Labour and income

Trends

Flexible employment

Flexible forms of work are on the rise in the Netherlands. In 2016, more than 1.8 million people – i.e. over one-fifth of the Dutch labour force – were in flexible employment, up from merely 1.1 million in 2003. Between 2003 and 2016 the number of on-call (standby) and replacement workers even more than doubled, while the number of permanent workers declined from nearly 5.7 million (2003) to just over 5.2 million (2016).



Flexible arrangements offer employers the possibility to hire more staff during peak demand and reduce personnel costs in less favourable times. Employees themselves may also regard flexible arrangements as positive. One-third of ‘flex workers’ indicate they prefer flexibility or have no need for job security. However, the majority of flex workers state they have no other choice: they were hired recently by their employer (38 percent) or have not been successful in securing permanent work (30 percent). The disadvantages of flexible employment are a greater lack of employment and income security compared to a permanent contract; a lower income on average, compared to permanent employees; as well as highly variable income levels on average depending on type of contract. This variability is related to differences in number of hours worked, age, educational attainment level and branch of industry (other factors not precluded).





Who are these flex workers?

Flex workers are defined as people who have either a fixed-term contract or flexible hours. This group comprises seven different categories: temporary employees with prospects for permanent employment and a fixed number of hours; temporary employees with a fixed-term contract for 1 year or more and fixed hours; temporary employees with a fixed-term contract for less than 1 year and fixed hours; on-call and replacement employees; workers hired through temporary employment agencies; permanent employees with flexible hours; and temporary employees with flexible hours. This chapter highlights four of the categories which are more easily distinguished due to differences in age, educational attainment and working hours:

1. Temporary employees with prospects for permanent employment and fixed hours are often relatively young (25 to 35 years) and highly educated. They mostly work full time.
2. Permanent flex workers with flexible hours: this group has an equal male/female ratio. Almost half are under the age of 25, over half are no longer in education. They are relatively often employed by small trading companies and in the hotel and restaurant sector. Slightly under 54 percent work less than 20 hours per week.
3. Among workers hired through temporary employment agencies, the share of male workers (62 percent) and the share of workers with a non-western background (31 percent) are relatively high. They are often middle-aged, while half are medium-skilled workers. Over half work full time and 63 percent work for a large company, often in manufacturing or construction.
4. The group on-call and replacement workers includes 67 percent young people (15 to 25 years). Six in ten are in either secondary or tertiary education. Over half work less than 12 hours per week. Compared to other flex workers, relatively many work in the hotel and restaurant sector, in trade and in the care sector.



Gross wages much lower than when permanent

Temporary employees with prospects for permanent employment are the highest-earning among all flex workers. The average gross annual income from labour is 35.8 thousand euros (2015). This income is still almost 30 percent lower than among permanent employees (50.8 thousand euros). Measured by income level, the second highest-earning are temporary agency workers (24.1 thousand euros) and permanent employees without fixed hours (23.4 thousand euros). On-call workers are the lowest earning by far at 9.3 thousand euros annually.

Income is determined by multiple factors including age, educational attainment level, seniority and sector of industry. The number of hours worked determines income to a great extent, of course. Among flex workers who work full time, the permanent employees without fixed hours earn most at an average 64.1 thousand euros, but income differences are relatively minor when they are compared to the other types of contracts. The lower pay for on-call employees can be explained by looking at all these factors: they are often young (half are in secondary or tertiary education), most work part time and less than 20 hours per week, and they often work in lower-earning sectors such as retail trade and the hotel and restaurant sector. The highest earning flex workers tend to be the full time employees. Their age is also higher on average than most other flex workers.
The factors listed above – which partly determine annual income – are not exhaustive. Another important factor is occupation, while some flex workers are out of work for part of the year.



Few on-call and replacement workers are economically independent

Due to the fact that flex workers have (much) lower income levels than permanent employees, they are much more likely to be economically dependent. No more than 20 percent of the on-call and replacement workers are able to support themselves financially. This group includes many young students. Even when these students are excluded, only 35 percent of on-call and replacement workers are financially independent.

Temporary workers with flexible hours at higher risk of poverty

Someone’s financial situation may not only depend on his or her own income, but also the income of a partner or other family member. Even with a second income, those in flexible employment are at risk of poverty. Over 6 percent of flex workers are members of a low-income household, versus 2 percent of permanent employees. In other words, half of all employees living in low-income households are flex workers.