Downward convergence between negotiated wages and the minimum wage: The case of the Netherlands

This chapter starts with a general discussion of the legal framework of the statutory minimum wage and its uprating mechanism. It describes the evolution of the minimum wage rate over time, compared to the overall wage developments, collectively negotiated wage increases and labour productivity. The chapter demonstrates that the lowering of the relative level of the lowest negotiated wage rates has created room for a strong increase of low-wage employment in the Netherlands – a development encouraged by the Dutch government during the 1990s. With the introduction of the minimum wage, the idea was that the adult minimum wage ought to provide a sufficient income for a family to live on. The chapter analyses the evolution of the lowest collectively negotiated wage rates and the interaction with the statutory minimum wage. It focuses on the negotiations in three specific sectors: the cleaning sector, supermarkets, and the metal industry.