The year of 2014 is ending and the labour market in The Netherlands has slowly but steadily improved. Data from the Central Bureau voor de Statistiek (CBS) Nederland paints a positive picture in terms of the Dutch economy and employment sector on the whole in 2014 – unemployment figures have dropped while labour participation is still on the rise.
Numbers from CBS show that the gross labour participation (seasonally adjusted) from 15-65 years of age from January 2014 to October 2014 went from 71.7% to 71.9%. Also, the unemployment rate dropped from 8.3% in 2013 to 7.8% in October 2014.
The number of job vacancies also increased across many sectors – seasonally adjusted vacancies went from 95,100 in the 3rd quarter of 2013 to 112,600 in the 3rd quarter of this year. Of the various sectors, Industry and energy, Commercial services, Business services, Wholesale and retail trade, Manufacturing, Information and communication, Private firms and Government, have seen the most increase in the number of job vacancies in comparison from a year ago. The Health and social work sector did improve from the third quarter of 2013 to same quarter in 2014 but it has decreased drastically from 2012, when 15,300 jobs were available and only 12,900 vacancies were available at the end of the third quarter 2014.
Youth unemployment (under 25s) has been a major issue across Europe but The Netherlands has one of the lowest rates -- Eurostat shows a decrease from 11.6% in October 2013 to 9.7% a year later. However, within this labour group, young people with low educational qualifications have the most difficulty finding a job. CBS data revealed that nearly 100,000 young people between the ages of 15-26, who no longer participated in education or training programmes were unemployed in the first quarter of 2014. Also, only 31% of young unemployed with low education or who have stopped studying had found work after three months. This was the lowest figure in the past 10 years.
The growth of self-employed people (ZZP’ers) is an issue that has caused some concern for the Dutch government. According to CBS, there were a total of 784,000 of self-employed people in 2013 and at the end of the third quarter of 2014, there were 809,000.
Financieele Dagblad stated in November that the rise in the number of self-employed people costs the government money because self-employed people pay less tax. As such, the cabinet plans to abolish the tax rebate for small entrepreneurs (zelfsstandigenaftrek), which costs the government about €1.8 billion in lost tax revenue. Dutch Finance Minister, Jeroen Dijsselbloem told RTLZ that self-employed people have few social securities but do enjoy relatively high income tax breaks. A proposal was submitted to the cabinet for an independent committee to investigate the position of self-employed people in the labour market.
The road ahead in 2015
Organisations and employees alike need to take note of the various policies that will come into effect in 2015 that will affect the Dutch labour market. The new policies will consist of regulations for worker protection, promoting work for low-skilled workers and persons with a disability, new tax measures and a boost for SMEs.
Labour laws:
The Work and Security Act (Wet Werk en Zekerheid), which will take effect in three main stages ( 1 Jan 2015, 1 Jul 2015 and 1 Jan 2016), will modernise the regulation of employment protection for workers on open-ended contracts; provide more protection to temporary workers; and reduce the maximum duration of publicly provided unemployment benefits beginning in 2016.
This Act address several issues but a couple of them should be noted: Starting 1 July, dismissal for economic or business reasons or due to long-term disability will go through the UWV and termination for personal or performance reasons will go through the court system. Also, a statutory entitlement will be created to transition pay for employees with at least two years of service, that will be payable on dismissal or at the end of fixed-term employment.
The Participation Act Participatiewet is another major policy that will affect employers and employees across all sectors when it comes into effect in 1 January, 2015. The intention is to help promote work for people at the margin of the labour market such as low-skilled workers and persons with a disability, including through the use of wage subsidies.
This law is also part of a decentralising move by the central government as municipal governments will take over the reins from it to implementing measures. The government plans to create 125,000 new jobs by 2026; 100,000 in the private sector and 25,000 in the government sector.
SMEs receive funding:
SMEs will receive incentives and help from the Dutch government in 2015. The Budget by the Finance Minister this year showed that a ‘Special Envoy’ has been set up to help start-ups and growing businesses. This Envoy will strengthen the international position of Dutch start-ups and growing businesses and will encourage entrepreneurs from other countries to set up business in The Netherlands.
The financial scope for SMEs will also be widened by a range of measures that can generate additional financing of €2.5 billion. Campaigns focusing on alternative forms of financing will be launched to increase the options available. Also, to boost innovation, the Dutch government will set up a Future Fund with a €200 million start-up capital. This fund will co-finance innovative SMEs and basic and applied research. In addition, the budget for involving innovative SMEs in top sector policy will be raised to €30 million, with a focus on finding answers to societal challenges.
Reducing tax burden on labour:
To alleviate tax burden on labour, the Dutch cabinet will set aside sum of €1 billion to reduce the lowest rate of income tax and increase the employed person’s tax credit in order to make work more profitable.
An employed person’s tax credit will increase and €5 million will be set aside for this measure on a structural basis. This incentive is in addition to the increase in the employed person’s tax credit announced in the 2014 Tax Plan. In total, the benefit to employees will rise to about €500.
Also, the lowest rate of income tax will be 36.5% next year and there will be a reduction in the general tax credit next year. People with incomes in excess of €20,000 will be entitled to a lower general tax credit.
By Priya de Langen