News item | 27-10-2023 | 17:27
The coalition agreement stipulates that the low-income benefit (LIV) will be abolished. The compensation for wage costs does not contribute enough to encourage employers to hire and retain people with a vulnerable labor market position. The released resources will be used, among other things, to structuralize the ‘wage cost advantage for the job speech target group’, and to mitigate the consequences of the abolition of the LIV for sheltered employment. This is stated in a bill that Minister Van Gennip (Social Affairs and Employment) is sending to the House of Representatives today.
In addition to the abolition of the LIV, the criteria for the wage cost benefit for reemployment of an employee with a work disability are expanded by the bill. Due to the current conditions of this wage cost benefit, fewer employees meet this requirement than the law intends. With the extension, employers will be eligible for wage cost benefits in more cases when they partially reassign an employee with a work disability to their own position or (fully or partially) elsewhere in the company.
The gradual abolition of the wage cost advantage for older employees will be added to the bill at a later date. An evaluation shows that the wage cost advantage for the elderly is limited. That is why the cabinet decided this spring to abolish the wage cost advantage for older employees as of January 1, 2026. This change is still being worked out in legislation. At the same time, the Senior Opportunities Vision is being used, among other things, to improve the image of seniors among employers and to further increase their labor market opportunities.
Background on low-income benefit
The ‘Wage Domain Compensations Act’ was introduced in 2017 to improve the labor market position of people with a low income, elderly people on benefits and people with disabilities. Part of this is the low-income benefit (LIV), a contribution to wage costs for employers. An effect evaluation from 2019 shows that the LIV makes only a limited contribution to encouraging employers to hire and retain people with a low income. That is why it was agreed in the coalition agreement to abolish the LIV.