Observation (CEACR) - adopted 1997, published 86th ILC session (1998)

Minimum Wage Fixing Convention, 1970 (No. 131) - Netherlands (Ratification: 1973)

In its previous comments, the Committee noted the introduction of a new system -- the "i/a" ratio -- to adjust the minimum wage. This is based on the ratio of people receiving social benefit ("i") and wage-earners ("a"). This ratio was at that time evaluated at 86 per cent and, according to the Government, the automatic adjustment of the minimum wage can be cancelled if this percentage is exceeded. The Committee requested the Government to indicate whether the employers' and workers' organizations were consulted in introducing the i/a ratio, and to supply any legislative or others texts that provide for the use of the i/a ratio in determining the application of section 14(5) of the Minimum Wage and Minimum Leave Allowance Act No. 657, of 1968, as amended by Act No. 624 of 1991 (possibility for the Government of not executing the automatic adjustment of minimum wage).

In its report, the Government states that the i/a ratio is part of the explanatory memorandum contained in Act No. 624 of 1991. Before the Act was introduced, the Social Economic Council (SER) was asked for advice about the new minimum wage system. According to the Government, the SER, consisting of representatives of the trade unions, employers and independent experts, has never approved the i/a ratio as the only norm of the minimum wage determination. In their opinion, other elements, like wage growth, development in unemployment, labour productivity growth, etc., should be taken into account.

In addition, the Government states that, during the years 1993 to 1995, minimum wages were frozen in nominal terms. The freeze in 1993 and 1994 were unanimously approved by the SER because of the rapid worsening of the economy, while the minimum wage freeze of 1995 was supported only by the employers' representatives and a majority of the independent members. The trade unions were against this freeze as, in their opinion, both wage growth and development in unemployment were better than in previous years. However, as the i/a ratio was expected to exceed 82.6 per cent in 1995, the Government could cancel the linkage, and made use of this possibility. In 1996 (and also 1997) minimum wages and social benefits were linked to the average wage growth.

As regards the appeal lodged by the Christian Trade Union (CNV) on the minimum wage freeze of 1995, the Committee notes that, in a judgement dated 22 June 1995, the court decided in favour of the Government by confirming, inter alia, that the i/a ratio is indeed the decisive norm although it is not laid down in Act No. 624 of 1991.

The Committee refers to paragraph 282 of its General Survey of 1992 on minimum wages which indicates that the "minimum wage-fixing criteria specified in (the Convention) do not represent precise models; nor do they pretend to give final and unequivocal answers to questions on how suitable minimum wage levels should be determined in a given situation to contribute as effectively as possible to the general welfare". The Committee recalls that the fundamental and ultimate objective of the Convention is to ensure to workers a minimum wage that will provide a satisfactory standard of living.

The Committee requests the Government to continue to provide general information on the manner in which the Convention is applied in the country, in accordance with point V of the report form.