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From 26-28 August 2004 in Utrecht the Industrial Relations in Europe Conference (IREC) was held on governance issues in shifting industrial and employment relations. As part of the session 'potential and limits of national level socio-economic governance' this paper about the organization of transitional labour markets in the Netherlands was presented. Covenants are a relatively new phenomenon in Dutch industrial relations. They create a new role for the government and they allow for flexibility where contracts are too constraining and laws are ineffective. In the Netherlands most covenants are in the field of working conditions, health and safety, with proven their value. On matters of the labour market however, covenants are both more rare and less targeted. Yet the thesis of this paper is that the covenant may develop into a valuable mechanisms for coordinating the attempts to establish transitional labour markets. The opportunities are that in situations where there is a felt and shared need for discovering, exploring and working new ground the parties may join forces. The threats are that parties stick to what they already know and possess and derive their interests from that.
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