‘Create a deregulated boom town’
10 August 2006 – The Netherlands must create a rule-free
zone in order to achieve the economic success of cities such as
Dubai and Singapore. This was argued by Mike Ackermans, former editor
in chief of FEM Business magazine, in yesterday’s NRC Handelsblad.
Last month, he named Amsterdam as the place where such a zone should
be created, but for now this appears to be wishful thinking.
Ackermans wants a zone without minimum wage, detailed health and
safety regulations, zoning plans, environmental permits, employment
protection and collective agreements. There should be general rules
with regard to welfare and environmental protection, and companies
that break these rules must be punished severely. In cities such
as Dubai, such an approach yields an economic growth of up to twenty
percent per year.
FEM Business has launched a campaign to promote the idea in the
Netherlands. Mayor Alexander Sakkers wants a zone in Eindhoven,
Commissioner Hans Alders wants careful experiments in the Groningen
Province and Akzo Nobel CEO Hans Wijers wants to create a rule-free
zone in one of Amsterdam’s districts.
Employers’ organisation VNO-NCW is enthusiastic as well. This
does not apply to the Netherlands Trade Union Confederation (FNV):
“We think that such a zone in the Netherlands is a bad idea”,
FEM Business quoted a spokesperson as saying. “Experiences
elsewhere are very negative. Take China. The labour conditions are
bad, people work seven days a week”. According to Ackermans,
this criticism shows the ‘conservatism of the trade union
movement in the Netherlands’.
Economic Affairs State Secretary Karien van Gennip has her doubts
as well. She has recently reached an agreement with the Technical
Universities to create opportunity zones for starting businesses,
but here it regards providing support rather than deregulation.
Further, at the end of last year the so-called Rotterdam Act was
passed. Large cities may turn disadvantaged neighbourhoods into
‘opportunity zones’ where businesses do not have to
pay property taxes. In Amsterdam, twenty neighbourhoods might qualify,
including the Kolenkit, the Diamantbuurt, the Indische buurt, Banne
Buiksloot and Osdorp-Midden.
It is unclear whether this would make a difference. University
of Amsterdam’s Jan Rath four years ago summed up the experiences
with similar projects in the USA and the UK: “While numerous
studies found evidence of employment growth, this growth could largely
be explained by (‘administrative’) company relocations”.
According to Rath, the disappointing results can be explained by
the fact that deregulation remained limited. “For obvious
reasons, laws and regulations regarding environmental protection,
health and safety, child labour and the minimum wage were not relaxed”.
For Ackermans, it is far from obvious that such regulations be left
unchanged. His inspiration comes not from the Anglo-Saxon countries,
but from Asia, Central America, India and the Middle East.
Critics point to appalling labour conditions and other abuses in
these countries’ rule-free zones. According to Ackermans,
however, exploitation in the Netherlands will not be much of a problem,
if only because employees here have the right to organise.
Another criticism is that rule-free zones with their low taxes
prey on the rest of society. The surrounding area is drained of
employment and companies in the rule-free zone are artificially
kept alive by hidden subsidies. Meanwhile, the government looses
out on tax income, which means that public services are eroded.
Recently, Alderman Lodewijk Asscher presented his plans to turn
Amsterdam into an economic ‘top city’. These plans are
all about city marketing and supporting businesses, and contain
no references whatsoever to rule-free zones. All in all, it seems
unlikely that Ackermans’ plans will be seriously considered
in the capital any time soon.
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