The C19-test

By: Ruben Houweling, Labour Law Professor at Erasmus University, Rotterdam

With this Academic Board Insight in the final EELC Newsletter of 2020, it’s inevitable to reflect on the impact Covid-19 had – and still has – on society as a whole and the labour market in particular. I’d like to share with you the Dutch experiences up till now.

Short after Covid-19 hit the Northern part of Europe in March 2020, the Netherlands experienced a tremendous increase in short time working permits requests. The level of applications for these permits threatened to collapse the whole administrative authority procedure. To prevent this from happening, in less than a week time, temporary emergency law was introduced. One of the measures taken was a wage support by the government. Up to 90% of the wages were compensated by the government. In return employers had to commit themselves to a ‘non-dismissal period’. If they failed to live up to this commitment, (a part of) the compensation had to be refunded. In the first three months after this new measure was adopted, 138,586 employers used the compensation, giving a wages relief over 10 billion euros for more than 2.5 million employees – almost 1/3 of the employees in the Netherlands.

Of course, this only covered the workers with an employment contract. For temporary employees not qualifying for employment benefits, such as on-call workers or employees whose fixed-term contract had expired, a lump sum support of a few hundred euro’s was guaranteed. Employers and self-employed workers were supported by delaying tax payment and exploitation costs compensation.  The estimated total amount of governmental support to the labour market is 45 billion euro.  So far, the measures seem the have had effect. It appears that there have not been any really big layoffs. No major redundancies have taken place. The permanent impact on the economy as a whole has yet to be seen. 2021 will most likely give us the answer.

Looking back at 2020, it is almost ironic that in January, the State Committee for Regulation of Work warned that the difference in protection of employees with a permanent contract (60% of the total labour market) and the increasing group of precarious workers (40%) is worrying. The Netherlands had reached the point of no return and there was no more time for further delaying necessary labour law reforms, said the Committee. And the rest is history…

Following the Covid-19 pandemic, I think that we should introduce a C19-test. A simple question that has to be answered every time a new bill or amendment is to be adopted: “What will happen if all goes wrong?”. In the Netherlands, this C19-test will help us redesign the legal framework of work especially for the 1,2 million (almost 18% of the total labour market) self-employed workers. The C19-test proved that the majority of this group is not able to be self-supported for a longer period than two months, without pension benefits, sickness insurance and life-long learning packages. It is encouraging to see that the emergency laws (partly) include self-employed workers and that labour market policies during Covid-19 drastically changes in including self-employed workers in work-to-work schemes, opening up learning and job coach pathways for non-employees as well. These necessary reforms are all because of Covid-19 (and of course a bit of help from EU aid funds), and we are only at the very beginning of it. In a strange way, I hope that we can hold on to this urgency of reforming the labour market, with not only modern social security schemes and reformed tax law, but also much more inclusive labour market – a more level playing field for all workers and work suppliers. A permanent C19-test might help us not to forget 2020.

Happy Holidays and the best for 2021!