Source: CleanTotal
On 20 September, it is Budget Day and the Budget Memorandum will be presented. It is clear from the leaked information that there will be a purchasing power repair. This repair will reportedly involve 15 billion euros. The minimum wage, as well as the related state pension and social assistance, will rise by 10%. What effect will this increase have on the cleaning sector?
Written by Henk Cornelisse
Recent minimum wage developments
In the coalition agreement “Looking out for each other, looking forward to the future”, the Cabinet decided in December 2021 to increase the statutory minimum wage (WML) by 7.5%, phased 3.75% in the year 2024 and 3.615% in the year 2025. Current events forced the Cabinet to come up with an adjustment in the Spring Memorandum 2022 and bring forward the increase in the WML. It became 2.5% by January 2023, 2.5% by January 2024 and 2.32% by January 2025 [For comparison cleaning collective agreement: April 2022: 3.4%, April,2023 2.75% and April 2024 1.5%. This does not include increase in end-of-year bonus ed].
It is expected that in the upcoming Budget Memorandum, an increase in the WML by 10% all at once with effect from January 2023 will be announced. This alongside other tax- and pension-related issues, among others. To what extent this increase in the WML and the other measures will be sufficient to fully fix purchasing power seems like wishful thinking for now. As our Prime Minister Rutte says about this, “We will all get a bit poorer.”
Unique selling point
The cleaning industry has been coquetting for years with the wide gap in the wage level of its collective agreement versus the WML. This has so far given the industry quite an edge over other segments such as retail and hospitality. The proposed sharp increase in the minimum wage will reduce this lead considerably. A certain challenge in an already overstrained labour market.
CNV is realistic
CNV director Jan Kampherbeek shows realism: “Formally, the WML increase has no impact on the cleaning collective agreement. After all, hourly wages in cleaning remain slightly higher on balance. The argument of Schoonmakend Nederland that cleaners earn 120% more than the WML has been nonsense to me for years. After all, wages are determined by the number of hours x the hourly wage! The government is now clearly putting the ball in the employers” court to come up with creative solutions to deal with the labour market shortage. Where possible, we support our members in achieving above-collaboration results. We see great initiatives emerging. Such as recreation parks that, following the necessary action by cleaners, have increased travel costs. Unfortunately, some parks persist in not doing so (yet). Or a cleaning company in Amsterdam [Libelle ed.] that already implemented the hourly wage increase from 1 January 2023 as of 1 September this year."
Such measures are also badly needed, according to Kampherbeek. Complaints are increasingly reaching him that due to the labour market shortage, the work pressure is again rising sharply as there are too few colleagues: “What I also notice is an increase in absenteeism due to the rise in work pressure in conjunction with the financial problems many a cleaner is facing. Surely this should be reason enough for employers to do something extra for their employees? Of course, we will continue to assist people if things really get out of hand.”
SieV: Collective agreement increases are not enough
Raymond Kouwenberg, chairman SieV, says he is following the proposed measures closely: “It is important to remain careful before drawing conclusions. Let's avoid unnecessary unrest. Good to join forces with Schoonmakend Nederland and the unions in this. Because our employees are mostly at the base of our society, the higher retail/energy prices hit hard. We notice this through our supporters as well as among employees in our own cleaning companies.”
“Extra income is badly needed in these times”
Overall, it finds SieV that work must continue to pay and the industry must remain attractive to work in. “The recent collective bargaining increases are no longer sufficient to compensate for rapidly rising prices. Extra income is badly needed in these times. Cleaning workers now need extra income more than secondary or tertiary conditions.”
Raising wages temporarily has far-reaching consequences, according to the new SieV president. “When taking over a project, the losing company has to deduct the difference. Apart from the fact that the taxman also shares in the interim by collecting extra tax. It is wise for us as an industry to research this in advance to see what may or may not be possible, temporarily or otherwise, to help our employees, companies and customers. Good examples from the past can help.”
Moreover, the chairman points out that cleaning companies have also been confronted with various cost increases in the recent period, such as cleaning materials and resources, energy, transport costs, etc., which have not (yet) been passed on to the clients: “Of the already competitive rates, there is little room left to do healthy business, let alone increase salaries sharply. It would therefore be wise to work with the unions to also look at the possibilities with clients. It is the clients who can provide financial leeway.”
According to SieV, it will be ideal if the tax authorities are a bit more generous by, for example, temporarily widening the WKR (working expenses scheme) and/or giving extra work tax favourable treatment. Or reducing the first tax bracket so that more net remains immediately: “Temporarily reducing taxes seems easy, however, the Tax Administration's software system turns out to be so outdated that such temporary measures are impossible to implement in the short term.”
As other examples that could be made possible, SieV mentions:
- actively take holiday hours for cash,
- make more hours where the compulsory contract increase scheme temporarily does not apply (the 13-week period).
“Labour shortages have also hit our industry and have been a concern for entrepreneurs for some time. Incidentally, the accelerated increase in the minimum wage also means that working from benefits, with all the allowances, will not become more attractive. After all, benefits rise as the minimum wage increases. All in all, a comprehensive and complex whole that we need to tackle together, temporarily but also structurally,” Kouwenberg concludes.
FNV: We can't wait for minimum wage increase
FNV driver Renate Bos shows fighting spirit: “The increase in the WML threatens to make the cleaning sector more unattractive to work in. It is now up to the employers in this segment to solve it. But many members are knocking on our door asking ‘the minimum wage is increasing by 10%, what does this mean for us?’ With rising costs, many people are short of money.”
The FNV executive refers to the call by FNV chairman Elzinga and also by the cabinet to raise wages, and now says he will first wait for the reaction of employers in the industry before deciding on the union's strategy: “We see that here and there employers are already doing what is necessary to help their employees. Our people are also taking actions themselves, achieving success at Schiphol Airport and here and there in hotels, for example. But it is still far too little.” If the industry fails to further accommodate the cleaners themselves, a response from FNV can be expected: “We cannot wait until the new collective agreement negotiations in 2024.”
Cleaning Netherlands: Distinctiveness lapses
The spokesperson for Cleaning Netherlands also confirms to have taken note of the proposed decisions the cabinet intends to take: “Of course, it is important to first wait for the actual plans to be presented on Budget Day.”
The intention to raise the minimum wage by 10% does not yet hit the cleaning CAO wages in cost, according to Schoonmakend Nederland: “The CAO wages start at 110% WML. But Clean Totaal's comments about the unique selling point are justified; our sector wants to be distinctive compared to other sectors and that distinction will soon be lost. Reason to think carefully about whether and how this will affect our sector.” When the whole package of measures is known on Budget Day, the employers' organisation will make a proper analysis on it, it said.
“We desperately need to rejuvenate”
The labour market shortage has been high on the agenda of Schoonmakend Nederland for some time now: “Due to the corona pandemic, many colleagues have left who we would like to see back. In addition, we desperately need to rejuvenate to be able to deliver good cleaning in the future too. This is one of the reasons why we are launching our labour market campaign this month Schoonmaakjerijk. And us mobility centre works hard on inflow and advancement to retain as many employees as possible for the industry.”
The trade association regularly receives questions from its members about whether and how they can also do more as a sector, financially or otherwise: “Many employers are already doing that themselves, also in relation to the increased cost of living and fuel. We are constantly discussing with our members whether we should also do something collectively. Given the diversity and size of the sector, a process that needs to be gone through carefully. Naturally, we will involve our members as and when progress is made on this.“
Quite a challenge
The industry faces quite a challenge once the 10% increase in WML becomes a reality. This in conjunction with labour market issues. The gap between, say, welfare benefits or working in certain segments will be narrowed. The pond from which to fish will be less fishy due to such an increase in the WML. More important than ever then is the bait with which to fish.
All sails will have to be pulled out to avoid falling behind the net.
English (UK)