Bicycle traffic in Amsterdam, the Netherlands (Unsplash/Noralí Nayla)
Pressure is mounting on the Dutch government to reverse liberalizations in the labor market.
The OECD, a club of 38 wealthy nations, has endorsed a call by Dutch employers and trade unions to encourage the use of permanent contracts.
But where the OECD prioritizes reforms to make it cheaper and easier to hire workers full-time, the Netherlands’ own Social and Economic Council (SER), in which trade associations and labor groups are represented, would make temporary and part-time work more expensive.
The divide is mirrored in Dutch politics: Prime Minister Mark Rutte’s liberal VVD (of which I am a member) and the centrist Christian Democrats would reduce the cost of regular employment for businesses. The Labor Party and Greens would rein in zero-hours and freelance contracts. All four may be needed to form a government. Read more “Dutch Likely to Reverse Labor Market Liberalizations”
South Front Entrance of Union Station in Washington DC, July 4, 2019 (Unsplash/Caleb Fisher)
Big government is back.
Massive rescue programs have prevented business failures and unemployment on the scale of the Great Depression, even though last year’s economic contraction was nearly as bad. The European Union agreed a €750 billion recovery fund, financed, for the first time, by EU-issued bonds. The money comes on top of national efforts. The United States Congress passed a $2.2 trillion stimulus, worth 10 percent of GDP, in March and added $484 billion in April. An additional $900 billion in relief was included in this year’s budget.
Joe Biden, the incoming American president, wants to spend $2 trillion more over the next four years to transition the United States to a greener economy and create a public health insurance program. Corporate tax would go up from 21 to 28 percent.
In Spain, a socialist government has introduced the biggest budget in Spanish history — partly to cope with the impact of coronavirus, but also to finance digitalization, electric cars, infrastructure, renewable energy and rural development. Taxes on income, sales and wealth are due to increase.
In the United Kingdom, the ruling Conservative Party is building more social housing and it might renationalize rail. Unlike during the last economic crisis, it does not propose to cut spending even though tax revenues are down.
Same in the Netherlands, where all the major parties agree the government needs to do more to reduce pollution and prevent people at the bottom of the social ladder from falling through the cracks.
I’m not opposed to more government per se. I’ve argued the United States should imitate policies in Northern Europe to improve child care, health care and housing.
The British flag flies over the Cabinet Office in London, England (Shutterstock/Willy Barton)
Two months ago, I argued Britain was once again the sick man of Europe. It had the second-highest per capita COVID death rate among major countries. Economic output had fallen 20 percent from the year before.
The crisis wasn’t lost on policymakers. The dual shock of coronavirus and Brexit — Britain formally left in 2019 but still applies EU rules and regulations this year — has led to something of a quiet revolution in Whitehall: the potential rebirth of the interventionist state.
There is still much wrong with how the British government has handled both events, the poster child for COVID being the decimation of the British aviation and travel industry as well as the arts. Not since the closing of the coal mines has an entire industry shrunk so dramatically.
French workers demonstrate against proposed pension reforms in Paris, December 17, 2019 (PS/Mathieu Delmestre)
French metro and railway workers have been on strike for almost a month to preserve privileges from an era when the trains ran on coal.
The people who suffer the most are workers on modest incomes who don’t own a car and normally commute into Paris by train; small businesses and shops which are understaffed; families that couldn’t get together for Christmas.
The unions behind the strikes claim they are fighting a “president of the rich” — Emmanuel Macron — on behalf of “the people”.
View of the Piazza del Duomo in Milan, Italy, November 24, 2009 (Bjørn Giesenbauer)
Italy is creating a lost generation.
Consider the following statistics, some taken from the Financial Times:
30 percent of Italians between the ages of 15 and 24 are out of work, more or less the same rate as in Spain but almost double the eurozone average.
Of those in work, the majority are on temporary contracts.
Nearly eight out of ten young Italians are in part-time work and unable to find full-time employment, the highest rate by far among large European economies. In France and Spain, it’s about 50 percent.
Italy spends far less on tertiary education that its neighbors. The result: only 27 percent of Italians in their thirties have a university degree, the second-lowest rate in the EU, where the average is 40 percent. Italy does especially poorly in educating migrants: just 13 percent of its foreign-born population has completed university against 36 percent in the EU as a whole.
Average real incomes are roughly at the level they were in 1995. In France, Germany and Spain, they have grown about 25 percent.
Italian labor minister and Five Star Movement leader Luigi Di Maio eyes Prime Minister Giuseppe Conte during a news conference in Rome, July 3 (Governo Italiano)
Italy’s ruling populists claim to have made good on their campaign promise to overturn the previous government’s labor reforms.
A decree:
Reduces the maximum length of temporary work contracts from 36 to 24 months;
Reduces the times such contracts can be renewed from five to four; and
Introduces a requirement for employers to prove a temporary contract is still warranted after one year.
Italy’s National Institute for Social Security estimates that 8,000 temp workers could lose their jobs as a result of the changes, but the Five Star Movement and League have dismissed these figures as “unscientific” and “disputable”.
Germans demonstrate against Chancellor Angela Merkel’s immigration policy in Kaiserslautern, January 30, 2016 (Franz Ferdinand Photography)
Lyman Stone writes in The American Interest that in both Germany and the United States (and I imagine in other Western democracies too, but I only know for sure about the Netherlands), men are more likely to vote for the far right than women. Middle-aged men in particular.
Stone volunteers various explanations:
Changes in the global economy have systematically disfavored historically male-dominated industries.
Men are more likely to take a protective or defensive view of nationhood.
Men are pulled toward more radical politics of many varieties and just happen to be ticked off at their former political home.
Stone also finds that support for Germany’s Alternative was lower in those parts of the former East Germany that were Prussian before communism and highest in Saxony, a state with a long history of radical politics.
Dutch prime minister Mark Rutte is received by Jan Peumans, the speakers of the Flemish parliament, in Brussels, October 15, 2015 (Vlaams Parlement)
Dutch prime minister Mark Rutte is in trouble.
When his latest government, a coalition of Christian and liberal parties, came to power in October, he claimed there was no paperwork to support its contention that the Netherlands needed to eliminate dividend tax altogether in order to remain competitive. Now it turns out the Finance Ministry did write a series of memos on the topic — and doubted the tax played a major role in multinationals’ decisionmaking.
The Finance Ministry produces a lot of memos when political parties are negotiating to form a government, so it is possible that Rutte didn’t see this one.
Except this was by far the most controversial policy of the new government. None of the governing parties had promised to cut dividend tax in their manifestos. There had been no public debate about it.
The suspicion in The Hague is that Rutte’s former employer, Unilever, and Royal Dutch Shell lobbied to get the tax removed.
Ponte Vittorio Emanuele II in Rome, Italy (iStock/Spooh)
Italy’s Democrats are split on whether to negotiate with the anti-establishment Five Star Movement.
At a party meeting on Tuesday, former ministers Dario Franceschini and Andrea Orlando argued for coalition talks.
The alternative, a Five Star government with the xenophobic (Northern) League, would make Italy look “like Hungary,” Franceschini said.
However, centrists loyal to the outgoing leader, Matteo Renzi, reject a deal.
Five Star leader Luigi Di Maio has said it is time to “bury the hatchet”. His talks with the League have not been going well. But the Five Stars still call for overturning Renzi’s signature labor reforms, which made it easier for firms to fire and hire workers. Read more “Italy’s Democrats Split, EU Victory for Macron, Doubts About Syria Strikes”
French president Emmanuel Macron, Greek prime minister Alexis Tsipras and German chancellor Angela Merkel speak at a NATO summit in Brussels, May 25 (NATO)
French president Emmanuel Macron has convinced other EU countries to rein in employers’ ability to hire low-wage “posted” workers from Eastern Europe.
A majority of countries agreed this week to reform the Posted Workers Directive, which allows companies to temporarily “post” workers to another member state without abiding by its labor laws.
