Netherlands: non-standard work and social protection

Abstract

Over the last decades, the share of non-standard work in The Netherlands has grown substantially and it is now among the highest of all OECD-countries. Approximately one in three workers work in a non-standard work arrangement (including own-account or temporary work, variable hours contracts and agency work). In the current Dutch institutional setting, firms can save social contributions, severance payments, re-integration obligations and tedious administrative procedures by hiring people as own account workers or, to a lesser extent, through one of the other non-standard work arrangements. By using temporary work arrangements, for example, employers can circumvent employment protection legislation – i.e. severance payments and time-consuming procedures to ask for permission to dismiss – and sickness related payments and re-integration obligations that end upon the end date of the contract. If policy makers wish to reduce the share of non-standard work arrangements, they should aim to reduce incentives to hire workers on non-standard contracts, by reducing differences in taxes and social security coverage between non-standard and standard work.