• There appears to be a kind of trade-off between policy options. This does not mean that governments should opt for one policy road and ignore other possibilities. A system with sufficiently flexible legislation would be beneficial to labour market dynamics and increase the chances for “outsiders” to obtain permanent contracts. This could be combined with a range of flexible contract forms. Such contracts would not only be beneficial for employers, but also enhance flexibility for workers (fostering combinations of work and private life) and provide a stepping stone for workers with a disadvantage on the labour market.

Developments in the Netherlands in the early 1980's
In the early 1980's, the Dutch economy was in a bad state (negative economic growth, a steep rise unemployment, growing public deficits, and high inflation). Government and the social partners at the time realized that a policy response was necessary. In the Agreement of Wassenaar of 1982, the central organisations of employers and employees agreed on two essential objectives: i) a redistribution of employment through various forms of working time reduction ii) which should not be accompanied by wage increases in order to restore company profits. This combination of working time reduction and wage moderation was later seen as an important condition for the recovery of the Dutch economy. For the purpose of this conference, its importance for the development of flexible forms of employment is particularly relevant

Working time reduction
• A reduction of hours worked on an annual basis did not have the intended effect (redistribution of labour) but rather was used by employers a means to reduce overcapacity without massive redundancies. In the years since 1985, the attention for working time reduction through part-time work increased. Through agreements in Collective Labour Agreements and later through legislation, part-time work became more common.
• The lesson drawn by the Netherlands is that reductions in working time are not a sustainable solution to unemployment. On the contrary, the challenge for the Netherlands is to increase labour force participation in order to achieve a higher and sustainable growth path and thereby a low unemployment rate.

Part-time work
• The share of people on part-time employment is particularly high in the Netherlands at 40 %. For women, this percentage is even just above 70 %, but also for men it is relatively high at about 20 %. Part-time employment as a proportion of total employment rose strongly between 1983 and 2001: from 14% to 33% according to OECD-statistics

• The rise in part-time employment in the Netherlands can be explained both by cultural and policy factors. Cultural factors relate to the changing views of society on the role of women. Women participated in high-level education and wanted to work, but since they also took care for their families, they had a strong preference for part-time work (this pull factor was enforced by a lack of adequate childcare facilities). The participation of women, which had been stable since the start of the twentieth century, increased from 26 % in 1975 to 54 % in 2002.
• Government policies have also been conducive to the growth in part-time work (push factor). For example, in the mid 1980's working hours and wage level thresholds unfavourable to part-time work were removed in various social security laws.
• During the 1990's, the government adopted three laws which govern the treatment of part-time workers:
In 1996, the general principle of equal treatment regardless of working time was introduced in labour law.
The 1996 Working Hours Act increases the possibilities for employers and employees to come to an agreement regarding working hours.
In July 2000, the Working Hours Adjustment Act was introduced which gives employees (in companies of more than 10 persons) the legal right to either increase or reduce their working hours. The difference with Dutch national statistics arises because the latter also take into account the large part-time jobs of 30-35 hours per week.

Temporary agency work
Since the early 1990's, the share TWA-contracts (TWA stands for temporary work agencies) in all flexible contracts has risen from approximately 20% to 40% (in 2001). Currently, TWA represents 60% of the volume of flexible hours worked in The Netherlands. Despite a somewhat restricted environment, agency work has grown strongly. In an environment of relatively tight labour legislation, high unemployment, and a significant unemployment trap in the 1980's, agency work filled a need for flexible contracts. The strongest growth occurred in the 1980's and the 1990's. In particular after the recession of the early 1990's agency work boomed.
In 1998 and 1999 two laws changed the scene for temporary work agencies and agency workers: the law on the allocation of workers through intermediaries (WAADI, 1998) which increased flexibility for agencies and the Law on Flexibility and Security (1999) which increased security for agency workers. The main changes are:
• Agencies no longer need a license and can offer workers in all sectors (accept when they can be used to break a strike);
• There is no longer a maximum period for lending out a worker;
• Agency workers are employees of the agency; their contract is governed by labour law and they are now eligible for fringe benefits;

• Agency workers have the possibility to obtain a permanent contract with the agency.
The latter is probably the most significant change. This originates from the law on flexibility and security, or more in particular the three-times-three rule. This rule had a dual objective:
• On the one hand, the possibilities for employers to renew a temporary contract increased;
• At the same time, temporary contracts could not be renewed indefinitely .
In general one can state that temporary agency work is attractive from the perspective of the user company (reduce search costs and avoid firing costs, handle temporary peaks in production) and the employee (reconcile work and private life in a flexible manner and gain work experience). For people at a disadvantage in the labour market, agency work can provide a stepping stone to permanent employment. OECD figures (Employment Outlook, July 2002) indicate that 50 % of temporary workers move to a permanent job within one year and 65 % do so within two years.
On the other hand, employers have to pay a fee to the agency. Depending on the estimation of search costs and firing costs, this may make temporary agencies an expensive option. The next few years will make clear the effect of the flexibility and security legislation on the demand for temporary agency workers. If agencies charge a higher fee, this may decrease the attractiveness of agency workers.
It would be a shame if increased security would hurt the attractiveness of agency workers. In the economic upturn of the 1990's, agency work boomed, indicating that it was an important channel for labour supply. It amounted to 40 percent of total employment growth between 1990 and 2000 (OECD figures).

Things to keep in mind
Flexible employment contracts are a way to increase flexibility for employers and employees on the labour market. In the Netherlands , this type of flexibility is combined with a careful balance of rights and obligations. One must note that there are alternative roads to flexibility, in particular through relaxing labour market legislation (the Danish system is an interesting case with the combination of flexibility through limited legislation and security through the social security system). The relative position between insiders and outsiders requires constant attention when deciding on a mix between the different policies.
Part-time work is a means for reconciling work and family life and responds to a particular need in the Netherlands . The presence of part-time labour in the Netherlands is a consequence of both push factors (preferences) and pull factors (policies). It can foster a high participation rate, measured in persons. One must not lose sight of other means to reconcile these obligations (child care, leave schemes) in an environment where increased labour participation in terms of full-time equivalents is an important policy goal
Temporary agency work can be a stepping stone to regular employment on the labour market (in particular for disadvantaged groups) and has been an important channel for labour supply growth in the Netherlands . It provides flexibility for both employers and employees. A careful design of the balance between flexibility and security is necessary to make the system attractive.