Thanks to an age-dependent minimum wage, young Dutch workers are both over the hill and barely keeping their heads above water

Thanks to an age-dependent minimum wage, young Dutch workers are both over the hill and barely keeping their heads above water

In the Netherlands, young workers are paid lower wages than their older counterparts. It was a system borne out of good intentions but trade unionists are calling for minimum wage reform because “young people simply aren’t getting by.”

(Jeroen Jumelet/ANP via AFP)

In 2012, a woman interviewed for a job as a shop assistant at a Dordrecht branch of the clothing store Esprit in the western part of the Netherlands. Four days later, the store left her a voicemail message explaining she would not be hired. “Unfortunately, as someone who would work on weekends, you’re really too old and so too expensive for us. We’re looking for someone who’s younger than 23.”

The applicant was 25.

The woman was “too expensive” because, under the Dutch youth minimum wage system, young workers are paid lower wages than their older counterparts. At the time, the 25-year-old applicant would have legally been entitled to a minimum wage of €67 per day. A 22-year-old, on the other hand, would have earned the minimum wage applicable to their age bracket of €57 per day, representing a 15 per cent lower wage cost per day.

Although it might have made economic sense, a local human rights institute still ruled the company’s justification to reject her application due to her age unlawful age-based discrimination a year later. The woman was not named in the decision the Netherlands Institute for Human Rights published on its website. Because its decisions are not legally binding, the institute does not have the power to issue penalties or impose corrective measures.

According to Krystyna Bakhtina, a lecturer at the University of Amsterdam who wrote her PhD on age-based discrimination, the Dutch youth minimum wage system routinely leads to such situations, although it is rare for employers to leave such a smoking gun. Instead, such discrimination typically takes place during the pre-recruitment process, a stage at which it is typically difficult for applicants to gather testimonies or documents attesting to discrimination.

“Nobody is likely to write to you in email: ‘We will not hire you because you are more expensive,’” she tells Equal Times, adding that youth minimum wage or not, Dutch law doesn’t allow employers to recruit solely based on age. “It’s not legal,” she says. “But you cannot do anything about it.”

Bakhtina likens it to exploitation, putting the system on a par with the unpaid internships young people are expected to do in many high-profile and creative industries. “They don’t have a choice; they have to gain some experience; they have to earn some money to survive and they’re offered these conditions,” she says.

The Dutch youth minimum wage was borne out of good intentions. Local lawmakers introduced it in 1974 because workers below the age of 23 did not enjoy minimum legal protection when employed under a civil law employment contract. They sought to remedy this by introducing a separate, statutory minimum wage for young workers. Since then, the youth minimum wage has offered a staggered pathway to the country’s standard minimum wage, with a 20-year-old and an 18-year-old, for instance, currently entitled to 80 per cent and 50 per cent of the traditional minimum wage.

But five decades after its adoption, the system has past its sell-by date, says Marinus Jongman, vice-chair of the young workers’ section of the Dutch trade union FNV. “It cannot be explained, not in any way, why we still have this,” he tells Equal Times.

“The minimum youth wage has got to go”

If you go to a supermarket, hotel, restaurant, café or retail store in the Netherlands, you are likely to see only young people behind the counter, Jongman explains, and that’s because of the youth minimum wage. “Young people are used [by companies] to [spend] as little money as possible on wage costs. It’s really become a business model for them,” he says, adding that stories from union members suggested that managers tend not to tell young employees that their contract won’t be renewed because they have gotten too expensive. “But, in the end, you know who’s taking your place,’” he says. “Everyone tells the same story: a 19-year-old leaves and a 15 or 16-year-old takes his place.”

According to FNV Young & United, few countries in the European Union have a separate minimum wage for young workers, and those that do – for instance, Belgium and Luxembourg – have young workers earning far higher percentages of the traditional minimum wage than the Dutch system.

According to Jongman, the impact of this stratified remuneration system on young workers is huge. “Young people simply aren’t getting by,” he says, pointing to research from a Dutch research institute that suggests that 45 per cent of people aged between 18 and 25 are “financially unhealthy”. At the same time, Eurostat figures show that students in the Netherlands are more likely to have a part-time job than anywhere else in the EU. Pointing to the Dutch minimum youth wage as the link between these two contradictory findings, he says: “The minimum youth wage has got to go.”

There have been efforts to curtail the Dutch system before. In 2017, two years after FNV began a major awareness-raising campaign on the topic, Dutch lawmakers agreed to lower the age at which the traditional, higher minimum wage kicks in from 23 to 22. Another reform entered into effect two years later, when those aged 21 and over also became legally entitled to the country’s statutory minimum wage.

But FNV’s Jongman saw a big resistance to axe the system from 18 years onward, and he didn’t expect any changes to it as long as the current centre-right government, led by pro-business party VVD, was in power.

“They have always taken good care of the interests of companies. And, well, they simply don’t want [the youth minimum wage to be abolished]. It’s as simple as that.” The union’s current position is that the traditional minimum wage should kick in as soon as workers turn 18, and that workers aged 15, 16 and 17 should earn 50 per cent or more of the traditional minimum wage.

So, the union decided to embark on another strategy and, from 2019 onward, intensified efforts to abolish the minimum youth wage from collective labour agreements. (About 80 to 88 per cent of employees are covered by a collective labour agreement in the Netherlands, according to Jongman.) As evidenced by figures provided by Jongman, 348 out of 870 local collective labour agreements allowed companies to pay their younger workers less for the same work as their older colleagues in 2019. Today, only 283 do, marking a 19 per cent decrease, though he conceded that many of the companies covered by these agreements don’t employ many young people. In 2022, Swedish furniture giant Ikea, railway operator Nederlandse Spoorwegen and a branch of KLM Royal Dutch Airlines agreed to pay any worker aged 18 or over the legal minimum wage as part of newly concluded collective labour agreements with FNV.

Encouraging low youth unemployment and continued education

Some employers haven’t needed to be prodded by unions to scrap the system. As early as 2016, Amsterdam’s municipal council adopted a proposal from the Greens, the Socialist Party and Partij van de Ouderen, a party representing the interests of those aged 50 and over, to pay anyone aged between 18 and 23 the same wages as their older colleagues.

Many local lawmakers and economic experts have argued against abolishing the system because it would reduce employment by making it more costly for companies to hire young workers. Asked how this decision impacted Amsterdam’s budget, Anouk Panman, a spokesperson for the municipality, noted that its wage costs frequently increase, for instance as a result of new collective labour agreements, and that they were forced to find a way to balance the budget as a result of the increased salary costs. “You could argue that abolishing the minimum youth wage had a negative impact on our budget,” she concedes. “The municipal council deliberately chose to do this because it prioritises properly rewarding young employees and attracting young talent.”

She adds: “Our assessment is that this measure has made the municipality of Amsterdam more attractive as an employer, because it means younger employees enter at higher salary scales and receive more money.”

Contacted for comment, the Dutch employers’ federation VNO-NCW noted that they called on the Dutch Ministry of Social Affairs and Employment to raise the statutory minimum wage in 2021 in an advisory report published by the Social and Economic Council of the Netherlands, a body that groups employers, employees and independent experts, and that advises the Dutch government on social and economic policy. “The cabinet has done this at present and this is also rippling through in the youth minimum wage,” spokesperson Edwin van Scherrenburg said in an email. Pointing out that the reverse was true for many other EU countries, he said: “The current youth minimum wage scheme moreover results in relatively low youth unemployment in the Netherlands and better opportunities for young people on the labour market. It contributes to the longest possible uptake of education and that is key.”

A spokesperson for the Dutch Ministry of Social Affairs and Employment told Equal Times that the legal minimum wage was deliberately set to stimulate young people to pursue degrees and follow-on degrees, which he said improve a person’s labour position and contribute to their career progression. “This is why a young person would ideally spend the majority of their time on continuing their studies rather than on full-time work,” the spokesperson said, adding that young people tend to have lower basic expenses because they often still live with parents or caregivers. “Abolishing the minimum youth wage could make it more difficult for young people to find a job or side job because it would increase costs for employers. All of these reasons together justify the importance of the minimum youth wage in the government’s view.”

In addition to political support and buy-in from companies, abolishing the Dutch youth minimum wage system will also require a shift in mindset among a perhaps more unlikely cohort of people – namely young workers themselves. “Because this system has existed for so long in the Netherlands, a lot of people grew up with it and find it very normal,” Jongman says, adding that he was paid €3 per hour as a 16-year-old when he worked at a supermarket just a few years ago. “And the notion that something can be done about this – well, that’s still a little complicated.”

This was echoed by Bakhtina from the University of Amsterdam, who notes that conversations she has had with students who work in bars suggest that they don’t see any issue with their lower wages; and that when they do, they don’t know how to enforce their rights.

At the end of the day, and whether young people agree or not, she says, the Dutch system flies in the face of a key principle under international labour standards: that of equal pay for equal work. “If you have more skills or qualifications or expertise, you should be better remunerated,” Bakhtina says. “But not just because you are older.”