Hospitals fear wage wave – NRC

It was the largest action ever in academic hospitals. In October 2021, 279 departments from eight academic centers took part in the protest.

Shortly afterwards, a new collective labor agreement was drawn up. Less than a year later, pamphlets are again hanging in the academic hospitals. This time it says: “Inflation correction yes! A deal is a deal.”

There is unrest because the NFU, the branch association of academic hospitals, wants to get rid of one of the collective labor agreements: to raise wages from January 2023 at least in line with the inflation figure. “When making the agreement, no one took into account a war in Europe, with unforeseen dramatic consequences for energy prices and inflation,” said the NFU.

Hospitals are concerned about a wage surge. This does not only apply to university hospitals, ‘normal’ hospitals also fear it.

Negotiations for a new collective labor agreement for non-academic hospitals will start this Monday. The FNV has set a wage requirement of 12.5 percent. Hospitals are already saying that they cannot afford that.

It remains to be seen exactly how high the wave will be, but it is clear that there will be a wage wave. And that will have direct consequences for the health care premium.

Higher salary, higher premium

The irony is that everyone grants nurses higher wages. But that extra wage will also make life a bit more expensive for Dutch people through the premium. And every percent added also has major consequences for hospitals themselves; more than half of their budget is spent on staff.

Wouter Bos, the new CEO of health insurer Menzis, said last week on Radio 1 that citizens have to take into account a price increase of around 10 to 12 euros per month before 2023.

“90 percent of the increase in premiums can be explained by the fact that people in care want to earn more,” Bos said. “Rightly so. Prices are going up, and they have to pay that too.”

So with prices, wages and with them premiums also go up. The Spring Memorandum even expected that the average premium for basic insurance would continue to rise for a while. The current Rutte cabinet foresees an increase of 128 euros now, to 176 euros per month in 2027.

Other yardstick

A wage wave not only has consequences for the premium, but also makes it more difficult for hospitals themselves to remain financially healthy. Because insurers usually only compensate hospitals for part of the wage growth. They take a different measure: they look at the so-called OVA margin (Government Contribution to Labor Costs Development), a figure that the Central Planning Bureau calculates on the basis of the average estimated wage increase in the market. But that figure has been much lower for years than what unions of hospitals (with strikes) demand for wage increases.

The NFU even agreed in its collective labor agreement to give staff a wage increase by 2023 based on inflation (via the consumer price index) over 2022. That figure is not yet known, but it seems to be 10 percent or more. This means that UMCs will pay hundreds of millions extra to staff next year.

‘Double falls in the right direction’

The NFU wants to talk to the unions quickly in order to achieve “a realistic wage increase”. It refers to the government’s plans to repair purchasing power next year.

“They try to link that, but that has nothing to do with each other,” says FNV negotiator Elise Merlijn. According to Merlin, the conversations don’t have to last long. “The collective bargaining agreement is very clear. The dime just falls in the right direction for the employees this time.”

For hospitals, it is increasingly becoming a balancing act to remain financially healthy. They already have little return. In 2020, regular hospitals had an average return of 1.5 percent, and academic hospitals an return of 0.7 percent. They have to put that money aside to make investments, for example in sustainability.

Because the margins are so tight, a wage wave can quickly become a headache file for hospitals. Some fear that they will have to spend millions of euros extra on higher energy prices.

The new round of collective labor agreement negotiations will start on Monday for regular hospitals. The FNV wants to discuss, among other things, a better travel allowance and better agreements about accessibility services.

In addition, there is therefore a wage requirement of 12.5%. In a message on the site Ad Melkert, chairman of the sector association of hospitals (NVZ), will probably take an advance on the answer.

Healthcare workers are “a lot in demand”, writes Melkert. “Then the reward must also be in order. We don’t have that extra salary space at the moment. It is urgent that the House of Representatives close this gap during the upcoming budget discussion, especially now that the labor market is becoming increasingly tight.”