and the self-employed is simply because it is cheaper. Borstlap gives an example. “If a teacher with an income of 50,000 euros gross resigns on Friday afternoon and returns on Monday morning as a self-employed person, he earns fifteen thousand euros more net.”
As a result, tax benefits such as the self-employed deduction and the SME profit exemption must disappear altogether in the long term. A new financial incentive must be designed in such a way that it is immediately clear who the self-employed person is and who is the employee. Because that was one of the important questions that the committee wanted to answer.
“When do you see when someone is self-employed or an employee? The answer is when that self-employed person starts investing. That is the real difference. Because in the case of an employee, the employer does that,” explains Borstlap.
As far as he is concerned, there should be a tax benefit on the investments of self-employed people without employees. “So no advantage for the entrepreneur, but for entrepreneurship.”
Borstlap therefore thinks that meal deliverers, catering staff and cleaners, who work via an app, have had their longest time as self-employed persons.
It is the next cabinet’s turn with advice
In the committee’s advice, there are ultimately three types of employees: the self-employed, employees with a permanent contract for (un) specified time and temporary employees.
The OECD, a club of rich industrialized countries, warned Borstlap half a year ago that the Netherlands is approaching a ‘point of no return’ if no action is taken now. That is why the next cabinet must certainly start, but perhaps as before.
Work is already underway in The Hague on election programs for the parliamentary elections in March 2021. Borstlap wants to give politicians ammo for further steps. “When you are on the mountain as a skier and you know in which valley you want to end up, you must now put all your skiing in the right direction. Otherwise you will end up in the wrong valley.”
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