Pay rises fall in the Netherlands

Full-year figures from the Netherlands show that negotiated pay increases last year continued to fall and at 2.8% were lower than at any time since 1996.

The figures from the central statistics bureau (CBS) show that negotiated pay increases were 4.4% in 2001, 3.6% in 2002 and 2.8% in 2003. However, the pay trends have followed those of prices and with average inflation running at 4.2% in 2001, 3.3% in 2002 and 2.1% in 2003, last year saw a 0.6% increase in pay in real terms. Pay increases in 2003 were higher in the public sector, at 3.2%, than in the private sector, 2.7%.

The deteriorating economic situation and the government's threat to cut state benefits to balance the books led the unions, employers and government to reach an agreement to freeze pay increases for 2004 and 2005. This was ratified by the ruling council of the largest union confederation, the FNV, last November.

Under the terms of the agreement only pay increases linked to performance improvements are possible. With inflation forecast to be 1.5% this year most employees will see their real pay decline.