COMMISSION STAFF WORKING DOCUMENT Country Report The Netherlands 2019 Including an In-Depth Review on the prevention and correction of macroeconomic imbalances Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2019 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011
Date: 2019-02-27
Institutions: European Commission, Secretariat-General
Subjects: Netherlands, economic situation, education, investment, labour market, macroeconomics, public finance, social policy, structural adjustment, tax system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 27.2.2019  SWD(2019) 1018 final  COMMISSION STAFF WORKING DOCUMENT Country Report The Netherlands 2019     Including an In-Depth Review on the prevention and correction of macroeconomic imbalances Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROGROUP 2019 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011 {COM(2019) 150 final}  
 
 
CONTENTS 

Executive summary 

1.  Economic situation and outlook 

2.  Progress with country-specific recommendations 

3.  Summary of the main findings from the MIP in-depth review 

3.1. 

Imbalances and their gravity 

3.2.  Evolution, prospects and policy responses 

3.3.  Overall assessment 

4.  Reform priorities 

4.1.  Public finances and taxation 

4.2.  Financial sector 

4.3.  Labour market, education and social policies 

4.4.   Competitiveness reforms and investment 

Annex A: Overview table 

Annex B: Commission Debt Sustainability Analysis and fiscal risks 

Annex C: Standard Tables 

Annex D: Investment guidance on cohesion policy funding 2021-2027 for the 

Netherlands 

References 

LIST OF TABLES 

Table 1.1: 

Key economic and financial indicators -the Netherlands 

Table 2.1: 

Assessment of 2018 CSR implementation 

Table 3.1: 

Outward spill-over heatmap for the Netherlands 

Table 3.2: 

MIP assessment matrix 

Table 4.2.1: 

Financial soundness indicators, all banks in the Netherlands 

Table C.1: 

Financial market indicators 

Table C.2: 

Headline Social Scoreboard indicators 

Table C.3: 

Labour market and education indicators 

Table C.4: 

Social inclusion and health indicators 

1 

4 

8 

13 

17 

17 

18 

18 

22 

22 

26 

37 

48 

57 

60 

61 

67 

70 

12 

15 

18 

19 

26 

61 

62 

63 

64 

 
 
 
Table C.5: 

Product market performance and policy indicators 

Table C.6: 

Green growth 

LIST OF GRAPHS 

Graph 1.1:  GDP growth 

Graph 1.2: 

Investment by sector, 2017 

Graph 1.3: 

Labour market trends 

Graph 1.4: 

Actual and predicted wage growth based on fundamentals 

Graph 1.5: 

Change in employment by contract type (thousands) 

Graph 1.6: 

Temporary employment and self-employment without employees, % of total 

employment 

Graph 1.7: 

Trends in unit labour costs and components 

Graph 1.8:  General government budget balance 

Graph 1.9: 

Net lending by sector (% of GDP) 

Graph 2.1:  Overall multi-annual implementation of 2011-2018 CSRs to date 

Graph 4.1.1:  Change in the structural balance vs. output gap, 2019, euro area Member States 

Graph 4.1.2:  Long term care expenditure 

Graph 4.1.3:  Fiscal policy stance, 1997-2020 

Graph 4.1.4:  Government expenditure by function (% of total government expenditure) 

Graph 4.2.1:  Credit growth 

Graph 4.2.2:  Private debt 

Graph 4.2.3:  Disaggregation of NFC debt 

Graph 4.2.4:  Household debt (2017, % of GDP) 

Graph 4.2.5:  House price valuation indicators 

Graph 4.2.6:  House prices and development of new dwellings 

Graph 4.2.7:  Pension contributions and payments 

Graph 4.2.8:  Pension contribution (current and actuarially fair) 

Graph 4.2.9:  Current account balance 

Graph 4.2.10:  Net lending by sector 

Graph 4.2.11:  Net lending by non-financial corporations 

Graph 4.2.12:  Household balance sheets (% of GDP) 

Graph 4.3.1:  Labour market indicators 

Graph 4.3.2:  Beveridge curve 

Graph 4.3.3:  Vacancy rate by sector (%, 2018Q3) 

Graph 4.3.4:  Flattening of the Philips curve 

Graph 4.3.5:  Shortfall in wage growth (pps) and combined share of temporary employees and self-

employed without employees (% of the workforce) 

Graph 4.3.6: 

Transition rate from temporary to permanent employee by educational level 

Graph 4.3.7:  Hours worked and share of part-time work for women in 2007 and 2017 

2 

65 

66 

8 

8 

9 

10 

10 

10 

11 

11 

11 

13 

22 

24 

25 

25 

27 

28 

28 

29 

30 

31 

31 

32 

33 

33 

34 

35 

37 

37 

37 

38 

39 

39 

42 

 
 
 
Graph 4.3.8:  Employment rate of native born with migrant background (two foreign born parents) 

compared to native-born with native background (two native born parents) in the 

Netherlands and other EU MS (15-34), 2016-17 

Graph 4.3.9: 

Impact of social transfers on reducing the at-risk of poverty rate (%) and the at-risk of 

poverty rate (%) (2005-2017) 

Graph 4.4.1: 

Investment share by sectors (2017) 

Graph 4.4.2:  Productivity level compared to EU average 

Graph 4.4.3:  Productivity by sector (2015) 

Graph 4.4.4:  Business expenditure on R&D, 2015 

LIST OF BOXES 

Box 2.1: EU funds help overcome structural challenges and foster development in the Netherlands 

Box 3.1: Spill-overs of structural reforms – the Netherlands 

Box 4.3.1: Monitoring performance in light of the European Pillar of Social Rights 

Box 4.4.1: Circular economy 

Box 4.4.2: Investment challenges and reforms 

44 

45 

48 

49 

49 

50 

16 
21 
40 
52 
54 

3 

 
 
 
 
 
EXECUTIVE SUMMARY 

While growth is moderating, the still favourable 
economic  environment  provides  a  window  of 
opportunity  to  sustain  the  reform  momentum. 
This includes tackling long-term challenges in the 
housing  market,  labour  market  and  pensions(1). 
Recent structural reforms have borne fruit in terms 
of  a  job-rich  recovery.  Although  measures  to 
reduce  the  debt  bias  for  households  have  been 
adopted, incentives to incur debt remain. While the 
labour  market  continues  to  recover,  challenges 
with respect to labour market segmentation and the 
pension system remain. 

Domestic  demand  continues  to  drive  economic 
growth. In 2018, GDP increased by 2.5%. In 2019 
and 2020, growth is projected to moderate to 1.7% 
for  both  years.  Next  to  household  consumption, 
government  expenditure  is  providing  a  temporary 
boost  to  short-term  GDP  growth.  Measures  to 
reduce  the  wedge  on  labour  —  the  difference 
between workers’ take-home pay and what it costs 
to  employ  them  —  and  R&D  investment  support 
potential  growth.  With  headline  surpluses  and 
government debt declining to below 50% of  GDP 
in  2019,  government  finances  are  in  good  shape. 
However, 
in  public 
expenditure  on  long  term  care  points  to  medium 
risks in long-term sustainability. 

the  projected 

increase 

Relatively strong investment growth is expected 
to  soften.  Reaching  21%  of  GDP  in  2018,  the 
investment  rate  is  broadly  in  line  with  the  euro 
area  average.  The  share  of  public  investment  is 
stabilising  at  around  3.5%  of  GDP,  significantly 
below pre-crisis levels but well above the euro area 
average. Household and business investment is set 
to  continue  growing,  albeit  less  than  in  recent 
investment  outlook  are 
years.  Risks 

the 

to 

(1)  This report assesses the Netherlands’ economy in the light 
of  the  European  Commission’s  Annual  Growth  Survey 
published  on  21 November  2018.  In  the  survey,  the 
Commission  calls  on  EU  Member  States  to  implement 
structural  reforms  to  make  the  European  economy  more 
productive,  resilient  and  inclusive.  In  doing  so,  Member 
States  should  focus  their  efforts  on  the  three  elements  of 
the  virtuous  triangle  of  economic  policy  —  delivering 
investment,  focusing  reforms  efforts  on 
high-quality 
productivity growth, inclusiveness and institutional quality 
and  ensuring  macroeconomic  stability  and  sound  public 
finance.  At  the  same  time,  the  Commission  published  the 
Alert  Mechanism  Report  (AMR)  that  initiated  the  eighth 
round  of  the  macroeconomic  imbalance  procedure.  The 
AMR  found  that  the  Netherlands  warranted  an  in-depth 
review, which is presented in this report. 

4 

relatively  high  given  the  uncertain  international 
economic environment. 

the 

level  of  unemployment, 

Job  creation  continued  in  the  second  half  of 
2018,  driving  down  the  unemployment  rate  to 
pre-crisis  lows.  While  the  labour  market  has 
recovered from the crisis in terms of employment, 
the 
jobs  and 
composition  of  the  labour  force  has  changed  over 
the past decade. The share of permanent contracts 
has  declined,  with  a  marked  increase  in  flexible 
contracts  and  self-employment.  While  flexible 
work arrangements allow for an efficient matching 
between  labour  supply  and  demand,  an  overly 
flexible  labour  market  with  high  self-employment 
contains 
as 
(human 
in  human 
underinvestment 
knowledge  and/or  skills)  and  underinsurance  for 
old-age, disability and sickness. 

social-economic 

capital 

risks, 

such 

Wage  growth  remains  moderate.  Over  a  longer 
period,  it  has  been  below  the  level  that  could  be 
expected  based  on  fundamental  drivers  such  as 
unemployment,  productivity  and  inflation.  This 
flexible 
may  partly  be  due 
employment  as  temporary  employees  earn  less  in 
general.  A  further  tightening  of the labour  market 
is  expected  to  lead  to  an  acceleration  of  wage 
growth in 2019 and 2020. 

to  growth 

in 

Investments  in  Research  and  Development, 
human  capital,  climate  and  energy  are  needed 
to support productivity growth and  maintain a 
strong  innovation  capacity.  While  the  research 
and development investment intensity rose to over 
2%,  it  is  still  well  below  the  2.5%  national  target 
and the level of top performers. In terms of labour 
productivity,  the  Netherlands  is  one  of  the  best 
performing countries in many sectors. This implies 
that  productivity  growth  should  come  from  new 
innovations.  A  further  increase  in  research  and 
development  investment,  especially  in  the  private 
sector,  is  needed  for  this  to  happen.  Technical 
skills and qualified professionals are crucial for the 
Dutch 
and 
productivity  growth.  This  points  to  the  need  to 
invest  more 
to  promote  flexible 
upskilling  and  reskilling  opportunities  for  all. 
Improving  society’s 
innovation  capacity  also 
requires  investments  to  support  education  in  the 
field  of  science,  technology,  engineering  and 
mathematics.  Moreover,  increased  investment  in 
to 
skills,  education  and 

economy’s 

is  crucial 

innovation 

training, 

capacity 

training 

in 

 
 
                                                           
 
Executive summary 

measures  that  support  higher  disposable  real 
incomes of households. 

There  has been  limited  progress in the  following 
areas: 

for 

the 

and 

self-employed 

  Reducing  the  incentives  to  use  temporary 
without 
contracts 
employees,  while  promoting  adequate  social 
protection 
self-employed.  The 
government sent a draft bill (Wet Arbeidsmarkt 
in  Balans    to  Parliament  in  November  2018. 
This  draft  bill  contains  a  package  of  proposed 
measures to make the hiring of employees on a 
permanent  basis  easier  and  make  flexible 
contracts  less  flexible.  However  no  other 
concrete measures have been adopted so far. 

  Ensuring  that  the  occupational  pension  system 
is  more  transparent,  inter-generationally  fairer 
and more resilient to shocks. 

There has been no progress in the following areas: 

  Tackling 

bogus 

self-employment. 

The 
government  is  expected  to  inform  Parliament 
on 
announced  measures 
addressing  bogus  self-employment  in  spring 
2019.  

the  previously 

Regarding  progress  towards  its  national  targets 
under  the  Europe  2020  strategy,  the  Netherlands 
has achieved its targets on energy efficiency, early 
school  leaving  and  higher  education.  The  targets 
on  the  employment  rate  and  reduction  of  national 
greenhouse  gas  emissions  are  also  expected  to  be 
met.  The  target  of  14%  for  renewable  energy 
consumption  in  2020  is  expected  to  be  out  of 
reach.  While  the  Netherlands  has  taken  measures 
to  increase  R&D  spending,  a  substantial  further 
effort is needed to reach 2.5% of GDP. 

good 

standing 

The  Netherlands  performs  very  well  on  most 
indicators  of  the  Social  Scoreboard  supporting 
the  European  Pillar  of  Social  Rights.  It  has  an 
labour  market 
overall 
performance  and  the  social  situation.  Per  capita 
real  gross  disposable 
income  of  households 
continued to rise, with income inequality below the 
EU  average.  In  the  area  of  social  protection  and 
inclusion,  the  weakening  of  the  situation  with 
regard to the risk of poverty or social exclusion is a 

in 

fostering 

labour  market,  while 

improving  access  to  the  labour  market  and  the 
employability of those operating at the margins of 
the 
equal 
opportunities  and  active  inclusion.  The  energy 
transition  and  the  reduction  of  greenhouse  gas 
emissions  requires  substantial 
to 
ensure  more  sustainable  and  resource-efficient 
identifies  key 
economic  growth.  Annex  D 
priorities  for  support  by  the  European  Regional 
Development Fund and the European Social Fund 
Plus  over  2021-2027,  building  on  the  analysis  of 
investment  needs  and  challenges  outlined  in  this 
report. 

investments 

Overall, 
the  Netherlands  has  made  some 
progress in addressing the 2018 country-specific 
recommendations.  

There  has  been  substantial  progress  in  the 
following area:  

  Raising  public  and  private 

in 
research,  development  and  innovation,  while 
respecting  the  medium-term  objective.  The 
government  is  implementing  fiscal  stimulus 
measures, including higher investment in R&D. 

investment 

There  has  been  some  progress  in  the  following 
areas:  

  Taking  measures  to  reduce  the  debt  bias  for 
households and the remaining distortions in the 
housing market, in particular by supporting the 
development  of  the  private  rental  sector.  The 
government  accelerated 
in 
mortgage interest deductibility and submitted a 
law  to  Parliament  to  increase  the  supply  of 
housing  in  the  middle  segment  of  the  rental 
market. 

reduction 

the 

  Creating  conditions  to  promote  higher  wage 
growth,  while  respecting  the  role  of  the  social 
partners.  Wages 
in  collective  agreements 
increased  on  average  by  2.1%  in  2018.  Public 
sector  wages  increased  at  a  faster  rate  (by  3% 
in  the  second  half  of  2018),  with  wage 
agreements  leading  to  a  nominal  increase  of 
7% in two years for all civil servants in central 
government.  Additional  funding  has  been 
provided  to  increase  the  salaries  of  primary 
school teachers. The government has taken tax 

5 

 
 
point of attention. However, the Netherlands is still 
among  the  top  performers,  with  a  low  level  of 
poverty. 

findings  of 

The  main 
review 
contained  in  this  report  and  the  related  policy 
challenges are as follows:  

in-depth 

the 

  Mortgage  interest  deductibility  continues  to 
fuel  household  debt.  Private  debt  is  well 
above  macroeconomic  imbalance  procedure 
thresholds.  Corporate  debt  is  largely  in  the 
hands  of  multinationals  and  poses  limited 
macroeconomic  risks.  High  household  debt 
makes  households  vulnerable 
to  financial 
shocks  with  macroeconomic  repercussions. 
Although  the  ratio  of  household  debt  to  GDP 
has  been  falling,  it  is  still  twice  the  euro  area 
average.  Household  debt  largely  consists  of 
mortgage  debt  and  is  fuelled  by  generous  tax 
relief  on  mortgage  interest  payments.  While 
mortgage  interest  deductibility  is  effectively 
being  lowered,  debt-financed  home  ownership 
remains heavily subsidised. 

  Subsidies  to  owner  occupied  housing  and 
social  housing  lead  to  an  underdeveloped 
private rental market. The social housing and 
rent-controlled  sector  is  large  compared  to 
other Member States. The private rental market 
is  the  only  non-subsidised  housing  sector  and 
remains  underdeveloped.  The  lack  of  a  well-
functioning  middle  segment  on  the  rental 
market  encourages  households  to  buy  rather 
than rent, leading to high debt-to-income ratios 
and financial vulnerability. 

in 

  High  illiquid  housing  and  pension  assets 
combined  with  high  mortgage  debt  make 
households  vulnerable  to  shocks.  While  the 
pension  system  performs  well  on  pension 
it  has 
adequacy  and  fiscal  sustainability, 
drawbacks 
intergenerational 
terms  of 
fairness,  transparency  on  pension  rights  and 
flexibility.  Moreover,  occupational  pension 
contributions are  high and  fluctuate  depending 
on how pension funds perform. As such, it may 
affect  household  spending  in  a  pro-cyclical 
way,  with  the  balance  of  risks  geared  towards 
young  age  groups  as  lower  indexation  and 
higher  pension  contributions  have  been  the 
primary  means  of  adjustment.  Households 

Executive summary 

combine  substantial  housing  and  pension 
wealth  with high mortgage debt. However, the 
former  are  highly 
illiquid  and  unevenly 
distributed across generations. Long household 
balance  sheets  make  households  vulnerable  to 
economic  shocks  and  accentuate  the  pro-
cyclical dynamics of household finances. 

  The  current  account  continues  to  show  a 
marked  surplus.  The  Netherlands  has  had  a 
current  account  surplus  of  7%  of  GDP  on 
average  over  1999-2017.  All 
institutional 
sectors  are  currently  in  surplus,  which  led  to 
the  current  account  surplus  rising  to  10.5%  of 
GDP  in  2017.  This  high  level  is  mostly 
accounted  for by the  non-financial  corporation 
sector,  and  may  be  linked  to  the  presence  of 
multinationals’  headquarters.  A  comparatively 
large non-financial corporation savings surplus 
is rooted in a relatively high operating surplus, 
together  with  high  net  property  income  and 
relatively  low  levels  of  domestic  corporate 
investment.  Resuming 
growth 
combined  with  high  compulsory  savings, 
pressure  on  households  to  reduce  their  debt 
level and low residential investment has led to 
positive  net 
lending  for  households.  The 
government  sector  recorded  stable  headline 
fiscal 
surpluses 
consolidation 
years.  While 
corporations  make  the  largest  contribution  to 
the  surplus  over  time,  the  government  and 
household sector are largely responsible for the 
post-crisis  increase  in  the  current  account 
surplus.  Housing  market 
and  pensions 
institutions affect consumption and the surplus 
in a pro-cyclical way.  

following 
in 

substantial 

income 

recent 

  Structural  reforms  have  small  but  positive 
international  spillovers.  Simulations  in  this 
report  show  that  structural  reforms  aimed  at 
closing half of the gap with top performance in 
a  selected  range  of  pro-growth  policy  areas 
have  a  considerable  effect  on  domestic  GDP 
and small yet positive international spillovers. 

Other key structural issues analysed in this report, 
which  point  to  particular  challenges  facing  the 
Dutch economy, are the following: 

  The  labour  market  performed  well  across 
the  board,  while  challenges  of  segmentation 

6 

 
 
and  integration  of  non-EU-born  migrants 
remain.  Employment  reached  a  record  high 
and  unemployment  continued  to  decline.  An 
increasingly  tight  labour  market  has  recently 
provided  incentives  for  employers  to  offer 
more open-ended contracts. However, the share 
of flexible employment remains high, and there 
are large differences in the working conditions 
and  social  protection  of 
the  employment 
contracts  and  work  arrangements.  In  addition, 
there is  still large untapped labour potential  in 
the  high  number  of  women 
in  part-time 
employment  and  people  with  a  non-EU-born 
migrant 
the 
employment situation of those operating at the 
margins  of 
remains 
challenging.  

labour  market 

Furthermore, 

background. 

the 

the 

include 

planning 

engaged 

by  multinationals 

  The  Netherlands’  tax  rules  appear  to  be 
used 
in 
aggressive tax planning structures, but some 
important steps are being taken to limit such 
practices.  Some  elements  that  may  facilitate 
tax 
of 
withholding  taxes  on  royalties  and  interest 
payments.  However,  to  curb  aggressive  tax 
planning the Netherlands is  making important 
changes to its tax system in line with European 
and  internationally  agreed  initiatives,  but  also 
introduction  of 
through 
withholding 
interest  and  royalty 
payments  to  low-tax  countries  or  in  case  of 
abuse, which will need to be monitored closely. 

announced 

taxes  on 

absence 

the 

Executive summary 

7 

 
 
1.  ECONOMIC SITUATION AND OUTLOOK 

GDP growth 

Investment 

GDP growth in 2018 remained robust at 2.5%, 
but  moderated  compared  to  2017.  In  2019  and 
2020, growth is expected to decline further to 1.7% 
for  both  years.  Unemployment  has  fallen  well 
below  4%  and 
the  manufacturing  capacity 
utilisation  rate  has been on an upward trend since 
2013,  exceeding  its  pre-crisis  level.  The  output 
gap,  which  was  negative  for  a  prolonged  period 
during the crisis, turned positive again in 2017 and 
is  expected  to  remain  so  over  the  coming  years 
(Graph 1.1).  The  economic  expansion  is  job-rich, 
with  labour  productivity  growth  contributing  less 
than 1% per year on average since the crisis.  

Graph 1.1:  GDP growth 

Investment  has  been  on  an  upward  trend, 
reaching 20.5% of GDP in 2017. The investment 
rate  is  broadly  in  line  with  the  euro  area  average 
(20.8%,  Graph 1.2).  The 
share  of  public 
investment has been decreasing  since 2009, but is 
expected  to  stabilise  at  around  3.5%  of  GDP  in 
2018-2020,  compared  to  a  euro  area  average  of 
2.6%.  Household  investment  is  to  a  large  extent 
driven  by  residential  investment,  which  increased 
by 18% per year on average in 2015-2017 (in real 
terms). However, it is expected to experience more 
moderate  growth  in  the  coming  years.  Corporate 
investment has historically been lower than the rest 
of the euro area as a share of GDP, although it has 
been  increasing  rapidly  in  recent  years.  Looking 
ahead,  corporate  investment  is  expected  to  grow 
more  moderately  given  that  the  economy  is 
expanding  at  a  slower  pace  and  economic 
sentiment  has  decreased  over  the  course  of  2018. 
In  terms  of  investment  needs,  higher  investments 
in R&D, human capital and climate and energy are 
necessary  to  support  productivity  growth  and  to 
maintain  a  strong 
(see 
Section 4.4.1). 

innovation  capacity 

Graph 1.2: 

Investment by sector, 2017 

Source: European Commission (Winter 2018 Interim 
Economic Forecast) 

increase. 

As  the  economic  cycle  matures,  domestic 
demand  is  the  main  contributor  to  growth. 
Private consumption is expected to increase on the 
back  of  higher  disposable  income  as  employment 
government's 
and  wages 
expansionary  fiscal  package  is  also  expected  to 
boost  growth, 
to 
implementation  risks.  The  contribution  of  net 
exports  is  projected  to  be  close  to  zero,  reflecting 
the  weaker  external  environment  and  solid 
domestic demand. 

although 

subject 

The 

is 

it 

Source: Eurostat 

8 

-5-4-3-2-10123456711121314151617181920pps.Net exportsInventoriesPrivate consumpt.Public consumpt.GFCFReal GDP (y-o-y%)forecast02468101214PublicinvestmentHouseholdinvestmentCorporateinvestment% of GDPNLEA 
 
 
 
 
 
1. Economic situation and outlook 

Regional dimension 

Graph 1.3: 

Labour market trends 

this 

seems  a 

Regional  differences 
in  terms  of  economic 
activity  and  income  are  limited.  In  2016,  GDP 
per  head  in  purchasing  power  standard  terms 
relative  to  the  EU  average  varied  from  90  in 
Friesland  and  Drenthe  to  166  in  Noord-Holland. 
While 
substantial  difference, 
disparities in GDP per head at the provincial level 
are  among  the  smallest  in  the  EU  and  vary  little 
over  time.  In  most  regions,  except  Groningen(2), 
GDP per head growth in 2010-2016 was similar to 
in 
the  national  average  of  1.1%.  Variations 
productivity  per  worker  and  in  household  income 
are  much  smaller.  Household 
income  varied 
between  83%  (Groningen)  and  115%  (Utrecht)  of 
the national average in 2015.  

Source: Eurostat (Labour Force Survey) 

Wage  growth  is  increasing,  but  has  remained 
moderate so far. According  to the Commission’s 
Autumn  2018  Economic  Forecast,  nominal 
compensation  per  employee  is  expected  to  have 
increased  by  2.4%  in  2018,  compared  to  1.1%  in 
2017. As in previous years, wage growth remained 
below  what  would  be  expected  based  on  its 
historical  relationship  with  inflation,  productivity 
and  unemployment  developments  (Graph 1.4). 
labour  market  segmentation  could 
Increased 
explain  part  of  the  low  wage  growth  in  recent 
years  (see  Section 4.3  and  European  Commission 
2018e).  Trade  unions  have  again  formulated 
substantially  higher  wage  demands  compared  to 
before. In combination with a further tightening of 
the  labour  market,  this  is  expected  to  result  in  an 
acceleration  of  nominal  wage  growth  to  3.1%  in 
2019  and  3.5%  in  2020.  However,  as  inflation  is 
also picking up the increase in real wages remains 
moderate.  

Inflation 

A Value Added Tax (VAT) increase is expected 
to  drive  inflation  up  to  2.4%  in  2019.  An 
increase  in the reduced VAT  rate  from 6% to 9% 
took  effect  at  the  start  of  2019,  as  part  of  a 
comprehensive  tax  package.  Higher  energy  prices 
pushed  up  inflation  in  recent  months,  but  their 
influence is expected to dissipate in line with lower 
oil prices compared to the second half of 2018. In 
2020,  inflation  is  expected  to  fall  to  1.7%. 
Underlying,  core  inflation  is  expected  to  pick  up, 
in  line  with  tightening  supply  constraints  and 
related wage increases. 

Labour market 

Employment  continued  to  increase    strongly  in 
2018  while  the  unemployment  rate  is  reaching 
historically  low  levels  (Graph 1.3).  Employment 
increased  by  2.3%  in  2018,  following  a  2.1% 
in  2017(3).  The  unemployment  rate 
increase 
reached 3.8% in 2018, only slightly above the pre-
crisis level of 3.7% in 2008. The employment rate 
(20-64  years)  has  exceeded  its  historical  peak. 
Over  the  course  of  2018,  labour  force  growth 
started  to  accelerate,  leading  to  a  temporary 
stabilisation  in  the  unemployment  rate  for  several 
months before a further decline.  

(2)  The  GDP  of  the  province  of  Groningen  declined by  0.9% 
over this period, linked to the sharp decline of natural gas 
production.  

(3)  According 

to  Labour  Force  Survey  data,  Statistics 

Netherlands. 

9 

0%1%2%3%4%5%6%7%8%9%7000720074007600780080008200840014 Q114 Q315 Q115 Q316 Q116 Q317 Q117 Q318 Q118 Q3x1000Active population (lhs)Employment (lhs)Unemployment rate (rhs) 
                                                           
 
 
1. Economic situation and outlook 

Graph 1.4:  Actual and predicted wage growth based on 

fundamentals 

also  remains  widespread,  in  particularly  among 
women. 

Graph 1.6: 

Temporary employment and self-employment 
without employees, % of total employment 

Source: European Commission (based on Autumn 2018 
Economic Forecast) 

Graph 1.5:  Change in employment by contract type 

(thousands) 

Source: European Commission 

temporary 

employees 

share  of  non-standard 

The 
employment 
remains high in the Netherlands. Job creation for 
permanent  employees  has  exceeded  job  creation 
for 
since  Q4-2017 
employees 
(Graph 1.5). For the first time in years, the share of 
temporary 
employment 
decreased  slightly  to  14.8%  in  Q3-2018,  down 
from 15.2% one year earlier. However, this is still 
well  above  the  EU  average  (11.4%)  and  the  pre-
crisis  level  (Graph 1.6).  In  addition,  the  share  of 
self-employed  without 
total 
employment  remains  high  (12.2%  compared  to 
9.9%  for  the  EU  average).  Part-time  employment 

employees 

total 

in 

in 

Source: European Commission 

Unit  labour  costs  are  set  to  increase  somewhat 
faster than the euro area average. According to 
the  Commission’s  Autumn  2018  Economic 
Forecast, growth of unit labour costs is expected to 
accelerate from 1.7% in 2018 to 2.2% in 2019 and 
2.5% in 2020 (Graph 1.7). For 2019 and 2020, this 
is roughly 1 pp. above the euro area average. Over 
a  longer  period  of  time  unit  labour  cost  trends  in 
the  Netherlands  are  closely  aligned  with  the  euro 
area as a whole. 

Social developments 

The  Netherlands  has  a  low  level  of  income 
inequality. As a result of the highly redistributive 
tax  and  benefit  system,  the  ratio  of  disposable 
household  incomes  between  the  richest  and  the 
poorest  quintile  of  the  Dutch  population  is  4.0, 
which is well below the EU average of 5.2. Wealth 
inequality is higher, although this is mainly driven 
by  households  with  negative  net  housing  equity 
following  the  decline  in  house  prices  during  the 
crisis. 

10 

-2-10123456799010305070911131517%Actual nominal compensation growthPrediction based on inflation,productivity and unemployment-400-300-200-100010020030001 Q102 Q103 Q104 Q105 Q106 Q107 Q108 Q109 Q110 Q111 Q112 Q113 Q114 Q115 Q116 Q117 Q118 Q1thsPermanent employeesTemporary employeesSelf employmentOverall0246810121416Self-employedpersons withoutemployeesTemporarySelf-employedpersons withoutemployeesTemporaryNetherlandsEU20072017 
 
 
 
 
 
 
 
1. Economic situation and outlook 

Graph 1.7: 

Trends in unit labour costs and components 

External position 

Graph 1.9:  Net lending by sector (% of GDP) 

Source: European Commission 

Source: Statistics Netherlands 

Public finances 

to 

lags, 

including 

implementation 

The  budget  balance  is  expected  to  remain  in 
surplus  over  the  coming  years  (Graph 1.8).  The 
budget surplus is forecast to have reached 1.1% in 
2018.  This  is  higher  than  previously  expected  as 
several  planned  expenditure  increases  have  been 
subject 
in 
infrastructure  and  defence.  For  2019  and  2020  a 
further 
surplus  around  1% 
is 
broadly 
expansionary  measures  will 
compensated  by  strong  growth  in  tax  revenues. 
The  structural  balance  is  set  to  deteriorate  from  a 
surplus  of  0.7%  in  2017  to  a  deficit  of  0.3%  in 
2019,  before  rebounding  somewhat  to  -0.1%  in 
2020.  The  debt-to-GDP  ratio  is  declining  rapidly 
and  is  expected  to  fall  below  50%  in  2019,  down 
from 57% in 2017.  

foreseen,  as 

be 

Graph 1.8:  General government budget balance 

After  peaking  at  10.5%  in  2017,  the  current 
account  surplus  is  expected  to  decline  only 
gradually.  From  a  net  lending  perspective,  the 
corporate sector accounts for the largest part of the 
domestic  surplus,  while 
the  household  and 
government  sector  are  also  in  surplus  (Graph 1.9, 
see  also  Section 4.2.6).  A  sustained  trade  surplus 
in  goods,  averaging  9.5%  over  the  period  2013-
2017,  is  the  main  driver  of  the  high  level  from  a 
trade perspective. Primary income flows have had 
a limited impact on the current account on average 
over a multi-year period, but are a source of short-
term  volatility  and  largely  explain  the  peak  in 
2017.  On  the  back  of  solid  domestic  demand 
growth, the current account balance is expected to 
decline  only  gradually.  Despite  the  persistently 
net 
high 
international 
fell  back 
investment  position 
somewhat  from  63%  in  2016  to  60%  in  2017. 
Negative valuation effects and high  nominal GDP 
growth outweighed domestic net lending.  

surpluses, 

account 

current 

the 

Source: European Commission Autumn 2018 Economic 
forecast 

11 

-3-11357030507091113151719*Rate of change y-o-y (%)Inflation (GDP deflator growth)Real Compensation per EmployeeProductivity Contribution (negative sign)structural budget balanceheadline budget balancemedium-term budgetary objective-3,0-2,0-1,00,01,02,02014201620182020% of (potential) GDP-8-6-4-202468101214060708091011121314151617% of GDPCorporationsGovernmentHouseholds and NPISHTotal net lending 
 
 
 
 
 
 
1. Economic situation and outlook 

Table 1.1: 

Key economic and financial indicators -the Netherlands 

(1) NIIP excluding direct investment and portfolio equity shares 
(2) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU 
foreign-controlled branches. 
(3) the tax-to-GDP indicator includes imputed social contributions and hence differs from the tax-to-GDP indicator used in the 
section on taxation 
Source: Eurostat and ECB as of 31-1-2019, where available; European Commission for forecast figures (Interim Winter forecast 
2019 for real GDP and HICP, Autumn forecast 2018 otherwise)  

12 

2004-072008-122013-1520162017201820192020Real GDP (y-o-y)2,80,01,12,22,92,51,71,7Potential growth (y-o-y)1,80,90,81,41,71,91,81,8Private consumption (y-o-y)0,8-0,40,51,11,9...Public consumption (y-o-y)3,01,40,21,31,1...Gross fixed capital formation (y-o-y)6,2-4,17,4-7,36,1...Exports of goods and services (y-o-y)6,62,04,81,75,3...Imports of goods and services (y-o-y) 6,81,16,5-2,04,9...Contribution to GDP growth:Domestic demand (y-o-y)2,4-0,71,7-0,82,3...Inventories (y-o-y)0,00,00,20,1-0,3...Net exports (y-o-y)0,40,8-0,82,90,9...Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0,30,20,30,70,80,80,60,5Capital accumulation (y-o-y)0,70,50,30,50,60,70,70,7Total factor productivity (y-o-y)0,70,30,20,20,30,40,50,5Output gap-0,6-1,3-2,5-1,10,11,01,61,6Unemployment rate5,24,87,26,04,93,93,63,6GDP deflator (y-o-y)2,01,00,80,51,22,02,42,0Harmonised index of consumer prices (HICP, y-o-y)1,51,91,00,11,31,62,41,7Nominal compensation per employee (y-o-y)2,32,51,11,21,12,43,13,5Labour productivity (real, person employed, y-o-y)1,7-0,11,21,10,7...Unit labour costs (ULC, whole economy, y-o-y)0,62,4-0,10,50,51,72,22,5Real unit labour costs (y-o-y)-1,31,4-0,80,0-0,7-0,3-0,20,5Real effective exchange rate (ULC, y-o-y)-0,20,2-1,20,50,61,0-0,10,5Real effective exchange rate (HICP, y-o-y)-0,5-0,8-0,21,30,61,5-0,2-0,4Savings rate of households (net saving as percentage of net disposable income)2,66,49,39,99,0...Private credit flow, consolidated (% of GDP)12,17,54,35,63,0...Private sector debt, consolidated (% of GDP)228,4243,4262,4262,1252,1...of which household debt, consolidated (% of GDP)106,5115,9111,5107,6104,5...of which non-financial corporate debt, consolidated (% of GDP)121,9127,6150,9154,5147,6...Gross non-performing debt (% of total debt instruments and total loans and advances) (2).2,42,72,21,9...Corporations, net lending (+) or net borrowing (-) (% of GDP)9,29,06,65,06,96,96,66,5Corporations, gross operating surplus (% of GDP)27,327,727,627,226,927,127,026,9Households, net lending (+) or net borrowing (-) (% of GDP)-2,41,34,12,92,31,81,51,3Deflated house price index (y-o-y)2,4-3,7-1,77,96,0...Residential investment (% of GDP)6,04,83,24,14,4...Current account balance (% of GDP), balance of payments7,77,28,28,110,510,19,59,1Trade balance (% of GDP), balance of payments8,58,49,610,210,7...Terms of trade of goods and services (y-o-y)-0,1-0,50,50,6-0,30,10,00,0Capital account balance (% of GDP)-0,4-0,3-0,1-0,2-0,1...Net international investment position (% of GDP)-5,510,342,962,759,8...NIIP excluding non-defaultable instruments (% of GDP) (1)-64,3-73,2-54,8-44,4-29,3...IIP liabilities excluding non-defaultable instruments (% of GDP) (1)326,3387,0414,3426,8379,8...Export performance vs. advanced countries (% change over 5 years)6,90,8-5,4-2,7-3,2...Export market share, goods and services (y-o-y)..-0,10,50,9...Net FDI flows (% of GDP)4,65,86,514,42,0...General government balance (% of GDP)-0,6-3,7-2,40,01,21,11,11,0Structural budget balance (% of GDP)..-1,00,40,70,3-0,20,0General government gross debt (% of GDP)47,159,766,761,957,053,249,646,9Tax-to-GDP ratio (%) (3)36,036,137,238,939,239,139,439,5Tax rate for a single person earning the average wage (%)32,532,131,630,5....Tax rate for a single person earning 50% of the average wage (%)23,321,420,116,1....forecast 
 
 
 
 
2.  PROGRESS WITH COUNTRY-SPECIFIC RECOMMENDATIONS 

of 

all 

76 % 

Since  the  start  of  the  European  Semester  in 
2011, 
country-specific 
recommendations addressed to the Netherlands 
have recorded at least ‘some progress”.  24% of 
these  CSRs  recorded  "limited"  or  "no  progress" 
(Graph 2.1).  Substantial  progress  has  been  made 
over  the  past  years  in  the  area  of  public  finances, 
this  includes  a  reform  of  the  long-term  care 
system,  and  the  protection  of  expenditure  in 
growth-friendly 
education, 
innovation  and  research.  Substantial  progress  and 
full  implementation  have  also  been  achieved 
several  areas  of  the  labour  market  and  pensions, 
such as an increase in the statutory retirement age 
and getting older workers back into work. 

areas; 

such 

as 

Graph 2.1:  Overall multi-annual implementation of 2011-

2018 CSRs to date 

retirement  age  was  raised  and  linked  it  to  life 
expectancy.  

Housing  market  measures  have  helped  to 
reduce  the  high  household  debt  level,  but 
challenges remain. At 105% of GDP and 211% of 
household disposable income in 2017, compared to 
57%  and  93%  respectively  for  the  euro  area, 
household debt is high in the Netherlands. A high 
debt 
to 
level  makes  households  vulnerable 
economic shocks. Household debt largely consists 
of mortgage debt, which is subsidised by mortgage 
interest  deductibility  in  personal  income  taxes. 
Since 2012, recommendations have been issued on 
the  need 
in 
particular  to  modify  the  favourable  tax  treatment 
of  homeownership,  refocus  social  housing  and 
provide  a  more  market-oriented  price  mechanism 
in  the  rental  market.  The  Dutch  government  has 
acted  upon  those  recommendations,  in  particular 
with a reduction of mortgage interest deductibility 
(including  a  requirement  to  repay  mortgages 
within  30  years  to  qualify  for  mortgage  interest 
deductibility).  Policy  measures  have  also  been 
taken on the rental market, such as the the Housing 
Act  (Woningwet)  in  2015,  but  challenges  in  the 
housing market remain.  

the  housing  market, 

to  reform 

* The overall assessment of the country-specific 
recommendations related to fiscal policy excludes 
compliance with the Stability and Growth Pact 
** The multi-annual CSR assessment looks at implementation 
from the first year of adoption up until the 2019 Country 
Report. 
Source: European Commission  

Since  the  first  round  of  country  specific 
recommendations  in  2011,  the  government  has 
implemented  significant  structural  reforms.  In 
recommendations 
line  with  country  specific 
adopted 
the  Netherlands 
in  2011  and  2012, 
corrected  its  excessive  deficit  by  2013,  while 
protecting public expenditures directly relevant for 
growth, such as  spending on  R&D, education and 
training.  Following  recommendations  to  improve 
the  fiscal  sustainability  of  public  finances,  the 
government  implemented  reforms  in  the  field  of 
long-term  care  and  pensions.  The  statutory 

2018 assessment 

On  the  recommendation  to  use  fiscal  and 
structural  policies  to  raise  public  and  private 
in  research,  development  and 
investment 
innovation,  while  respecting  the  medium-term 
objective, the Netherlands has made substantial 
progress.  The  government  is  implementing  a 
fiscal  stimulus,  which  includes  public  investment, 
while  respecting 
the  medium-term  objective. 
According  to  the  Commission  Autumn  2018 
Economic  Forecast,  the  structural  budget  balance 
is expected to decline from 0.7% of GDP in 2017 
to -0.3% of GDP, pointing to a fiscal expansion of 
1%  of  GDP  in  2019  (see  Section  1  and  Section 
4.1). The announced increase in R&D expenditure 
in 2019 has been incorporated into the budget law. 
The  main  fiscal  tool  to  foster  R&D  is  set  to 
increase  by  2020.  However,  a  gap  remains 
compared  to  the  national  R&D  target  of  2.5%  of 
GDP, implying that more effort is needed. 

Some  progress  has  been  made  on  reducing 
remaining  housing  market  distortions.  The 

13 

12%12%32%16%28%No ProgressLimited ProgressSome ProgressSubstantial ProgressFull Implementation 
 
 
2. Progress with country-specific recommendations 

real 

support  higher  disposable 
incomes  of 
households,  by  a  reduction  of  personal  income 
taxes,  which  is  only  partly  financed  by  higher 
indirect  taxes.  Despite  a  shared  understanding 
among  stakeholders  of 
to  reform, 
negotiations  to  reform  the  occupational  pension 
fund  system  stalled  at  the  end  of  2018.  Early 
February  the  government  informed  Parliament 
with a letter setting out the government initiatives 
to  continue  reforming  the  occupational  pension 
system, leading to limited progress.  

the  need 

Overall,  the  Netherlands  has  made  some 
progress in addressing the 2018 country-specific 
recommendations.  Substantial  progress  has  been 
made in general in addressing CSR 1, in particular, 
stimulus  measures, 
fiscal 
by 
including  public  investment  and  increasing  R&D 
expenditure,  while  respecting  the  medium  term 
objective.  On  CSR  2,  limited  progress  has  been 
made, leading to some progress overall. 

implementing 

reduction 

in  mortgage 

accelerated 
interest 
deductibility  has  been  adopted  and  will  be 
implemented between 2020 and 2023. However, as 
this  fiscal  subsidy  will  not  be  phased  out 
completely  and  remains  an 
important  policy 
distortion,  sustaining  a  debt  bias  for  households 
and  affecting  the  decision  to  buy  or  rent.  The 
to 
government  also  acknowledges 
develop  the  private  rental  market,  making  it  a 
genuine alternative for the owner occupied market. 
It  has  submitted  a  draft  law  to  Parliament  to 
increase  supply  in  the  mid-priced  rental  market 
easing 
(Wet  maatregelen  middenhuur)  by 
requirements for housing corporations to build for 
this segment.  

the  need 

to  best 

the  problem  of 

On  CSR  2,  limited  progress  has  been  made  to 
address 
labour  market 
segmentation. As a first step in a broader process 
of labour market regulation measures and ongoing 
tackle  distinct 
reflections  on  how 
institutional  drivers  properly,  a  draft  bill  (Wet 
Arbeidsmarkt in Balans) was sent to Parliament in 
November 2018. It contains a package of measures 
to make it easier to hire permanent employees and 
to make flexible contracts less flexible. In addition, 
a  Committee  of 
independent  experts  was 
established  to  advise  the  government  on  the 
regulation  of  labour  in  the  future  bearing  in  mind 
the  changing  economy  and  society.  However,  on 
possible  social  security  coverage  for  sickness  and 
disability  of 
the  self-employed,  no  concrete 
measures  have  been  adopted  yet,  but  a  plan  of 
action  to  increase  and  strengthen  well  informed 
choices  by  self-employed 
to  be 
presented  in  the  beginning  of  2019.  In  addition, 
government plans to tackle bogus self-employment 
have  been  delayed.  Further  details  on  possible 
measures  are  only  expected  to  be  provided  by 
spring  2019  in  view  of  them  becoming  law  by 
January 2021. On wage growth, which is gradually 
increasing,  some  progress  has  been  made.  Wages 
in collective agreements have increased on average 
by 2.1% in 2018, with public wages increasing at a 
faster  rate  (by  3%  in  the  second  half  of  2018).  In 
2018  wage  agreements  were  reached  in  various 
government sectors (e.g. a nominal increase of 7% 
in  two  years  for  all  civil  servants  in  central 
government), after zero-wage growth in the public 
fiscal  consolidation  era. 
sector  during 
Additional  funding  has  been  provided  to  increase 
the salaries of primary school teachers. In the 2019 
budget,  the  government  has  taken  measures  that 

is  expected 

the 

14 

 
2. Progress with country-specific recommendations 

Table 2.1: 

Assessment of 2018 CSR implementation 

This does not include an assessment of compliance with the Stability and Growth Pact 
Source: European Commission  

15 

The Netherlands Overall assessment of progress with 2018 CSRs : some progress  CSR 1:  While respecting the medium-term objective, use fiscal and structural policies to raise public and private investment in research, development and innovation Take measures to reduce the debt bias for households and the remaining distortions in the housing market, in particular by supporting the development of the private rental sector. (MIP relevant) The Netherlands has made substantial progress in addressing CSR 1:    Substantial progress has been made by implementing a fiscal stimulus, including additional spending on R&D in 2019.  Some progress has been made on the housing market, although the mortgage interest deductibility will remain generous after being reduced to a maximum applicable rate of 37% by 2023.   CSR 2:   Reduce the incentives to use temporary contracts and self-employed without employees, while promoting adequate social protection for the self-employed, and tackle bogus self-employment. Create conditions to promote higher wage growth, respecting the role of the social partners. Ensure that the second pillar of pension system is more transparent, intergenerationally fairer and more resilient to shocks. (MIP relevant) The Netherlands has made limited progress in addressing CSR 2:   Limited progress has been made on labour market segmentation, with a draft bill to make the hiring of employees on a permanent basis easier and making flexible contracts less flexible, but no concrete measures on social protection coverage for the self-employed. In addition, a Committee of independent experts was set up to advise the government on the regulation of labour in the future bearing in mind the changing economy and society.   No progress has been made in tackling bogus self-employment.  Some progress. Negotiated wages increased by 2.1% in 2018, with public sector wages growing at a faster rate. In 2018 wage agreements were reached in various government sectors (e.g. a nominal increase of 7% in two years for all civil servants in central government). Additional funding has been made available for teachers’ salaries. Fiscal measures included in the 2019 budget support disposable household income.  Limited progress has been made on the reform of the occupational pension system.   
 
 
 
 
 
 
 
2. Progress with country-specific recommendations 

Box 2.1: EU funds help overcome structural challenges and foster development in the 
Netherlands 

The  Netherlands  continues  to  benefit  from  EU  funds  to  support  structural  change.  The  financial 
allocation  from  European  structural  and  investment  funds,  whose  aim  is  to  help  the  Netherlands  face 
development  challenges,  amounts  to  up  to  EUR 1.9 billion  in  the  current  multiannual  financial  framework. 
This is equivalent to around 0.04% of GDP annually in 2014-2020. As of the end of 2018, EUR 1.47 billion 
had  been  allocated  to  specific  projects.  In  addition, numerous  Dutch  research  institutions,  innovative  firms 
and  individual  researchers  have  benefited  from  other  EU  funding  instruments,  in  particular  Horizon  2020 
which  has  provided  EUR 2.6 billion  to  boost  innovation  and  research  in  the  Netherlands.  Furthermore,  the 
Connecting  Europe  Facility  has  allocated  EUR 439 million  to  specific  projects  on  strategic  transport 
networks. 

EU  funding  has  helped  to  address  policy  challenges,  including  those  identified  in  the  2018  country 
specific  recommendations.  EU  funds  support  investment  in  R&D  in  the  Netherlands.  The  European 
structural and investment  funds stimulate investments in innovation in the private sector, among  others, by 
providing  loans  or  grants  to  develop  experimental  new  products  and  services,  set-up  living  labs  and 
encourage cooperation between small and medium-sized enterprises (SMEs) and research institutions. Over 
400  enterprises  have  received  support  to  cooperate  with  research  institutions  and  over  1 500  SMEs  to 
introduce  new  products  to  the  market.  Private  investment  that  matches  R&D  support  has  exceeded 
EUR 300 million.  The  “Uniiq  –  Proof  of  Concept  Fund  for  South-Holland”  uses  EU  Funds  to  invest 
EUR 22 million  in  supporting  SMEs  to  convert  an  idea  into  a  concrete,  marketable  product  or  service.  EU 
funds also contribute to a EUR 4 million investment to develop the “High tech X-Gen wind turbine”, which is 
compact,  maintenance-friendly,  silent,  affordable  and  suitable  for  the  built  environment.  Horizon  2020  has 
supported over 3 300 research projects covering a broad range of areas from health to energy transition. The 
European social fund also invests in coaching people at the margin of the labour market, which in turn helps 
improve overall labour market participation. Furthermore, it supports specific measures that improve the job 
prospects  of  older  workers.  212 000  people  have  benefited  from  measures  that  foster  social  inclusion  and 
5 200 enterprises have received support to adapt the working environment to prolonged working lives. 

EU funding helps to mobilise private investment. The European structural and investment funds mobilise 
additional  private  capital  in  the  Netherlands,  whereby  private  enterprises  provide  a  high  proportion  of 
national  co-financing.  Around  EUR 31.3 million  of  support  from  the  European  structural  and  investment 
funds has been allocated to financial instruments including loans, guarantees and equity, which is expected to 
leverage substantial private investment. In addition, financing allocated to projects under the European fund 
for strategic investments amounts to EUR 2.2 billion in the Netherlands and is set to trigger EUR 10 billion in 
investments (EIB, 2018). For infrastructure and innovation, 27 projects financed by the European Investment 
Bank  and  backed  by  the  European  fund  for  strategic  investments  have  been  approved  to  the  tune  of 
EUR 2 billion.  For  SMEs,  12  agreements  with  intermediary  banks  or  funds  have  been  approved  for 
EUR 199 million in total financing, leading to improved access to finance for 7 364 SMEs and mid-caps.  

16 

 
 
 
3.  SUMMARY OF THE MAIN FINDINGS FROM THE MIP IN-

DEPTH REVIEW 

in-depth  review 

The  2019  Alert  Mechanism  Report  concluded 
should  be 
that  a  new 
undertaken  for  the  Netherlands  to  assess  the 
persistence  or  unwinding  of  the  imbalances 
(European Commission, 2018b). In spring 2018, 
identified  as  having 
the  Netherlands  was 
macroeconomic 
(European 
Commission,  2018a).  The  imbalances  identified 
related  in  particular  to  the  high  level  of  private 
debt  and  the  large  current  account  surplus.  This 
chapter summarises the findings of the analyses in 
the  context  of  the  macro-economic  imbalance 
procedure  in-depth  review  that  is  contained  in 
various sections in this report(4).  

imbalances 

3.1. 

IMBALANCES AND THEIR GRAVITY 

in 

the  highest 

The  current  account  balance  increased  further 
in 2017 to a peak of 10.5% of GDP. The surplus 
is  among 
the  euro  area.  A 
persistently high trade surplus in goods is the main 
driver  from  a  trade  perspective.  However,  the 
recent  increase  was  mainly  driven  by  higher  net 
primary 
income  flows,  reflecting  higher  net 
property  income  in  the  corporate  sector.  In  2017 
the  Netherlands  contributed  0.7  pps  to  the  euro 
area  current  account  surplus,  which  is  the  second 
largest contribution after Germany (2.3 pps).  

With  the  corporate  sector  making  the  largest 
contribution to net lending, all domestic sectors 
are  in  surplus.  Both  financial  corporations  and 
non-financial corporations are in surplus,  with the 
latter  being  the  main  driver.  Net  lending  by  non-
financial  corporations  amounted  to  5.3%  of  GDP 
in  2017.  Compared  to  the  rest  of  the  euro  area, 
profitability and net property income are relatively 
high  for  Dutch  firms,  whereas  investments  are 
lower. The presence of multinational enterprises is 
likely  to  influence  aggregate  corporate  sector  net 
lending,  although  available  macro-economic  data 
do not allow for a straightforward identification of 
(see Section 4.2.6). 
impact 
their 

statistical 

(4)  Analyses relevant for the in-depth review can be found in 
the  following  sections:  fiscal  policy  (Section 4.1),  private 
indebtedness,  house  price  developments,  developments  in 
the  field  of  pensions  (Section 4.2);  wage  developments 
(Section 4.3); 
imbalances 
and 
(Section 4.4).  Box  3  discusses  the  potential  effects  of  a 
stylised set of structural reforms. 

investment 

saving 

Households  have  been  recording  surpluses  since 
the  crisis,  amounting  to  2.3%  in  2017. The  dip  in 
the  housing  market  during  the  crisis  led  to  a 
decrease  in  residential  investment,  while  at  the 
same time private consumption stagnated. Pension 
funds are also an important driver of household net 
lending.  Pension  contributions  and  investment 
income  are  much  higher 
than  payouts,  with 
pension  funds  mainly  investing  in  assets  abroad 
(European  Commission,  2018e).  The  government 
sector recorded a headline surplus of 1.2%, driven 
by past consolidation  measures and increasing tax 
revenues.  

Private  debt  continued  to  decline  in  2017,  but 
remains  elevated.  Private  debt  reached  252%  of 
GDP  in  2017,  down  from  262%  the  year  before. 
Non-financial  corporate  debt  accounted  for  148% 
of  GDP.  However,  60%  of  this  debt  is  owed  by 
multinationals.  As  multinationals’  debt  largely 
consists  of  intra-group  debt,  the  macro-economic 
risks appear to be limited.  

to 

incentivises  households 

Household  debt  largely  consists  of  mortgage 
debt.  The  tax  deductibility  of  mortgage  interest 
payments 
take  on 
mortgage  debt.  The  household  debt  ratio  declined 
to  105%  of  GDP  in  2017  on  the  back  of  strong 
GDP  growth,  although  nominal  household  debt  is 
increasing again. However, growth is much slower 
than  before  the  crisis,  at  around  1%  annually  in 
recent years. Growing mortgage debt can be linked 
to  the  strong  recovery  of  the  housing  market. 
House  prices  accelerated  in  2017,  increasing  by 
6%  in  real  terms  therefore  reaching  the  macro-
economic imbalance procedure threshold. Overall, 
house price developments suggest a lagged supply 
response rather than overvaluation at national level 
(see Section 4.2).  

Potential  spill-overs  to  other  EU  countries  are 
relatively  moderate  given  the  size  of  the  Dutch 
economy.  Table 3.1  shows  that  exports  to  the 
Netherlands  constitute  a  relatively  large  share  of 
GDP  for  Belgium  (11%).  From 
the  Dutch 
perspective Germany is the most important export 
destination,  followed  by  the  United  Kingdom.  On 
the  financial  side,  Belgium,  Cyprus,  Ireland, 
Luxembourg  and  Malta  have  a  relatively  high 
exposure  to  the  Netherlands.  Box 3.1  presents  an 

17 

 
 
                                                           
3. Summary of the main findings from the MIP in-depth review 

Table 3.1: 

Outward spill-over heatmap for the Netherlands 

Note: cross-border figures for Netherlands, expressed as a % of the GDP of the partner country. The darkest shade of red 
corresponds to percentile 95 and the darkest shade of green to percentile 5. The percentiles were calculated for each 
variable based on the full available sample of bilateral exposures among EU countries. The blank spaces represent missing 
data. Data refer to: Imports - 2016, Imports (in value added) - 2014, Financial liabilities - 2015, Financial assets - 2015, Liabilities 
(to banks) - 2018-Q2, Bank Claims - 2018-Q2.  
Source: UN, OECD, WIOD, BIS and Commission services 

analysis of the effects of a stylised set of structural 
reforms  on  GDP,  indicating  small  but  positive 
spill-over  effects  to  the  rest  of  the  euro  area.  The 
simulations  presented  therein  follow  the  spirit  of 
the  2019  Council  Recommendations  for  the  euro 
area.  

3.2. 

EVOLUTION, PROSPECTS AND POLICY 
RESPONSES 

to 

The current account is set to fall gradually, but 
the  European 
remains  high.  According 
Commission’s  autumn  forecast,  the  surplus  is  set 
to  gradually  decline  from  10.5%  in  2017  to  9.1% 
in  2020.  Growth  during  this  phase  of  the  cycle  is 
mainly  driven  by  domestic  demand,  leading  to 
higher  imports  and  a  gradual  expected  decline  in 
the trade balance. Wage growth in recent years has 
been relatively subdued, but is expected to increase 
in  line  with  the  tightening  labour  market  and 
increased wage demand by trade unions. Domestic 
demand is further supported by implementation of 
the  fiscal  stimulus  package  ensuing  from  the 
coalition agreement.  

Private  debt  is  expected  to  remain  elevated. 
Solid nominal GDP growth is projected to support 
the trend of passive deleveraging. The acceleration 
of  the  maximum  applicable  rate  of  mortgage 
interest deductibility from 49% in 2019 to 37% in 
2023  has  been  adopted  by  Parliament.  While  this 
decreases 
for  households,  a 
substantial  subsidy  remains.  The  government  has 
also  launched  initiatives  to  support  the  private 
rental  segment,  which  would  provide  households 
with  an  alternative  to  taking  on  mortgage  debt. 
However, with a share of 13% of the total housing 
stock  in  2017  the  private  rental  sector  remains 
underdeveloped.  For  firms,  a  limitation  on  the 

the  debt  bias 

interest  payments  has  been 
deductibility  of 
introduced 
the 
incentive  to  take  on  debt  for  tax  optimisation 
purposes.  

in  2019,  which  may  reduce 

3.3.  OVERALL ASSESSMENT 

is 

influenced  by 

the  presence  of 

The Netherlands has recorded persistently large 
current  account  surpluses.  The  net  lending 
position 
largely  driven  by  non-financial 
corporations, with both relatively high savings and 
low  investments.  Corporate  net  lending  is  also 
likely 
large 
multinationals.  Households  also  make  a  positive 
contribution,  among  other  things  due  to  high 
mandatory  pension  contributions.  Household  debt 
as a share of GDP is around 50 pps higher than the 
euro  area  average  as  tax  incentives  encourage 
households  to  take  on  mortgage  debt.  While 
household debt is coupled with substantial housing 
and pensions assets, these assets are often illiquid, 
leaving households vulnerable to shocks. 

The external surplus and the high private debt 
level  are  both  expected 
to  unwind  only 
gradually.  The  current  account  balance  is  set  to 
moderate  slowly on the back  of domestic demand 
and  rising  wages,  also  supported  by  the  fiscal 
stimulus  package.  However,  the  level  is  expected 
to  remain  well  above 
threshold.  While 
household debt is decreasing as a share of GDP, it 
is  increasing  in  nominal  terms  as  the  housing 
market  has  recovered.  Despite  measures  taken, 
strong incentives to take on mortgage debt remain, 
also against the background of an underdeveloped 
private rental market.  

the 

18 

ATBEBGHRCYCZDKEEFIFRDEELHUIEITLVLTLUMTNLPLPTROSKSIESSEUKImports1,010,81,81,21,23,41,61,62,01,02,60,72,35,10,82,32,26,67,52,31,41,22,21,41,01,71,6Imports (in value added)1,14,71,00,81,31,51,41,41,21,22,50,81,52,61,11,11,31,64,91,20,90,81,00,90,81,31,1Financial liabilities15,862,00,83,370,06,610,73,011,920,115,34,19,555,19,82,32,31391,119,98,210,10,42,04,619,713,022,8Financial assets18,168,619,211,496,56,010,28,419,117,312,51,912,660,28,51,32,01236,044,12,79,711,39,31,618,413,428,4Liabilities (to banks)1,14,70,74,11,80,10,60,90,61,22,13,7Bank claims2,35,31,23,73,14,40,88,31,646,34,66,41,44,02,91,33,7EU partner 
 
 
 
3. Summary of the main findings from the MIP in-depth review 

Table 3.2: 

MIP assessment matrix(*) 

(Continued on the next page) 

19 

 Gravity of the challenge Evolution and prospects Policy response Imbalances (unsustainable trends, vulnerabilities and associated risks) Current account balance The three-year average of the current account stood at 8.3% in 2017, one of the highest in the euro area. The Netherlands has been running a current account surplus over the last three decades. This implies a persistent gap between savings and investment, with possible adverse consequences for the allocation of resources and therefore growth and welfare. A breakdown by sector points to non-financial corporations as the largest contributor, with a surplus of 5.3% in 2017 (see Section 4.2.6), although all domestic sectors are net savers. Compared to the euro area average, high corporate surplus is driven by a relatively high operating surplus and net property income, as well as low investment. The large presence of multinationals, possibly related to profit shifting and aggressive tax planning, might also have an upward effect on corporate savings.  The household balance turned positive during the crisis and accounts for much of the surplus widening since. It reached 2.3% in 2017 and is likely boosted by relatively large mandatory pension savings . After reaching a historic high of 10.5% of GDP in 2017, the current account surplus is likely to have remained broadly stable in 2018. The trade balance has remained persistently elevated in recent years on the back of buoyant global trade developments. The primary income balance is a source of short-term volatility and is largely responsible for the increase in 2017.   Solid growth in domestic demand and increasing wages in this phase of the business cycle, coupled with the ongoing fiscal stimulus, is expected to support to a gradual reduction of the surplus. Nevertheless, a surplus position linked to structural reasons is expected to persist going forward, among others linked to the presence of multinationals.  The government is implementing a sizeable fiscal stimulus package, which should boost domestic demand and thereby contribute to external rebalancing. For 2019 increases are planned in the areas of education, research and innovation, security and infrastructure. Despite a shared understanding among stakeholders about the need to reform the pensions system, negotiations between the social partners collapsed in November 2018. The implementation of measures in the area of corporate income taxation and e.g. the Anti Tax Avoidance Directive might affect cross-border income flows as well as headquarter location decisions for multinationals, with potential implications for corporate net saving. However, it remains to be seen to what extent this would affect the current account.    
 
 
 
 
3. Summary of the main findings from the MIP in-depth review 

Table (continued) 

(*)The first column summarises 'gravity' issues which aim at providing an order of magnitude of the level of imbalances. The 
second column reports findings concerning the 'evolution and prospects' of imbalances. The third column reports recent and 
planned relevant measures to address these. Findings are reported for each source of imbalance and adjustment issue. The 
final three paragraphs of the matrix summarise the overall challenges in terms of their gravity, developments and prospects, 
policy response. 
Source: European Commission 

20 

Private debt  The private debt level in the Netherlands continues to decline but is still very high, reaching 252% of GDP in 2017. Household debt declined to 105% of GDP in 2017 but still exceeds the euro area average by about 50 percentage points, driven by tax incentives and an underdeveloped rental market. While households have a high positive net asset position due to housing and pension wealth, they remain vulnerable to financial and other shocks since those assets are often illiquid. NFC debt has declined somewhat to 148% of GDP in 2017 from over 150% in previous years (see Section 4.2.3). The high level of NFC debt is largely driven by intra-group debt of multinationals.          Passive deleveraging is expected to continue on the back of robust real GDP growth and increasing inflation. Nominal household debt is increasing again after a temporary decline in 2013 and 2014. Despite a strong house price growth, the increase remained limited to 1% per year on average in 2015-2017. Moderate debt flows combined with the housing market recovery have strongly reduced the share of underwater mortgages (see Section 4.2.4). The pace of the increase is much slower than before the crisis when it grew by more than 8% per year over 2000-2008. Overall, private debt as a percentage of GDP is expected to gradually decline further, but remain elevated over the medium term.  The acceleration of the reduction in mortgage interest deductibility has been adopted by Parliament, reducing the maximum applicable rate to 37% by 2023. Nonetheless, a substantial subsidy on homeownership remains. Initiatives are being undertaken to improve the functioning of the private rental market, but the effect remains to be seen.  In 2019, a limitation on the deductibility of interest payments (‘earnings stripping’) was introduced as part of the implementation of the Anti-Tax Avoidance Directive. This reduces the incentive to take on debt for tax optimisation purposes and could help reduce corporate debt.   Conclusions from IDR analysis  The current account balance is one of the highest in the euro area, peaking at 10.5% in 2017. The persistently high gap between savings and investment has possible adverse consequences for the allocation of resources and therefore growth and welfare. Household debt, consisting mainly of mortgage debt, is high compared to the euro area. Tax incentives encourage households to take on mortgage debt, while the private rental market remains underdeveloped.  A gradual reduction of the current account is expected in line with solid growth in domestic demand and increasing wages in this phase of the cycle. However, it is expected to remain high, also driven by structural features such as the pension system with implications for household consumption and disposable income and the presence of multinationals. Nominal household debt is increasing again as the housing market has recovered, but is outpaced by nominal GDP growth, resulting in passive deleveraging.  The fiscal stimulus package should support domestic demand and contribute to external rebalancing, although it has been subject to implementation lags in 2018. The acceleration of the reduction in mortgage interest deductibility has been adopted and takes effect between 2020 and 2023, although a generous subsidy remains. Despite a shared understanding among stakeholders, there is no comprehensive agreement on pension reform.   
 
 
 
 
 
 
 
3. Summary of the main findings from the MIP in-depth review 

Box 3.1: Spill-overs of structural reforms – the Netherlands 

There is some debate about the size and direction of the cross-border spill-overs of structural reforms. 
While  the  demand  effect  leads  to  higher  export  demand  for  foreign  products,  reforms  usually  improve  a 
country’s competitiveness too, which has the opposite effect. Whether the net effect is positive or negative 
depends  on  the  relative  strength  of  these  two  opposing  channels  and  is  likely  to  be  reform-specific.  In  a 
simulation exercise using the European Commission’s the QUEST model(1), the impact of a comprehensive 
set of reforms is quantified for all EU Member States in a harmonised way (Varga and in ’t Veld, 2014). For a 
large  set  of  structural  indicators  the  benchmark  is  defined  as  the  average  of  the  three  top  performing 
countries. In the simulation these gaps are then closed by half for all indicators together, and for each country 
separately. An update of this exercise for the Netherlands, based on recent indicators (but does not capture 
the latest reform measures), is shown in the table below. As the magnitude of the reform ‘shocks’ simulated 
here  are  based  on  a  harmonized  benchmarking  exercise,  they  do  not  exactly  correspond  to  past  European 
Semester  country  specific  recommendations.  However,  they  do  illustrate  the  potential  impact  structural 
reforms can have. 

An ambitious reform package would boost Dutch GDP, with small but positive spillovers to the rest of 
the  euro  area.  The  simulated  reforms  cover  all  areas:  product  market  regulation  and  entry,  labour  market 
participation, taxation structure and R&D subsidies. For the Netherlands the largest ‘reform gaps’ identified 
are in the tax wedge (as captured by the relative share of labour tax revenues compared to consumption tax 
revenues)  and  the  benefit  replacement  rate,  with  smaller  gaps  identified  in  the  field  of  labour  force 
participation,  in  particular  of  low-skilled  workers.  Based  on  the  simulation,  this  ambitious  reform  package 
would boost GDP by 5% after 10 years, and 7.75% after 20 years. The reforms raise competitiveness, leading 
to a real depreciation and boosting exports. The terms of trade fall by around 5% after 10 years, and there is a 
marginally positive effect on the trade balance as a share of GDP. The net spill-over to the rest of the euro 
area (EA) is small but positive.  

(1)  More information on the QUEST model is available at https://ec.europa.eu/info/business-economy-euro/economic-and-

fiscal-policy-coordination/economic-research/macroeconomic-models_en  

21 

Table 1:NetherlandsYears123451020GDP0.461.091.72.312.95.087.74REER0.240.761.351.972.584.476.8Trade balance (% GDP)-0.17-0.24-0.140.010.180.11-0.07Rest of EA GDP0.020.020.020.010.010.020.07EA GDP0.040.080.110.140.170.310.5Note: Increase in REER is a depreciation. GDP and REER are expressed in percent deviation. Trade balance (% GDP) is (cid:10)(cid:10)in percentage point deviation from baseline. 
 
 
 
 
 
 
 
 
 
4.  REFORM PRIORITIES 

4.1.  PUBLIC FINANCES AND TAXATION 

4.1.1.  EXPENDITURE DEVELOPMENTS* (5) 

Following  a  period  of  fiscal  consolidation,  the 
government  is  implementing  a  sizeable  fiscal 
stimulus package. The expansionary fiscal policy 
stance  is  illustrated  by  a  1  percentage  point  of 
GDP  decline  in  the  structural  budget  balance  in 
two years, from a surplus of 0.7% of GDP in 2017 
to a deficit of 0.3% in 2019 (Graph 1.8) (6). In its 
2019  Budgetary  Plan,  the  government  highlights 
increased  spending  on  education,  research  and 
innovation  (EUR 1.9 billion,  0.25%  of  GDP), 
defence  and  security  (EUR 1.7 billion,  0.2%  of 
GDP)  and  infrastructure  (EUR 1 billion,  0.1%  of 
GDP,  amongst  others  via  an  increase  in  the 
infrastructure  fund).  Public  investment,  which  fell 
from  a  peak  of  4.3%  of  GDP  in  2009  to  3.4%  of 
GDP  in  2017,  is  expected  to  stabilise  at  slightly 
above 3.5% of GDP in 2018 and 2019. 

Graph 4.1.1:  Change in the structural balance vs. output 

gap, 2019, euro area Member States 

(1) Greece is outside the chart area with output gap of -3.8 
and change in the structural balance of -1.7 
Source: European Commission Autumn 2018 Economic 
Forecast 

only  having  a  limited  impact  on  real  economic 
growth  due  to  supply-side  constraints.  However, 
price and wage developments have been relatively 
muted  until  now.  Moreover,  focusing  on  supply-
side  investment,  such  as  education,  R&D  and 
innovation is expected to have beneficial effects on 
potential growth in the medium run.  

4.1.2.  TAXATION* 

indirect 

taxation 

increasing 

The  2019  income  tax  package  contains  a  shift 
away  from  labour  and  income  taxes  to  other 
sources  of  revenue  less  detrimental  to  growth. 
The  Netherlands  has  one  of  the  highest  tax  and 
non-tax compulsory payment wedges on labour in 
the  EU  (European  Commission,  2018e).  The 
government  is  reducing  the  tax  burden  on  labour 
by lowering personal income tax by 0.7% of GDP, 
while 
(on 
consumption)  by  0.4%  of  GDP,  largely  via  an 
increase in the reduced Value Added Tax rate from 
6%  to  9%  as  of  2019.  A  lower  tax  wedge  and  a 
shift from direct to indirect taxes is generally seen 
as  beneficial  for  economic  growth  as  the  tax 
burden  is  shifted  from  the  active  to  the  inactive 
population.  The  number  of  tax  brackets  has  been 
reduced from four to two, with a base rate of 38% 
in the lower bracket and a top rate of 51.75% (for 
incomes  above  EUR 68 507)  as  from  2019.  Both 
rates will be reduced to 37% and 49.5% from 2021 
onwards.  Tax  deductible  expenses  will  gradually 
only  be  deductible  against  the  lower  rate,  leading 
to  lower  tax  expenditures.  In  addition,  the  labour 
tax  credit  (arbeidskorting)  will  be  increased  to 
incentivese  people  to  work.  To  strengthen  the 
fiscal 
the 
investment  climate  for  companies, 
corporate  tax  rate  will  be  gradually  reduced  from 
to 
25% 
EUR 200 000,  the  rate  will  be  reduced  from  20% 
to 15%. 

taxable  profit  up 

to  20.5%.  For 

While  the  fiscal  stance  is  pro-cyclical,  the 
expansionary  budget  is  partly  used  to  ease 
supply-side  constraints.  A  pro-cyclical  fiscal 
stance  (Graph 4.1.1)  risks  fuelling  prices  while 

(5)  An asterisk (*) indicates that the analysis in the section 
contributes to the in-depth review under the MIP (see 
Section 3 for an overall summary of main findings) 
(6)  European Commission Autumn 2018 Economic Forecast. 

The high level of dividend, royalty and interest 
payments  made via the Netherlands (European 
Commission,  2018e)  may  be  an  indication  that 
the  country’s  tax  rules  are  used  by  companies 
that  engage  in  aggressive  tax  planning.  The 
current  absence  of  withholding  taxes  on  royalties 
and  interest  payments  (which  may  lead  to  those 
payments  escaping  tax  altogether,  if  they  are  also 

22 

BEDEEEIEESFRITCYLVLTLUMTNLATPTSISKFIEA-1,2-1,0-0,8-0,6-0,4-0,20,00,20,40,6-1,0-0,50,00,51,01,52,02,53,03,5Change in the structural balance (pps. of pot.GDP)Output gap (% of pot. GDP) Pro-cyclicalAnti-cyclicalAnti-cyclicalAnti-cyclicalPro-cyclical 
 
 
                                                           
amounts 

royalties) 

tax  avoidance 

through  Dutch 

not subject to tax in the recipient jurisdiction) may 
have  facilitated  aggressive  tax  planning.  A  study 
commissioned  by  the  Dutch  Ministry  of  Finance 
letterbox 
on 
companies(7)  concludes  that  the  annual  income 
flowing 
interest, 
(dividends, 
flows 
through 
to 
companies 
these 
(27%  of  GDP),  of  which 
EUR 199 billion 
EUR 177 billion  (24%  of  GDP)  mainly  flows  to 
other Member States and the USA. The remainder, 
EUR 22 billion  (3%  of  GDP),  flows  to  low  tax 
jurisdictions.  This  part  should  be  affected  by  the 
announced  introduction  of  withholding  tax  on 
royalties(8),  which 
interest  and 
should  be 
monitored  closely.  For  the  income  flows  to  other 
Member  States  and 
the  Dutch 
that  normal 
government  generally  assumes 
taxation will apply in these countries and that any 
tax  avoidance  could  be  addressed  by  exchanging 
information and anti-abuse measures. 

the  USA, 

The Netherlands is acting to address aggressive 
tax  planning  by  implementing  European  and 
internationally  agreed  initiatives.  The  interest 
deduction  restriction  of  the  Anti-Tax  Avoidance 
Directive  has  been  introduced  in  the  shape  of  an 
earnings  stripping  measure,  implying  that  net 
interest expenses are only deductible up to 30% of 
the  gross  operating  profit(9).  The  Netherlands 
introduced  black  list  with  21  countries  that  the 
Netherlands considers low-tax jurisdictions, which 
is  used  for  the  new  controlled  foreign  company 
future 
measure, 
withholding taxes on royalties and interests. At the 
same time, two existing targeted interest deduction 
restrictions  have  been  abolished.  The  government 
has also announced that as of 1 July 2019 certainty 
in  advance  (rulings)  will  only  be  granted  to 
multinationals  that  have  a  sufficient  economic 
nexus  in  the  Netherlands.  A  ruling  will  not  be 
granted  if  it  involves  a  transaction  with  an  entity 
residing in a low-tax jurisdiction or if  the purpose 
of  the  transactions  is  solely  to  reduce  or  avoid 
paying Dutch or foreign taxes. This  may limit the 
attractiveness for letterbox companies. In 2018, the 

rules  and 

ruling 

the 

the 

(7)  Report  by  Stichting  Economisch  Onderzoek 

(SEO) 
‘Balansen,  inkomsten  en  uitgaven  van  BFI’s,  Amsterdam 
October 2018. 

(8)  The  government  intends  to  issue  a  proposal  to  introduce 
withholding taxes on interest and royalty payments to low 
tax  jurisdictions  and  in  abusive  situations  in  2019  to 
become effective as of 2021. 

(9)  The  Netherlands  is  not  providing  for  a  group  escape  and 

lowering the threshold to EUR 1 million. 

4.1. Public finances and taxation 

government introduced a withholding tax on profit 
distributions by cooperatives in abusive situations, 
its effects remain to be assessed. The  government 
has also proposed to adopt almost all provisions of 
the  Multilateral  Convention  to  Implement  Tax 
Treaty  Related  Measures  to  Prevent  Base  Erosion 
and  Profit  Shifting,  including  a  principal  purpose 
test  to  counter  treaty  shopping.  These  should 
become  effective  as  of  2020  and  should  among 
others prevent multinationals from benefiting from 
the Netherlands’ tax treaty network without having 
substantial  presence  in  the  Netherlands.  However, 
application  of  the  provisions  of  the  multilateral 
instrument will depend on the choices made by the 
relevant  treaty  partners.  The  effectiveness  of  all 
these  measures 
tax 
planning will need to be monitored(10).  

in  addressing  aggressive 

4.1.3.  DEBT SUSTAINABILITY ANALYSIS AND 

FISCAL RISKS 

the  Netherlands 

According  to  the  2018  Fiscal  Sustainability 
Report, 
faces  medium 
sustainability  risks  in  the  long  run.  The  report 
analyses  risks  in  the  short-,  medium-  and  long 
term (11).  The  early  detection  indicator  of  fiscal 
stress,  the  S0  indicator,  signals  low  risks  in  the 
short  term (12).  The  medium-term  S1  indicator, 
which  measures  the  effort  required  to  achieve  a 
debt level of 60% of GDP by 2033 (13), is negative 
(at  -1.7%  of  GDP).  This  implies  low  fiscal 
sustainability risks, which is mainly explained by a 
debt  level  below  the  reference  value.  The  debt 
low 
sustainability  analysis  also  points 

to 

(10)  The  government  has  commissioned  an  external  research 
bureau  to  carry  out  a  zero  measurement  on  money  flows. 
This  research  should  provide  for  a  better  insight  into  the 
effects of the implementation of various measures aimed at 
addressing aggressive tax planning. The result of this zero 
measurement on money flows, special financial institutions 
and balance sheet amounts has been reported to the Dutch 
parliament. Developments in these figures will be reported 
yearly. 

(11)  For  details,  see  the  European  Commission  2018  Fiscal 
Sustainability  Report  (European  Commission,  2019)  and 
annex B. 

(12)  The S0 indicator is a composite indicator to evaluate risk of 
fiscal  distress  in  the  short  term,  based  on  a  set  of  25 
indicators. 

(13)  The  medium-term  sustainability  indicator  S1  shows  the 
additional required adjustment, in terms of improvement in 
the government structural primary balance, over five post-
forecast years to reach a 60% public debt-to-GDP ratio by 
2033, including financing for future additional expenditure 
arising from population ageing. 

23 

 
                                                           
                                                           
in 

sustainability  risks.  However,  the  analysis  of  the 
fiscal  sustainability  gap  indicator  (S2)  points  to 
medium  risk  in  the  long  term (14).  This  is  mainly 
due  to  the  projected  increase  in  ageing  costs. 
While  the  Netherlands  scores  well  in  terms  of 
fiscal  sustainability  of  the  public  pension  system 
and  other  expenditures  related  to  ageing,  public 
the  field  of  health-care  and  in 
spending 
particular long-term care stand out. In the baseline 
reference  scenario,  public  spending  on  long-term 
care  is  expected  to  grow  from  3.5%  of  GDP  in 
2016  to  6%  of  GDP  in  2070,  with  both  having  a 
much higher initial level and greater increase than 
on average in the euro area (Graph 4.1.2). In a risk 
scenario,  which  assumes  higher  age-related 
spending  due  to  non-demographic  costs,  such  as 
long-term  care  costs  in  excess  of  costs  expected 
from  purely  demographic 
to 
technological  changes  (e.g.  development  of  new 
increases  are  even  greater.  This 
drugs) 
today’s 
liability 
represents  a  substantial 
government finances. 

factors  due 

the 

for 

improve 

sustainability 

the  authorities  promote 

The  2015  long-term  care  reform  may  lead  to  a 
more  cost-effective  system,  but  its  effect  on 
fiscal 
is  partly  off-set  by 
additional  spending  to  improve  the  quality  of 
nursing  homes.  In  2015,  the  government  moved 
the long-term care system to the municipal domain 
to 
its  efficiency  and  support  fiscal 
sustainability.  This  was  accompanied  by  a  budget 
cut  and  a  tightening  of  the  eligibility  criteria.  In 
independent 
parallel, 
living,  where  older  people  are  encouraged  to  live 
at  home  for  as  long  as  possible  before  turning  to 
more  expensive  nursing  homes.  This  reform  is 
expected  to  reduce  the  growth  in  long-term  care 
expenditure  by  0.2%  per  year  in  the  period  2018-
fiscal 
2021 (Mot et al., 2016). 
sustainability 
that 
additional  annual  expenditure  of  EUR 2.1 billion 
(0.3% of GDP) is needed to meet the requirements 
of  the  quality  framework  for  nursing  homes  as  of 
2021. 

However, 

concerns 

remain 

given 

(14)  The long-term sustainability indicator S2 shows the upfront 
adjustment  to  the  current  primary  balance  (in  structural 
terms)  required  in  order  to  stabilise  the  debt-to-GDP  ratio 
over  the  infinite  horizon,  including  financing  for  any 
additional expenditure arising from an ageing population. 

4.1. Public finances and taxation 

Graph 4.1.2:  Long term care expenditure 

Source: Ageing Report 2018, Ageing Working Group 
scenario's 

4.1.4.  FISCAL FRAMEWORK AND QUALITY OF 

PUBLIC FINANCES 

Since 

responsibilities, 

the  mid-nineties, 

The  Netherlands  has  a  well-established  fiscal 
framework. 
the 
Netherlands  has  been  conducting  a  trend-based 
fiscal policy with a strong multi-annual focus. The 
main  characteristics  of  this  multi-annual  trend-
based  fiscal  framework  include:  (i) the  use  of 
macroeconomic 
independently 
derived 
assumptions;  (ii) the  use  of 
inflation-adjusted 
expenditure  ceilings  for  the  government’s  entire 
term;  (iii) the  use  of  automatic  stabilisers  on  the 
revenue  side,  and  (iv) a  well-defined  budgetary 
process for decision-making  and clear distribution 
tasks  of 
of 
independent  fiscal  institutions,  the    Bureau  for 
Economic  Policy  Analysis    and  the  Advisory 
Division  of  the  Council  of  State.  The  Bureau  for 
Economic Policy Analysis carries out independent 
macro-economic  and  fiscal  forecasts  while  the 
Advisory Division of the Council of State, as fiscal 
council, is tasked with monitoring compliance with 
numerical  fiscal rules and a  normative assessment 
of  government  finances.  The  commitment  to 
comply  with  EU  fiscal  rules  is  embedded  in  the 
legal  framework  of  the  Netherlands,  in  particular 
via  the  law  on  sustainable  public  finances  (Wet 
Houdbare Overheidsfinancien). 

including 

the 

fiscal 

Automatic 
stabilisation  has  been 
strengthened.  The  fiscal  framework  uses  strict 
expenditure  ceilings,  with  automatic  stabilisation 
mostly  taking  place  via  the  revenue  side  of  the 
budget.  Changing  macro-economic  conditions  are 

24 

NL risk scenarioEA  risk scenario0123456789162025303540455055606570% of GDPNL  reference scenarioEA reference scenario 
                                                           
 
therefore absorbed by the headline budget balance 
via  revenues.  However,  this  framework  does  not 
prevent  pro-cyclical  decision-making  when  multi-
annual  fiscal  plans  are  set  at  the  start  of  a  new 
government  term,  or  when  fiscal  thresholds  are 
breached during a government term. In fact, fiscal 
consolidation (operationalised by a positive change 
in the  cyclically-adjusted primary budget balance) 
took  place  mostly  in  years  with  a  negative  output 
gap,  and  fiscal  expansions  in  economic  good 
times, with a positive output gap (Graph 4.1.3). In 
2018, 
the 
automatic  stabilisation  function  of  the  budget  by 
removing  the  non-discretionary,  cyclical  changes 
in  expenditure  on  unemployment  and  social 
assistance  from  the  expenditure  ceiling.  This 
allows  for  stronger  automatic  stabilisation  via  the 
expenditure  side  of  the  budget.  As  short-term 
expenditure  multipliers  tend  to  be  larger  than  tax 
multipliers (thanks to smaller savings leakages, see 
also  Coenen  et  al,  2012),  the  fiscal  stabilisation 
function of the budget is expected to improve. 

the  government  slightly 

improved 

Graph 4.1.3:  Fiscal policy stance, 1997-2020 

4.1. Public finances and taxation 

areas  such  as  education  and  public  investment(15) 
and  comparatively  low  share  of  expenditure  on 
social  protection  and  general  public  services, 
compared to other euro area countries. 

Graph 4.1.4:  Government expenditure by function 
(% of total government expenditure) 

Selection of indicators; not represented is the share of 
expenditure for social protection (37.3% in NL, 42.1% in the 
EA), as this would affect the readability of the graph. 
Source: Eurostat, Classification of the Functions of 
Government (2016) 

(15)  The  data  used  in  the  graph  slightly  differ  from  national 
accounts data. According to 2017 national accounts, public 
investment is 3.4% of GDP and 8.2% of total government 
expenditure  in  the  Netherlands,  compared  to  2.6%  and 
5.5% respectively in the euro area. 

Source: European Commission 2018  

The  government  expenditure  mix  is  relatively 
growth-friendly.  Government  expenditure  as  the 
ratio to GDP has fallen, due to the acceleration of 
nominal GDP growth in recent  years. Graph 4.1.4 
assesses  the  government’s  expenditure  mix  by 
function  compared  to  the  euro  area  average,  with 
expenditure categories expressed as a share of total 
government  expenditure.  This  shows  relatively 
high  government  spending  on  growth  friendly 

25 

199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020-2,5-2,0-1,5-1,0-0,50,00,51,01,52,0-4,0-3,0-2,0-1,00,01,02,03,0∆ CAPBOutput gapChange in CAPB (2018 AF)Linear (Change in CAPB (2018 AF))expansion/ good timesconsolidation/ bad timesexpansion/ bad timesconsolidation/ good times05101520general publicservicesdefensepublic orderand safetyeconomicaffairsenvironmentprotectionhealthrecreation,culture andreligioneducationpublicinvestmentNLEA-19 
 
 
                                                           
4.2.  FINANCIAL SECTOR 

4.2.1.  BANKING SECTOR  

While  there  appear  to  be  no  imminent  risks  to 
financial stability, vulnerabilities in the banking 
sector  remain.  Dutch  financial  institutions  meet 
regulatory  requirements  and  their  profitability 
improved last year supported by economic growth. 
Their  asset  quality  is  sound  and  the  level  of  non-
performing  loans  is  one  of  the  lowest  in  the  EU. 
However,  banks  still  largely  rely  on  market 
funding  —  albeit  with  long  maturity  periods  in 
most cases — and their leverage ratio stands below 
the EU average. 

Concentration  in  the  banking  sector  may  give 
rise  to  competition  issues.  With  total  assets  of 
312%  of  GDP  at  in  September  2018,  the  banking 
sector  remains  very  large  compared  with  the  EU 
average of 274%. The market is characterised by a 
high concentration. This may affect competition in 
certain  markets,  such  as  credit  to  non-financial 
corporations,  where  banks  are  hardly  challenged 
by  other  lenders.  For  instance  in  the  small  and 
medium-sized  enterprises’  loans  market,  the  three 
largest  Dutch  banks  provide  circa  85%  of  total 
bank  financing.  On  the  other  hand,  the  mortgage 
credit market has become more competitive in the 
last  few  years  thanks  to  the  emergence  of  new 
players  such  as  insurance  companies  and  pension 
funds.  They  currently  account  for  around  30%  of 
new mortgage production. 

sound 

financial 
Dutch  banks  maintain 
resilience, but their reliance on market funding 
and 
leverage  remain  high.  Their  financial 
stability  indicators,  namely  the  solvency  position 
and  capital  ratios,  largely  exceed  the  regulatory 
requirements. At sector level, the capital adequacy 
ratio  stood  at  22.1%  and  the  Tier  1  ratio,  which 
compares a bank’s equity capital with its total risk-
weighted  assets,  at  18.4% 
in  Q2-2018  (see 
Table 4.2.1).  Given  the  strong  capital  base  and 
modest lending growth, the counter-cyclical buffer 
has been kept at 0% by the Dutch central bank (De 
Nederlandsche Bank, 2018a). At the same time, it 
maintained  the  1%  to  3%  additional  buffers 
imposed  on  the  five  systemic  banks,  which  are 
gradually  being  increased  between  2016-2019. 
Regardless of the sound capital levels, the banking 
sector continues to be highly leveraged with a fully 
phased-in  leverage  ratio  (capital/total  assets)  of 
4.4%  in  September  2018,  which  is  one  of  the 
the  euro  area.  Furthermore,  with 
lowest 

in 

deposits (16) accounting for a modest 49% of  total 
funding  (against  58%  for  the  euro  area  average), 
the  sector  continues  to  rely  heavily  on  market 
financing.  Even  though  its  maturity  has  been 
largely  extended,  thereby  limiting  liquidity  risk, 
the cost of market funding could grow sharply in a 
stress situation.  

Table 4.2.1: 

Financial soundness indicators, all banks in the 
Netherlands 

*ECB aggregated balance sheet: loans excl to gov and MFI 
/ deposits excl from gov and MFI 
**For comparability only annual values are presented 
Source: ECB Central Bank Data 

The  profitability  of  Dutch  banks  has  been 
rising, mirroring economic growth. The sector’s 
return  on  equity  reached  almost  9%  in  2017 
compared  to  the  EU  average  of  6%.  However, 
given  the  continued  squeeze  on  interest  margins, 
the banks’ profits increasingly rely on non-interest 
income sources and  further cost-cutting  measures. 
However,  there  is  room  for  cost-to-income  and 
efficiency  improvement  in  the  sector,  among 
others by modernising IT systems and introducing 
digital  solutions  by  smaller  institutions,  which 
would  allow  them  to  compete  better  against  new 
fintech players. 

Bank  credit  growth  turned  negative  in  2018  in 
both household and corporate segments. In Q3-
2018, the stock of household credit in the banking 
sector fell by around 2% year-on-year. It consisted 
of  a  2%  decrease  in  mortgage  loans  and  a  5% 
decrease  in  consumer  loans  (Graph 4.2.1).  The 
reduction  was  not  only  due  to  subdued  new 
lending by banks, but also as a  result of the large 
volume  of  redemptions  and  repayments  made  by 
consumers. In addition, the role of non-banks such 
as pension funds and insurers in the production of 
mortgages  has  been  growing,  as  reflected  in  their 

(16)  Deposit holdings at banks have been steadily growing since 
2010. This positively impacted on the loan-to-deposit ratio 
standing  below  107%  in  Q1  2018,  coming  from  120%  in 
2010. 

26 

(%)201020112012201320142015201620172018Q2Non-performing debt2,32,42,72,73,02,42,21,91,8Coverage ratio36,540,437,641,037,837,835,629,827,2Loan to deposit ratio*120,3119,5119,2117,8114,1113,4110,1107,8105,5Tier 1 ratio11,811,812,312,915,416,617,918,618,4Capital adequacy ratio14,113,714,515,318,420,622,422,122,1Return on equity**7,56,04,15,03,37,07,38,8-Return on assets**0,30,30,20,20,20,40,40,5- 
 
 
 
 
 
                                                           
4.2. Financial sector 

Treasury  reduces  the  gross  debt  level,  but  has  no 
effect on the public deficit as its contributions were 
already  classified  under  the  government  sector 
based  on  the  EUROSTAT  decision  from  2016. 
Nevertheless,  if  in  case  of  a  crisis  the  Dutch 
Treasury suddenly needs to raise market financing 
in order for the fund to make payouts,, gross debt 
will  increase,  which  may  have  an  impact  on 
financial stability. 

large 

The  recovery  and  resolution  framework  for 
insurance  companies  (the  Insurers  Recovery 
and Resolution Act) was adopted, which should 
contribute  to  financial  stability.  Following  the 
lessons  learned  during  the  crisis  and  given  the 
vulnerabilities  of  the  insurance  sector  —  brought 
out  by  low  interest  rates  and  shrinking  life 
insurance  industry  —  the  government  proposed  a 
legal  framework  for  the  recovery  and  orderly 
resolution of insurers. The legislation draws on the 
Bank  Recovery  and  Resolution  Directive.  It 
mandates  medium-sized  and 
insurance 
companies  to  set  up  crisis  plans  that  outline 
measures  to  be  taken  when  they  are  at  risk  of 
failing.  Smaller  players  whose  default  would  not 
have a  major impact on society, financial  markets 
or  the  economy  would  not  be  obliged  to  draw  up 
crisis plans. In addition, the Dutch central bank as 
resolution  authority  would  have  to  draw  up 
resolution  plans  for  the  systemic  insurance  firms 
and  would  have  the  power  to  intervene  in  critical 
situations.  Thanks  to  the  new  legislation,  policy 
holders  should  be  better  protected  and  insurance 
companies  more  resilient,  resulting  in  greater 
financial  stability.  The  legislation  was  adopted  on 
27 November 2018 and is in force from 1 January 
2019. 

4.2.2.  ACCESS TO FINANCE 

improving.  The 

Overall,  the  Netherlands  maintains  a  score  in 
line  with  the  EU  average  on  access  to  finance, 
but the mark-up on smaller loans remains high. 
Demand  for  credit  is  rising,  with  the  success  rate 
situation  worsened 
slightly 
somewhat  at  the  end  of  2017  compared  to  other 
euro  area  countries  (ECB,  2018  and  European 
Commission,  2018c).  Small  and  medium-sized 
enterprises,  which  take  out  smaller  loans  on 
average, pay a relatively large mark-up: the cost of 
borrowing for small loans relative to large loans is 
the  third  highest  in  the  EU,  despite  falling 

expanding market share. It also appears that a high 
number  of  new  residential  investments  have  been 
financed  from  investors’  equity  or  households’ 
savings. Non-financial corporate credit growth also 
remained  negative,  at  around  2%  year-on-year  in 
Q3-2018,  partly  due 
to  a  high  volume  of 
repayments.  Furthermore,  large  corporates  have 
been  increasingly  using  corporate  bonds  as  a 
source  of  finance  to  replace  or  complement  bank 
credit.  The  issuance  of  corporate  bonds  by  Dutch 
companies has grown by roughly 50% since 2014. 

Graph 4.2.1:  Credit growth 

Source: European Central Bank  

The  funds  of  the  Deposit  Guarantee  Fund,  an 
independent legal entity, have been moved from 
a segregated account in the Dutch central bank 
to  an  account  with  the  Treasury.  The  Dutch 
Deposit Guarantee Fund is being built up gradually 
and has  so far accumulated around EUR 1 billion, 
with  an  additional  EUR 4 billion  to  be  paid  by 
banks by 2024. Until 2018, these funds were  kept 
in a ring-fenced account of the Dutch central bank 
with  the  intention  to  be  invested  in  a  diversified 
portfolio of low-risk assets in line with the Deposit 
Guarantee  Scheme  Directive.  As  of  November 
2018, 
the  fund  have  been 
transferred to be kept in an account with the Dutch 
Treasury, instead of the central bank. The Treasury 
will now be able to use the funds for the financing 
of  government  expenditures.  Once  the  fund  needs 
to  make  payouts 
finance 
interventions in accordance with its legal mandate, 
the Treasury will have to make the funds available. 
The  transfer  of  the  account  of  the  fund  to  the 

to  depositors  or 

the  resources  of 

27 

-12-9-6-30369Jan-12Jun-12Nov-12Apr-13Sep-13Feb-14Jul-14Dec-14May-15Oct-15Mar-16Aug-16Jan-17Jun-17Nov-17Apr-18Sep-18y-o-y % changeTotal privateHouseholdsMortgage credit Non-financial corporations 
 
4.2. Financial sector 

at  around  120%  of  GDP,  but 
increased 
substantially  during  the  crisis  to  over  150%, 
followed  by  a  gradual  decline.  The  high  level  of 
corporate  debt  and  the  recent  increase  are  driven 
by  multinational  enterprises.  Debt  of  other  (non-
multinational)  firms  has  been  broadly  stable  in 
recent  years  and  does  not  exceed  the  prudential 
corporate  debt  threshold.  As  multinationals’  debt 
largely  consists  of  intra-group  debt,  it  does  not 
pose 
risk 
(European  Commission,  2018e).  In  2019,  a 
limitation on the deductibility of interest payments 
(‘earnings stripping’) was introduced as part of the 
implementation  of 
the  Anti-Tax  Avoidance 
Directive.  This  reduces  the  incentive  to  take  on 
debt  for  tax  optimisation  purposes  and  could  help 
reduce corporate debt.  

immediate  macro-economic 

an 

Graph 4.2.3:  Disaggregation of NFC debt 

marginally  since  2016  (European  Commission, 
2018c). While remaining small, equity funding and 
business angel funding are relatively important and 
fast  growing  (OECDa,  2018).  Various  initiatives 
have been launched to support small and medium-
sized  enterprises  financing.  These  include  venture 
capital, 
small  and  medium-sized 
enterprises credit supply or the emission of bonds 
via  the  stock  exchange  and  the  set-up  of  a 
dedicated investment institution (see Box 4.4.2). 

increasing 

4.2.3.  PRIVATE DEBT* 

The  private  debt  level  in  the  Netherlands 
continues to decline, but remains very high. The 
private  debt  ratio  reached  252%  of  GDP  in  2017, 
down  from  262%  in  2016,  with  both  households 
and  non-financial  corporations  contributing  to  the 
decline.  Household  debt  accounted  for  105%  of 
GDP  versus  148%  for  non-financial  corporations. 
This  is  well  above  Commission  calculations  of 
prudential  thresholds,  which  stood  at  65%  and 
93% for households and non-financial corporations 
respectively in 2017(17).  

Graph 4.2.2:  Private debt 

The split by corporation type is based on corporate financial 
accounts data (Financiën grote ondernemingen and 
Financiën alle ondernemingen), which do not fully match 
national accounts data. 
Source: Statistics Netherlands. 

Household  debt  declined  to  105%  of  GDP  in 
2017  as  nominal  debt  developments  were 
outpaced by GDP growth. However, it remained 
well  above  prudential  thresholds.  After  declining 
temporarily in 2013 and 2014, nominal household 
debt is increasing again. However, at 1% per year 
on  average  over  2015-2017  it  is  increasing  at  a 
much  slower  pace  than  before  the  crisis,  when  it 
grew  by  more  than  8%  per  year  over  2000-2008. 
Mortgage  debt  is  the  main  driver  of  household 
debt,  accounting  for  86%  of  total  household  debt 
in  2017.  Part  of  the  relatively  subdued  growth  is 

Source: Statistics Netherlands 

High  corporate  debt  is  mainly  driven  by  intra-
group  debt  of  multinationals.  Until  the  crisis, 
non-financial  corporate  debt  was  relatively  stable 

(17)  Prudential  thresholds  represent  the  debt  threshold  beyond 
which  the  probability  of  a  banking  crisis  is  high, 
minimising  the  probability  of  missed  crises  and  that  of 
false alerts. See also European Commission (2017c). 

28 

0204060801001201401600200400600800100012001400160018002000959799010305070911131517% GDPBillion EURNFC (lhs)HH & NPISH (lhs)NFC (rhs)HH & NPISH (rhs)0%20%40%60%80%100%120%140%160%0%20%40%60%80%100%120%140%160%111213141516MultinationalsNL large corporateForeign large corporateOther NFC'sNFC debt (national accounts) 
 
                                                           
 
have 

these 

bank, 

amounted 

explained  by  voluntary  mortgage  repayments, 
which  are  financially  attractive  given  the  low 
interest  rates  on  deposits.  According  to  the  Dutch 
to 
central 
EUR 75 billion  since  2013  (De  Nederlandsche 
Bank,  2018c).  Solid  real  GDP  growth  and  higher 
inflation  are  expected  to  support  further  passive 
deleveraging  (also  see  Section  1).  However, 
household  debt  over  GDP  was  still  about  50 
percentage  points  higher 
the  euro  area 
average in 2017. As a share of household income, 
the difference is even greater as household income 
constitutes  a  relatively  low  share  of  GDP  in  the 
Netherlands (Graph 4.2.4). 

than 

Graph 4.2.4:  Household debt (2017, % of GDP) 

4.2. Financial sector 

4.2.4.  HOUSING MARKET* 

The  housing  market  moved from recovery into 
a  phase  of  buoyancy.  Nominal  house  prices 
increased  by  9%  in  2018,  up  from  annual  growth 
of  7.6% 
in  2017.  Nationwide,  house  prices 
exceeded  their  2008  nominal  pre-crisis  level  in 
mid-2018,  although  they  are  still  well  below  the 
pre-crisis  level  in  real  terms.  Real  house  prices 
increased  by  6%  in  2017,  thereby  reaching  the 
MIP scoreboard threshold, and accelerated further 
in 2018.  

Price-to-income  and  price-to-rent  ratios  were 
broadly in line with historical averages in 2017. 
A  model-based  assessment  also  does  not  suggest 
that house prices exceeded their fundamental value 
(Graph 4.2.5). These indicators suggest that house 
prices  were overvalued before the  crisis, followed 
by  a  strong  correction  during  the  crisis,  and 
recovery  in  recent  years.  Overall,  current  housing 
market  developments  point  to  a  lagging  supply 
response  rather  than  overvaluation.  However,  a 
continuation  of  price  increases  at  this  rapid  rate 
could lead to a risk of overvaluation in the future. 
The  ratio of  average  prices  to  income  has  already 
returned to a level that is higher than in most euro 
area economies.  

Source: European Commission 

The  share  of  underwater  mortgages  has 
decreased  substantially.  According  to  loan  level 
data  by  the  Dutch  central  bank,  6%  of  mortgages 
exceeded  the  value  of  the  underlying  property 
(“underwater  mortgages”)  in  Q2-2018.  This  is  a 
substantial  decrease  from  27%  3  years  earlier, 
supported by a strong increase in house prices (see 
Section 4.2.4). The average loan-to-value  ratio for 
new  mortgages  of  those  under  35,  who  are  often 
first-time buyers, decreased from 96% to 90% over 
the  same  period.  This  can  be  related  to  stricter 
loan-to  value-  and  loan-to-income  ratio’s  for 
mortgages. These developments reduce the risk of 
remaining  indebtedness  when  people  sell  their 
homes. 

29 

0%50%100%150%200%250%Debt/disposablehousehold incomeDebt/GDPNLEA 
 
4.2. Financial sector 

has  been  increasing  again  and  was  almost  8% 
higher in 2017 than in 2008. Financing costs have 
started to pick-up recently, but are still below pre-
2008 levels due to low mortgage interest rates (De 
Nederlandsche  Bank,  2018d).  However,  on  the 
supply  side  of  the  market,  the  number  of  existing 
dwellings for sale has decreased by more than 70% 
between  2012  and  2018(18).  The  number  of 
transactions peaked at a historic high of 242 000 in 
2017,  but  decreased  by  almost  10%  in  2018.  The 
slowdown  is  most pronounced in the larger cities, 
where supply shortages are largest, but is occurring 
in all provinces.  

Building  more  homes  could  help  ease  current 
housing market pressures. Housing supply in the 
relatively 
Netherlands  has  historically  been 
inelastic, although it  has increased since the crisis 
according to a recent Centraal Plan Bureau--study 
(Michielsen et al., 2018). The development of new 
dwellings  has  declined  drastically  since  2009  and 
started  to  recover  in  2015  (Graph 4.2.6).  The 
government  has  stated  an  annual  construction 
target  of  75 000  dwellings  until  2025  to  address 
housing  shortages  and  meet  demographic  trends 
(Ministry  of  the  Interior,  2018a).  In  2018  66 000 
new  dwellings  were  built  and  the  number  of  new 
building  permits,  which  reached  70 000  in  2017, 
remained roughly stable at that level.   

(18)  Based  on  data  by  NVM,  an  organisation  of  real  estate 
agents  that  covers  around  75%  of  the  Dutch  housing 
market.  

Graph 4.2.5:  House price valuation indicators 

The overall valuation gap is estimated as an average of the 
price/income, price/rent and fundamental model valuation 
gaps. Long-term values for the price/income and price/rent 
ratios are computed over 1995-2016. For the model based 
valuation gaps, a Vector Error Correction Model has been 
estimated for a panel of 21 EU countries, using a system of 
five fundamental variables; the relative house price, total 
population, real housing investment, real disposable income 
per capita and real long-term interest rate. 
Source: European Commission 

In  most  provinces  outside 

Behind  national  trends,  substantial  regional 
differences  exist.  The  housing  market  recovery 
was  led  by  the  larger  cities,  where  house  prices 
have increased at a faster pace than the rest of the 
country.  In  the  four  largest  cities,  house  prices 
increased  by  11%  to  13%  per  year  on  average  in 
2016-2018. 
the 
Randstad region, house prices increased at a more 
modest  rate  of  around  5-7%  in  the  same  period. 
This  difference  may  be  explained  by 
the 
attractiveness  of  urban  areas  (PBL,  2015)  and 
more  restrictive  supply  constraints  in  those  areas. 
A recent study by the Dutch central bank suggests 
that  house  prices  react  stronger 
income 
increases in municipalities where a larger share of 
available land has already been developed (Öztürk 
et al., 2018).  

to 

While  demographic 
trends  and  economic 
developments  increase  demand  for  housing, 
available  housing 
supply  has  decreased 
substantially.  While  population  growth  was  just 
below  0.5%  per  year  over  the  last  10  years,  the 
number  of  households  increased  at  a  substantially 
faster  rate  due  to  the  increasing  share  of  one-
person  households.  Nominal  disposable  income 
per  household,  after  stagnating  during  the  crisis, 

30 

-20-15-10-5051015202503040506070809101112131415161718% deviation of current priceModel-based valuations gapPrice to income vs. hist. avg.Price to rent vs. hist. avg.Overall valuation gap 
 
                                                           
4.2. Financial sector 

Graph 4.2.6:  House prices and development of new 

dwellings 

10  years  (Graph  4.2.7).  Compulsory  savings  via 
pension  funds  contribute  to  the  domestic  savings 
surplus  and  the  current  account  balance.  If  the 
change in net equity of pension funds (19) is taken 
as an approximation, this partial effect could be as 
high as 3% of GDP. 

Graph 4.2.7:  Pension contributions and payments 

Source: Statistics Netherlands 

4.2.5.  PENSIONS*  

company 

level 
is 

The  three-pillar  pension  system  scores  well  on 
pension  adequacy  and  fiscal  sustainability.  The 
first  pillar  is  the  pay-as-you-go  state  pension, 
funded  by  a  specific  contribution  and  general 
income  taxes.  To  ensure  its  fiscal  sustainability, 
the statutory retirement age has been linked to life 
expectancy  by  a  fixed  formula  embedded  in  law. 
The second pillar is typically organised at industry 
capital-funded. 
and 
or 
is 
pension 
and 
compulsory, 
Participation 
contributions and revenues depend on employment 
history.  While  some  large  industries  have  moved 
to  defined  contribution  pension  schemes,  90%  of 
all  participants  still  fall  under  defined  benefit 
pension  schemes.  The  third  pillar  is  formed  by 
individual  pension  products  and  only  consists  of 
tax  relief  on  contributions  paid  on  such  products. 
The  first  and  second  pillar  aim  to  provide  a 
replacement  rate  of  75%  of  the  average  lifetime 
gross salary when people retire. 

behaviour. 

Pension funds are important economic agents in 
the  economy  that  affect  household  saving  and 
investment 
actual 
contributions by employers and employees came to 
more  than  EUR 33 billion  in  2017,  fluctuating  at 
around  5%  of  GDP.  Pension  pay-outs  were  just 
below  EUR 30 billion  in  2017,  amounting  to 
around circa 4% of  GDP on  average  over the  last 

Annual 

Source: European Commission (based on National 
Accounts) 

amplifies 

economic 

The  development  of  pension  contributions  and 
cycle. 
the 
benefits 
Expansionary  monetary  policy  affects  funding 
ratios  as  lower  interest  rates  increase  liabilities. 
This leads to lower indexation of pensions, higher 
contributions  and,  as  a  last  resort,  lower  benefits. 
This  dampens  private  consumption  growth  due  to 
the  impact  on  disposable  household  income  and 
precautionary 
savings  behaviour.  This  was 
particularly  the  case  right  after  the  turn  of  the 
century,  during  the  2002-2003  recession,  but  also 
after  the  2009  recession  (Graph 4.2.7)  pensions 
contributions increased(20). 

Increased  longevity,  a  changing  labour  market 
environment  and  lower  interest  rates  pose 

(19)  Change  in  pension  fund  net  equity  is  National  Accounts 
item D8 Adjustment for the change of net equity of pension 
funds.  This  comprises  the  difference  between  actual 
pension contributions and pension payments, an adjustment 
made  for  the  operational  costs  by  pension  funds  and  a 
reallocation  of  received  capital  income,  in  the  form  of 
imputed  social  contributions  paid  by  the  household  sector 
that ‘owns’ a claim on these resources. 

(20)  Also for 2018 and 2019, the largest pension funds did not 
index  pension  payments  and  have  increased  or  plan  to 
increase contributions. 

31 

020406080100120-10-505101520969800020406081012141618Thousands% y-o-yHouse prices (lhs)Number of new dwellings produced per year (rhs)0123456010305070911131517% of GDPemployee contributionsemployer contributionspensions paid to householdschange of pension fund net equity 
 
 
                                                           
4.2. Financial sector 

pay-outs  are  a  last  resort,  the  balance  of  risks  is 
geared  towards  the  active  and  young  generations. 
In  other  words,  ad  hoc  adjustments  to  indexation 
and pension contributions have led to pro-cyclical 
macroeconomic  shocks  and  could  give  rise  to 
intergenerational transfers at the expense of current 
younger  generations, 
they  pay  higher 
contributions  for  a  relatively  lower  guaranteed 
pension. 

i.e. 

Graph 4.2.8:  Pension contribution (current and actuarially 

fair) 

Source: Lever, M.H.C. and S. Muns (2016) Pensioenresultaat 
bij degressieve opbouw en progressieve premie, CPB Notitie. 

Despite  a 
shared  understanding  among 
stakeholders,  negotiations  on  a  comprehensive 
pension  reform  have  stalled.  The  government 
and  social  partners  have  been  working  on  a 
substantial  overhaul  of  the  occupational  pension 
system,  based  on  four  themes:  (i)  coverage:  an 
adequate  pension  for  all  workers  including  the 
self-employed;  (ii)  actuarial  fairness:  a  shift  to  a 
more  actuarially  fair  system  of  accruing  pension 
rights;  (iii)  transparency:  moving  towards  a  more 
transparent  and  simple  pension  contract,  which 
would be aligned with more flexible work patterns; 
and  (iv)  flexibility:  more  room  for  customised 
solutions and options, including a greater focus on 
savings  with 
aligning 
individual  needs.  Despite  extensive  negotiations 
over  several  months,  no  overall  agreement  could 
on 
be 
a 
the 
subsequently 
comprehensive  pension 
stalled.  Early  February  2019,  the  government 
informed  Parliament  with  a  letter  setting  out  the 

negotiations 
reform 

compulsory  pension 

reached 

and 

to 

the 

leading 

current 

challenges 
system.  The 
occupational  pension  system  is  well  developed, 
holds a large capital buffer (around 200% of GDP 
in  Q3-2018)  and  ranks  high  in  international 
comparisons  of  pension  systems(21).  However,  a 
specific  combination  of  challenges  points 
to 
vulnerabilities, 
to  a  broad  consensus 
among  social  partners  and  the  government  on  the 
need  to  reform.  These  challenges  include  ageing, 
the  increase  in  non-standard  forms  of  work  not 
covered  by  the  system  and,  in  particular  and  the 
sensitivity  of  the  system  to  low  interest  rates. 
Although the financial supervision framework was 
relaxed slightly in 2015, pension funds had to take 
measures to improve the  funding ratio: indexation 
was  scrapped,  contributions  were  increased  and 
nominal pension payments were cut in some cases. 
Taken 
have 
developments 
negatively affected the trust in the system. 

together, 

these 

pay, 

seen 

have 

accrual’ 

generations 

A  generational  divide,  influenced  by  systemic 
redistribution  from  young  to  old  workers  via 
the  average  pay/average  accrual  system,  lies 
beneath these challenges. Both older and younger 
generations claim to carry a disproportional part of 
the  adjustment  burden.  For  pensioners,  the  real 
value of their pensions has declined due to the lack 
of  indexation  and/or  cuts  in  nominal  pensions. 
pension 
Young 
contributions  go  up  and  expect  to  receive  lower 
pensions  in  the  future.  In  addition,  the  current 
‘average 
system 
average 
('doorsneesystematiek')  is  considered  in  need  of 
reform. In the current set-up, pension contributions 
paid  in  at  any  point  of  one’s  career  entitles  the 
the  same  amount  of  pension 
beneficiary 
benefits, 
the 
investment  horizon.  While  this  system  facilitates 
collective  risk  sharing,  it  is  not  actuarially  fair 
(Graph 4.2.8).  It  leads  to  systemic  redistribution 
from young workers (who pay too much compared 
to an actuarially fair contribution) to older workers 
(who pay too little compared to an actuarially fair 
contribution).  While  the  shifts  in  value  may  be 
limited when measured over the full life-cycle, this 
system  may  lead  to  arbitrary  outcomes  depending 
on  career  paths.  As  it  makes  the  link  between 
contributions and pension savings less clear, it also 
reduces transparency. In addition, as lower pension 

their  age  and 

irrespective  of 

to 

(21)  See  for  example  the  Melbourne  Mercer  2018  Global 
Pension  Index,  which  ranks  pension  systems  in  terms  of 
adequacy, sustainability and integrity. 

32 

051015202530354020253035404550556065% of relevant gross incomeAgecurrent contributionActuarially fair contribution 
                                                           
 
4.2. Financial sector 

government  initiatives  to  continue  reforming  the 
occupational pension system. 

Graph 4.2.9:  Current account balance 

4.2.6.  SAVINGS AND INVESTMENT IMBALANCE* 

The Dutch economy has been running a current 
account  surplus  for  the  last  three  decades.  In 
2017  the  surplus  increased  to  a  historic  high  of 
10.5%  of  GDP,  up  from  8.1%  in  2016  (Graph 
4.2.9). Based on the latest four quarters for which 
data is available (Q4-2017 to Q3-2018), the current 
account has remained broadly stable since. From a 
balance  of  payments  perspective,  a  persistent 
surplus trade surplus in goods is the main driver. In 
terms of product groups, the trade in chemicals and 
related  products,  together  with  food  and  live 
animals  make  a  significant  contribution.  Just  over 
half  of  goods  exports  in  2017  consisted  of  re-
exports, illustrating the Netherlands’ role as a trade 
hub.  Statistics  Netherlands  has  previously 
estimated the value added of one euro of re-exports 
at 11 cents, with a total GDP contribution of 3.8% 
in 2015 (CBS, 2016). The trade balance increased 
slightly  in  2017  on  the  back  of  buoyant  global 
trade  developments.  However,  the  balance  on 
primary  incomes  increased  by  almost  2  pps.  in 
2017  and  was  therefore  the  main  cause  of  the 
to  Commission 
increase 
estimations(22), 
current 
fundamental  drivers  explain  almost  4  pps  of  the 
surplus 
these 
fundamental  drivers  include  the  relatively  high 
income per person, expected ageing relative to the 
rest  of  the  world  and  the  Netherlands’  status  as  a 
financial centre.  

in  2017.  According 

the  Netherlands 

in  2017.  For 

account 

‘norm’ 

Source: Statistics Netherlands 

sector)  as 

All  institutional  sectors  are  in  surplus.  A 
breakdown  by  institutional  sector  points  to  the 
the  non-financial  and 
corporate  sector  (both 
financial 
largest  contributor 
the 
(Graph 4.2.10).  Developments  in  the  household 
and  public  sector  are  also  important.  Before  the 
crisis,  households  were  net  borrowers.  However, 
since  2009  they  have  been  net  lenders  adding  to 
the  surplus.  Although  the  government  sector  was 
running  large  deficits  during  the  crisis  and  in  its 
aftermath, 
fiscal  consolidation  and  buoyant 
revenue  developments  led  to  a  strong  net  lending 
position. 

Graph 4.2.10: Net lending by sector 

including 

(22)  The  benchmark  is  derived  from  reduced-form  regressions 
capturing  the  main  determinants  of  the  saving-investment 
balance, 
(e.g. 
demography, resources), policy factors and global financial 
conditions. See also Coutinho, Turrini and Zeugner (2018). 
The  methodology 
the  External  Balance 
Assessment  (EBA)  approach  developed  by  the  IMF 
(Phillips et al, 2013). 

fundamental  determinants 

is  akin 

to 

Source: Statistics Netherlands 

33 

-6-4-2024681012-6-4-20246810120708091011121314151617% of GDPNet secondary incomeNet primary incomeServices balanceGoods balanceCurrent account balance-6%-4%-2%0%2%4%6%8%10%12%14%0708091011121314151617% of GDPHouseholds and NPISHGovernmentFinancial corporationsNon-financial corporationsTotal net lendingCurrent account 
                                                           
 
 
4.2. Financial sector 

to 

European  Commission,  2017d;  and  European 
Commission, 2018e). High corporate savings  may 
be caused by relatively strong profitability as well 
as  by  profit  shifting  and  aggressive  tax  planning. 
While  earlier  studies  have  pointed 
the 
importance of multinationals for international trade 
(see  for  example  CBS,  2018),  available  macro-
economic  data  do  not  allow  for  a  clear-cut 
estimation  of  their  overall  contribution  to  the 
current  account  surplus.  The  OECD  and  the  IMF 
are  currently  working  on  an 
international 
methodology  to  develop  disaggregations  of  the 
current  account,  and  a  separate  identification  of 
macro-economic 
to 
multinationals(24). 

transactions 

related 

Household saving is to a large extent driven by 
institutional features of the housing market and 
the  pension  system.  Following  a  housing  market 
boom,  the  crisis  led  to  a  considerable  dip  in  new 
construction.  Residential  investment  as  a  share  of 
GDP,  declined  from  over  6%  in  2008  to  3%  in 
2013,  leading  to  an  increase  in  household  net 
lending. The decrease in house prices also resulted 
in a negative net housing equity position for many 
households.  This  wealth  shock  could  have 
contributed 
in  private 
consumption during the crisis(25), further boosting 
the 
household 
introduction  of  mandatory  mortgage  repayment 
within  30  years  to  qualify  for  mortgage  interest 
deductibility  in  2013  also  require  homeowners  to 
increase  their  savings.  On  the  pension  side,  high 
pension  contributions  and  investment  income  that 
exceed  pension  benefits  also  fuel  the  household 
surplus (see Section 4.2.5). 

saving.  Policy 

factors 

strong 

like 

fall 

the 

to 

The  relatively  high  corporate  surplus  is  driven 
by  non-financial  corporations.  Non-financial 
corporations  record relatively  high  profits  and  net 
foreign  income,  as  well  as  comparatively  low 
investments. A comparison with the euro area over 
2008-2017  shows  that  both  the  gross  operating 
surplus  and  net  property  income  were  2.1  pps. 
higher  in  the  Netherlands.  Investments  were  1.4 
pps. 
(Graph 4.2.11).  High  profitability 
therefore  does  not  seem  to  translate  into  higher 
distributed 
domestic 
investments. In total, this led to a difference of 5.2 
pps  in  net  lending.  The  contribution  of  financial 
corporations  to  the  surplus  is  smaller  than  the 
contribution  of  non-financial  corporations,  but  is 
also  persistently  positive.  Within  this  subsector, 
there is no clear driver(23).  

earnings 

higher 

lower 

or 

Graph 4.2.11: Net lending by non-financial corporations 

2008-2017 average 
Source: European Commission 

influenced  by 

Corporate  sector  net  lending  is  likely  to  be 
positively 
the  presence  of 
multinational  enterprises.  In  2008-2017,  gross 
value  added  of  non-financial  firms  as  a  share  of 
GDP  exceeded  the  euro  area  average  by  5.4  pps. 
This relatively large share in corporate sector value 
added  is  likely  to  be  related  to  the  presence  of  a 
of  multinational 
number 
relatively 
enterprises,  which  play  an  important  part  in 
corporate  savings  (see  Eggelte  et  al.,  2014, 

high 

Higher  wage  growth  could  have  a  small  but 
positive  effect  on  external  rebalancing.  While 
the total compensation of employees as a share of 
GDP  is  close  to  the  euro  area  average,  wage 
growth in recent years has been below what would 
be expected based on fundamental drivers such as 
productivity,  inflation  and  unemployment  (see 
Section 1  and  Section 4.3).  Higher  wages  would 
boost  imports  through  their  positive  effect  on 
disposable  household  income.  Insofar  as  wages 
translate  into  higher  prices,  the  export  volume 
would also decrease as a result of competitiveness 

(23)  The  Dutch  central  bank,  other  monetary 

financial 
institutions,  insurers,  and  other  financial  institutions  and 
intermediaries all recorded positive net lending positions in 
2017.  

(24)  See IMF (2018) 
(25)  See Van Es and Kranendonk (2014) for an analysis of the 

effect of wealth shocks on consumption.  

34 

0.55.7-0.41.42.12.101234567NL net lendingOther factorsNL: lower investmentsNL: higher net property incomeNL: higher gross operatingsurplusEA net lending% of GDP 
 
                                                           
                                                           
4.2. Financial sector 

effects.  Taken  together,  these  effects  lead  to  a 
decline in the trade balance. This decline is partly 
counterbalanced  by  the  fact  that  higher  export 
prices  have  a  positive  impact  on  the  nominal 
export  value.  An  analysis  based  on 
the 
Commission’s  QUEST-model  suggests  that  an 
autonomous  wage increase of 1% would lead to a 
reduction in the trade balance of 0.1% compared to 
a baseline scenario.  

4.2.7.  POLICY PERSPECTIVE ON HOUSEHOLD 

BALANCE SHEETS* 

high  mandatory 

Pension  savings  come  with  a  large  compulsory 
payment  wedge  on  labour  and  low  liquid 
savings.  While 
pension 
contributions lead to good pension adequacy, they 
make up a large part of the relatively large tax and 
non-tax  compulsory  payment  wedge 
the 
Netherlands  (European  Commission,  2018e).  At 
EUR 33 billion in 2017, contributions amounted to 
almost  10%  of  total  employee  compensation  just 
for the second pillar. The high pension assets that 
households build up over their lifetime are among 
the  largest  in  the  euro  area,  but  are  generally  not 
accessible until retirement. 

in 

balance 

household 

Long 
sheets  make 
households vulnerable to financial shocks, with 
pro-cyclical  effects.  Pension  entitlements  as  a 
share  of  GDP  have  been  on  an  upward  trend 
between  2007  and  2017 reaching  almost  200%  of 
GDP  (Graph 4.2.12  and  Section 4.2.5).  Housing 
wealth  decreased  during  the  crisis,  but  has  been 
increasing  over  a  longer  time  horizon.  However, 
both  housing  and  pension  wealth  are  typically 
illiquid.  At  the  same  time,  almost  half  of  all 
households  own  less  than  EUR 10 000  in  liquid 
financial assets (Smid and Luginbuhl, 2018). High 
debt  and  low  liquid  savings  make  households 
vulnerable 
limit 
consumption  smoothing  over  time.  Low  liquid 
assets are also associated with a higher volatility of 
consumption  at  the  macro-level  (Lukkezen  and 
Elbourne, 2015). 

financial 

shocks, 

and 

to 

Graph 4.2.12: Household balance sheets (% of GDP) 

Source: Statistics Netherlands 

to  enter 

Mortgage interest deductibility is an important 
driver  of  household  debt.  This  fiscal  subsidy 
the  owner-
encourages  households 
occupied market and take on mortgage debt. Given 
housing  supply-constraints,  it  also  leads  to  higher 
house  prices.  The  announced  acceleration  of  the 
interest  deductibility 
reduction 
between  2020  and  2023,  reducing  the  maximum 
applicable rate from 49% to 37%, has been turned 
into legislation (Belastingplan 2019). Nevertheless, 
the  fiscal  subsidy  on  home-ownership  remains 
substantial.  

in  mortgage 

Further  developing  the  private  rental  market 
can  contribute  to  reducing  household  debt. 
Implicit  and  explicit  subsidies  lead  to  a  relatively 
large and highly regulated social housing sector (a 
share  of  29%  of  the  total  housing  market).  The 
private  rental  market,  as  the  only  non-subsidised 
segment,  remains  underdeveloped  with  a  share  of 
13%  in  total  dwellings.  It  is  often  not  affordable 
for  middle-income  households,  while  at  the  same 
time  they  are  not  eligible  for  social  housing 
(Middelkoop  and  Schilder,  2017).  In  2018,  the 
government  presented  draft  legislation  to  ease  the 
requirements for housing corporations to build for 
the  middle 
(Wet 
maatregelen middenhuur). Municipalities also play 
an  important  role  in  increasing  private  rental 
supply, but may not be fully incentivised to do so. 
Since 2017, they can include  minimum  shares  for 
the  affordable  private  rental  segment  in  their 
zoning  plans.  However,  they  can  generate  higher 
revenues  by  developing  and  selling  land  for  new 
construction 
the  owner  occupied  segment 
market  as  mortgage  interest  deductability  pushes 
up prices in this segment (De Nederlandsche Bank, 
2017).  At  the  same  time,  according  to  a  recent 
survey  the  percentage  of  municipalities  that  had 

segment 

income 

rental 

in 

35 

-600%-400%-200%0%200%400%600%-600%-400%-200%0%200%400%600%199620062016Net assetsHousehold debtHousing wealthPension entitlementsOther assets 
 
4.2. Financial sector 

some form of policy aimed at increasing supply in 
this  segment  rose  from  40%  in  2016  to  53%  in 
2018 (Stec groep, 2018). Supply-side  measures in 
the  rental  segment  can  provide  an  alternative  for 
middle  incomes  to  taking  on  mortgage  debt,  but 
the  debt  bias  for  households  continues  to  exist  as 
long as homeownership is fiscally subsidised. 

for 

repayment 

to  qualify 

Taken  together,  current  pension  and  housing 
institutions  may  lead  to  a  sub-optimal  pattern 
of  saving  and  consumption  over  the  lifetime. 
Households  are  encouraged  to  take  on  high 
mortgage  debt.  The  introduction  of  mandatory 
mortgage 
interest 
deductibility  in  2013  improves  the  incentive  for 
households  to  repay  their  mortgage.  However, 
higher  monthly  mortgage  payment  and  high 
pension  contributions  both  require  substantial 
savings,  which  puts  consumption  under  pressure. 
At  the  same  time,  replacement  rates  at  retirement 
exceed 100% for many households, particularly in 
the  case  of  homeowners  (Studiegroep  Duurzame 
Groei,  2016).  This  suggests  potential  welfare 
losses  due  to  a  lack  of  consumption  smoothing 
over the lifecycle. 

36 

 
 
4.3.  LABOUR MARKET, EDUCATION AND SOCIAL POLICIES 

4.3.1.  LABOUR MARKET  

pre-crisis 

levels.  Labour 
to 

The  labour  market  is  performing  well,  with 
headline  labour  market  indicators  converging 
towards 
force 
participation  continues 
increase  and  now 
exceeds the pre-crisis level. Moreover, it is one of 
the highest in the EU at 82.2% in Q3-2018. In the 
last  quarter  of  2018,  the  unemployment  rate 
reached  the  pre-crisis  low  level  of  unemployment 
of 3.6% (Graph 4.3.1) on the back of robust GDP 
growth.  In  addition,  the  long-term  unemployment 
rate  stood  at  1.4%  in  the  third  quarter  of  2008 
(well  below  the  EU  average  of  2.9%)  and  is 
declining for all age groups. 

Graph 4.3.1:  Labour market indicators 

Source: European Commission 

the 

Labour shortages are starting to emerge. In line 
with the expansionary phase of the business cycle 
the  Beveridge  curve 
the  movement  along 
continued 
second  quarter  of  2018 
in 
(Graph 4.3.2).  As  labour  shortages  emerge,  the 
slope  becomes  steeper,  with 
the  number  of 
vacancies  increasing  more  than  the  decline  in 
unemployment.  Moreover,  the  Beveridge  curve 
shifted  outwards,  indicating  that  the  matching 
efficiency worsened. The vacancy rate (i.e. number 
of  vacant  positions  as  a  percentage  of  the  sum  of 
the  number  of  vacant  and  occupied  positions) 
reached  3.1%  in  the  third  quarter  of  2018,  and  is 
and 
particularly  high 
Communications  Technologies, 
and 
construction  sector  (Graph 4.3.3).  In  addition,  the 
share  of companies reporting difficulties in  filling 
vacancies  increased.  Shortages  are  increasing  in 

Information 
health 

the 

in 

certain  professions,  such  as  secondary  school 
teachers  and  nurses,  and  in  certain  regions  more 
than others(26). 

Graph 4.3.2:  Beveridge curve 

Source: European Commission. Labour shortages are the 
percentage of managers reporting labour as a limiting 
factor for their business in the industrial sector. Data are 
obtained from the Business and Consumer survey. 

Graph 4.3.3:  Vacancy rate by sector (%, 2018Q3) 

Source: European Commission 

Wage developments* 

increasing 

Despite 
labour  shortages,  wage 
growth  remained  moderate.  Nominal  wage 
growth  (measured  as 
total  compensation  per 
time  equivalents)  remained 
employee 

in  full 

(26)  Ministry  of  Social  Affairs  and  Employment,  Appendix 
Arbeidsmarktbeleid,  letter  to  Parliament  of  15.6.2018, 
Kamerstuk  29544  nr.  833,  vergaderjaar  2017-2018, 
available  at  https://zoek.officielebekendmakingen.nl/blg-
845833 

37 

0123456789707274767880828408 Q108 Q409 Q310 Q211 Q111 Q412 Q313 Q214 Q114 Q415 Q316 Q217 Q117 Q418 Q3% of labour force% of populationUnemployment rate 15-74 (rhs)Long-term unemployment 15-74 (rhs)Activity rate 20-64 (lhs)Employment rate 20-64 (lhs)​2001q42003q42005q42007q4​2008q42010q42012q42014q42016q42018q12018q20246810121416181234567Labour shortage indicatorUnemployment rate024681012CZBENLDEATHUUKLVSISEFIHRCYEELULTROPLSKIEPTBGESELIndustry, construction and servicesInformation and communicationConstruction 
 
 
 
 
 
                                                           
in  recent  years 

subdued  at  1.1%  in  2017.  Wage  growth  was  also 
relatively  muted  in  the  sectors  with  fast  growing 
vacancy  rates.  In  combination  with  increasing 
inflation,  this  resulted  in  nearly  zero  real  wage 
growth  in  2017.  While  trade  unions  may  have 
foregone  wage  demands 
in 
exchange  for  employment  protection,  the  largest 
trade  union  has  set  far  higher  wage  demands  for 
2019,  with  5%  compared  to  3.5%  in  2018.  The 
government has also repeatedly acknowledged the 
need for higher real wage growth. With the further 
tightening  of  the  labour  market,  nominal  wage 
growth is expected to accelerate to 2.7% and 3.3%, 
in 2018 and 2019, according to the Commission’s 
Autumn 2018 Economic Forecast.  

Wage  growth  is  lower  than  it  was  before  the 
crisis with similar levels of unemployment. The 
Philips curve, which measures the extent to which 
wages  react  to  changes  in  unemployment,  has 
flattened  since  the  start  of  the  economic  recovery 
(Graph 4.3.4).  This  implies  that  wage  growth  has 
become 
in 
unemployment.  Wage  growth  remains  subdued 
even when controlling for unemployment, inflation 
and productivity (see Section 1). 

responsive 

changes 

less 

to 

Graph 4.3.4:  Flattening of the Philips curve 

4.3. Labour market, education and social policies 

the  shortfall 

for  permanent  employees 

decade(27). In 2000-2017, the increase in the share 
of  non-standard  employment  correlates  negatively 
in  wage  growth (28).  The 
with 
downward  pressure  on  wages  can  be  partly 
explained  by  the  fact  that  overall  wages  for 
temporary  employees  are  substantially  lower  than 
wages 
(European 
Commission,  2018e,  Box  4.3.1).  As  a  result,  the 
increase  in  the  share  of  temporary  employees 
negatively  affected  wage  growth  across  the  wage 
distribution  with  the  largest  impact  at  the  bottom 
(European  Commission,  2018h).  Lower  tax  and 
social contributions for the self-employed may also 
lead 
to  downward  pressure  on  wages.  Self-
employed  without  employees  pay  lower  tax  and 
social 
to 
contributions 
employees.  This  may  result  in  unfair  competition 
and  downward  pressure  on  wages  and  unfair 
competition, in particular for those at the bottom of 
the earnings distribution. 

compared 

security 

(27)  Other  factors  include  the  increasing  automatisation  and 
digitalisation, the globalisation of production processes and 
labour,  the  relatively  high  level  of  employers'  obligations 
and weakening bargaining power of  workers, see amongst 
others  Baarsma  and  Vrieselaar  (2018),  ‘Acht  redenen 
waarom  de  lonen  achterblijven’,  RABOResearch,  OECD 
(2015)  ‘The  Labour  Share  in  G20  Economies’,  De  Beer 
and Keune (2018), ‘De erosie van het poldermodel’, Mens 
en  Maatschappij.  p.  231-260  and  De  Nederlandsche  Bank 
(2018b),  ‘Flexibilisering  arbeidsmarkt  gaat  gepaard  met 
daling arbeidsinkomensquote’. 

(28)  Defined  as  the  difference  in  actual  and  predicted  wage 

growth 

Source: European Commission 

In  addition  to  labour  market  slack,  increased 
labour  market segmentation  may have  been an 
important driver of low wage growth in the last 

38 

-2,0-1,5-1,0-0,50,00,51,01,52,02,53,023456789Growth in nominal compensation per employeeUnemployment rate2001Q1-2007Q42008Q1-2011Q42012Q1-2018Q2 
 
                                                           
4.3. Labour market, education and social policies 

(dis)incentives  with  particularly  distortive  effects 
at  the  margin  of  the  labour  market  impeding  on 
fair working conditions, hampering smooth labour 
In 
market 
addition,  labour  market  segmentation  may  have  a 
negative  impact  on  wage  developments  and  not 
provide adequate social protection coverage for all. 

inclusive  growth. 

transitions  and 

While  job  creation  in  recent  years  has  mainly 
been  due  to  temporary  employment  and  self-
employment,  job  growth  for  employees  with 
permanent contracts has recently outpaced that 
for  temporary  employment.  Since  the  second 
half of 2017 there has been an increase for the first 
time  in  the  transition  rate  from  temporary  to 
permanent  contracts.  This  increase  applies  to  all 
education levels, but is particularly strong for high-
skilled workers (almost 4 pps). As a result, for the 
first 
temporary 
employees  (as  a  percentage  of  total  employment) 
decreased  slightly  in  the  third  quarter  of  2018 
(14.8%) compared to one year before (15.2%). An 
increasingly 
labour  market  may  have 
provided  incentives  for  employers  to  offer  more 
open-ended contracts. 

the  share  of 

in  years 

tight 

time 

Graph 4.3.5:  Shortfall in wage growth (pps) and combined 

share of temporary employees and self-
employed without employees (% of the 
workforce) 

Note: Shortfall in wage growth is the difference between 
actual and predicted wage growth based on inflation, 
productivity and unemployment. Data for 2015 are missing 
due to a data break in the series. 
Source: European Commission 

Labour market segmentation 

Graph 4.3.6:  Transition rate from temporary to permanent 
employee by educational level 

and 

including  favourable 

Flexible  employment  represents  a  growing 
share  of  the  labour  market.  Both  temporary 
employment 
self-employment  without 
employees  increased  considerably  in  the  last  ten 
years.  Important  drivers  of  the  trend  towards 
flexible  employment  relationships  are  distinct 
institutional  factors, 
tax 
treatment 
self-employed  without 
the 
employees)  and  differences  in  social  security 
legislation  as  well  as 
in 
applicable labour regulations and labour protection 
rules  for  permanent  and  temporary  contracts(29). 
Self-employed  are  not  obliged  to  be  insured 
against  labour-related  risks  such  as  accidents  at 
work,  unemployment  and  old  age  (second  pillar). 
These factors and differences may create financial 

large  differences 

(for 

Source: Statistics Netherlands 

(29)  See  European  Commission,  2016,  pp.  46-49,  European 
Commission,  2017d,  p.  30;  European  Commission  2018e, 
pp. 34-36 and p.39. 

39 

2001200220032004200520062007200820092010201120122013201420162017R² = 0,2576-3-2-101234-202468Shortfall in wage grwoth (pps)Change in combined share of self-employment without employees and temporary employment (%)7891011121314151617181911Q111Q312Q112Q313Q113Q314Q114Q315Q115Q316Q116Q317Q117Q318Q118Q3%, three-quarter moving averageAllLow-skilledMedium-skilledHigh-skilled 
 
 
                                                           
 
 
 
4.3. Labour market, education and social policies 

Box 4.3.1: Monitoring performance in light of the European Pillar of Social Rights 

The  European  Pillar  of  Social  Rights  is  designed  as  a  compass  for  a  renewed  process  of  upward 
convergence  towards  better  working  and  living  conditions  in  the  European  Union(1).  It  sets  out  twenty 
essential  principles  and  rights  in  the  areas  of  equal  opportunities  and  access  to  the  labour  market;  fair 
working conditions; and social protection and inclusion. 

The  Netherlands  performs  very  well  on  most  indicators  of  the  Social  Scoreboard  supporting  the 
European Pillar of Social Rights. It has an overall good standing in terms of labour market performance and 
social  situation.  Per  capita  real  gross  disposable 
income  of  households  continued  to  rise,  with 
income  inequality  below  the  EU  average.  In  the 
area  of  social  protection  and 
the 
weakening of the situation with the risk of poverty 
or social inclusion is a point of attention. However 
the Netherlands is still among the top performers, 
with a low level of poverty. 

inclusion 

The  issue  of  labour  market  segmentation 
deserves further attention  with regard to equal 
opportunities  in  the  labour  market  and  fair 
working  conditions.  Flexible  employment  still 
represents  a  relatively  large  share  of  the  labour 
force.  In  the  last  10  years  both  temporary 
employment as well as self-employment without 
employees increased considerably. 

The  vocational  education  and  training  sector 
performed  well  overall.  It  has  a  participation 
rate higher than EU average and provides recent 
graduates  with 
labour  market 
better 
opportunities.  However,  students  with  a  migrant 
background  appear  to  benefit  from  it  less.  To 
better address  the challenge of skills shortages a 
new  initiative  was  launched  in  2018  to  allow 
colleges to better reflect the regional specifics in 
cooperation  with 
(regional)  business 
the 
community.  A  new  agreement  was  signed  in 
the  Ministry  of 
February  2018  between 
Education,  Culture  and  Science  and  schools  for 
2018-2022.  Schools  should  draw  up  strategic 
plans  to  improve  the  quality  of  vocational 
education  and  training  in  line  with  regional  needs  and  in  close  collaboration  with  regional  stakeholders. 
Furthermore, the curricula will be made more flexible in terms of time, place and type of learning methods 
(e.g. blended learning) to better address the specific needs of adults.  

(1)  The European Pillar of Social Rights was proclaimed on 17 November 2017 by the European Parliament, the Council 
and  the  European  Commission.  https://ec.europa.eu/commission/priorities/deeper-and-fairer-economic-and-monetary-
union/european-pillar-social-rights/european-pillar-social-rights-20-principles_en  

40 

Early leavers from education and training (% of population aged 18-24)Better than averageGender employment gapOn averageIncome quintile ratio (S80/S20)Better than averageAt risk of poverty or social exclusion (in %)Good but to monitorYouth NEET (% of total population aged 15-24)Best performers  Employment rate (% population aged 20-64)Best performers  Unemployment rate (% population aged 15-74)Better than averageLong-term unemployment  (% population aged 15-74)Better than averageGDHI per capita growth On averageNet earnings of a full-time single worker earning AWBest performers  Impact of social transfers (other than pensions) on poverty reductionOn averageChildren aged less than 3 years in formal childcareBest performers  Self-reported unmet need for medical care Better than averageIndividuals' level of digital skillsBest performers  Social protection and inclusionEqual opportunities and access to the labour marketMembersStatesareclassifiedaccordingtoastatisticalmethodologyagreedwiththeEMCOandSPCCommittees.Themethodologylooksjointlyatlevelsandchangesoftheindicators in comparison with the respective EU averages and classifies Member States insevencategories(from"bestperformers"to"criticalsituation").Forinstance,acountrycanbeflaggedas"betterthanaverage"iftheleveloftheindicatorisclosetoEU average, but it is improving fast. For methodological details, please consult the draft Joint Employment Report 2019, COM (2018)761 final. Data update of 29 January 2019.NEET:neitherinemploymentnorineducationandtraining;GDHI:grossdisposablehousehold income.                      Dynamic labour markets and fair working conditionsSOCIAL SCOREBOARD FOR NETHERLANDS 
 
distinct 

regulation 

institutional 

labour  market 

tackling  a  number  of 

In order to find a better balance on the labour 
market,  a  draft  bill,  the  law  labour  market  in 
balance  (Wet  arbeidsmarkt  in  balans),  was  sent 
to  Parliament  on  7  November  2018.  This  bill 
constitutes  a  first  concrete  step  in  a  broader 
process  of 
reform 
measures  and  ongoing  reflections  on  how  to  best 
drivers 
tackle 
comprehensively.  It  follows  a  previous  major 
reform  (Wet  werk  en  zekerheid)  in  2015(30).  The 
new  draft  bill  contains  a  package  of  measures 
intended to make it easier to hire of employees on 
a  permanent  basis  and  to  make  flexible  contracts 
less  flexible  by 
the 
institutionally  driven  factors  of  the  increasing 
flexibility  in  the  labour  market.  The  package 
includes measures such as (1) the introduction of a 
new,  additional  ground  for  dismissal;  (2)  the 
possible  extension  of  the  probation  period  from  2 
to  5  months;  (3)  the  extension  of  the  duration 
period  for  temporary  contracts  to  3  years;  (4)  the 
entitlement to the transition allowance as of day 1 
of 
labour 
conditions  applicable  to  employees  working  on  a 
payroll  basis;  (6)  the  introduction  of  limits  to  the 
use of zero-hours contracts); and (7) the possibility 
to  differentiate  unemployment  contributions  by 
type of contract(31). At the same time, a committee 
of  independent  experts  was  established  to  advice 
the  government  on  how  to  regulate  the  labour 
market  in  the  future  taking  into  account  the 
changing  economy  and  society.  It  should  present 
its report and findings at the latest by 1 November 
2019. 

temporary  contracts;  (5)  minimum 

Important challenges remain, in particular with 
respect  to  self-employed  without  employees. 
With respect to possible initiatives concerning self-
employed without employees and the state of play 
of  ongoing  reflections,  the  Minister  of  Social 
Affairs  and  Employment  informed  the  Parliament 

(30)  The  specifics  and  preliminary  results  of  this  reform  were 
discussed in detail in previous European Semester country 
reports  (see  European  Commission  2015,  p.  38/39, 
European  Commission,  2017,  p.31  and  European 
Commission, 2018e, p. 35/36) 

(31)  During  the  vote  in  the  Second  Chamber  on  5  February 
2019, the possible extension of the probation period from 2 
to  5  months  was  voted  down,  while  accepting  that  for 
workers younger than 21 years working less than 12 hours 
a week on average the lower differentiated unemployment 
for 
contributions  would  apply  and 
derogations  by  collective  agreement  was  introduced  for 
seasonal work due to climatological circumstances. 

the  possibility 

4.3. Labour market, education and social policies 

by letter(32) that (1) the criterion 'under the control 
and  direction' 
('gezagsverhouding')  has  been 
clarified  as  of  1  January  2019,  while  (2)  a  web 
module  will  be  developed  to  qualify  the  working 
relationship  of  self-employed,  in  particular  when 
there  is  no  employment  relationship.  The  latter 
should be ready by the end of 2019. However, the 
government  plans  to  (3)  introduce  a  minimum 
hourly  rate  of  EUR 15-18  to  reduce  (bogus)  self-
employment  at  the  margins  of  the  labour  market 
and unfair competition, while (4) providing an opt-
out  from  payroll  taxes  and  employee  insurances 
for  those  self-employed  applying  a  high  hourly 
tariff  will  be  delayed  due  to  the  fact  that  the 
government considers that more work is needed to 
ensure  full  compatibility  with  EU  law.  Further 
details  on  possible  alternative  proposals  are 
expected to be provided by spring 2019 in view of 
them  becoming 
January  2021. 
law  by  1 
Furthermore,  on  (5)  possible  social  security 
coverage for sickness/disability for self-employed, 
the  Minister  (33)  announced  the  intention  to  work 
together  with 
insurers  and  stakeholders  on 
developing  a  programme  to  introduce  concrete 
increase  and  strengthen  well 
instruments 
informed choices by the self-employed as well as a 
plan  of  action  to  be  presented  at  the  beginning  of 
2019.  Moreover,  on  the  employer's  obligation  to 
continue  to  pay  salaries  for  2  years  in  case  of 
the  Minister  announced(34) 
that  an 
illness, 
agreement 
employers' 
organisations and insurers will offer more suitable 
insurances  to  cover  the  risk  of  sickness  (so  called 
MKB  verzuim-ontzorg-verzekering).  In  addition, 
the government intends to provide for a discount in 
sickness  contributions  of  EUR 450 million  as  of 
2021  to  compensate  small  and  medium  size 
enterprises  for  the  salary  costs  of  the  second  year 
of illness. 

between 

reached 

to 

an 

dialogue 

Social 
established 
is 
institutionalised  approach  and  an  essential 
feature  of  the  so-called  Dutch  poldermodel  and 
has  worked  well  in  general  in  the  past.  Social 
partners  were  consulted  on  the  intention  and 
possible policy options to reform the second pillar 

(32)  'Voortgang 

uitwerking  maatregelen 

'werken 

als 

zelfstandige', 26.11.2018 

(33)  Letter  to  Parliament  of  26  November  2018  'Gesprekken 
over 

verzekeraars 
met 
arbeidsongeschiktheidsverzekeringen voor zelfstandigen' 
(34)  Letter to Parliament of 20 December 'Loondoorbetaling by 

ziekte' 

41 

 
                                                           
                                                           
4.3. Labour market, education and social policies 

of the pension system and the ambitious agenda to 
reform the labour market. 

Graph 4.3.7:  Hours worked and share of part-time work for 

women in 2007 and 2017 

Female labour market participation 

positive 
part-time 

labour  market 
Despite 
the 
is 
employment 
performance, 
the 
for  women.  While 
particularly  high 
employment  rate  of  women  is  high  and  on  the 
increase  (74.1%  in  2017  compared  to  71.6%  in 
2016),  almost  three  out  of  four  women  (74.1%  in 
2017) work part-time(35). As a result, the full-time 
equivalent  employment  rate  of  women  is  low 
(42.5%  in  2017)  and  the  gender  gap  in  full-time 
equivalents one of the highest in the EU (26.6 pps 
in  2017).  The  share  of  part-time  employment  is 
particularly  high  among  women  with  care 
responsibilities,  although  many  women  already 
start  working  shortly  after  leaving  education, 
before having children (SCP 2018b). However, in 
recent  years,  the  hours  worked  by  women  with 
children  have  increased,  while  there  is  no  similar 
trend  visible 
for  women  without  children 
(Graph 4.3.7). Differences in  work intensity result 
in a relatively large earnings gap (47.5% in 2017) 
and one of the  largest gender pension  gap later in 
life  (45.2%  in  2016).  Recent  analysis  by  a 
consultancy  (McKinsey  Global  Institute  2018) 
shows  for  instance  that  incentivising  women  to 
work  a  few  hours  a  week  more  could  increase 
gender  equality  and  help  significantly  reduce 
existing labour shortages. 

(35)  Note that also for men the share of  part-time employment 
is  high  and  well  above  the  EU  average  (22.6  vs.  8.2%  in 
2017).  

Note: The graph represents the share of part-time 
employment of women (aged 30-45) and their average 
usual hours worked dependent on the presence of children 
under the age of 14 in the household. 
Source: European Commission 

jobs, 

for  most  care 

Historically speaking, part-time employment of 
women has always been high in the Netherlands 
and  is  a  result  of  a  combination  of  multiple 
factors  and  institutional  drivers.  According  to 
McKinsey  (2018),  the  vast  majority  of  Dutch 
women  work  in  education  or  healthcare  -  both 
sectors  with  mostly  part-time 
take 
tasks  and  are 
responsibility 
conditioned  by 
their  choice  of  degrees  and 
professions  (McKinsey  Global  Institute  2018). 
Drivers  of  part-time  employment  include  the 
design  of  family-related  leaves,  as  well  as  the 
intermediate  cost  and  availability  of  full-time 
childcare  and  after  school  care  (Portegijs  et  al., 
2008;  Task  Force  Part-time  Plus,  2010).  Parental 
leave 
in  most  cases  unpaid,  which  may 
discourage  main earners (mostly  men)  from  using 
it. On 2 October 2018 a reform was adopted by the 
Second  Chamber  of  Parliament  to  increasing 
paternity birth leave from 2 to 5 days in 2019 with 
a further 5 weeks of additional leave possible as of 
1 July 2020, to be taken within the first 6 months 
of the birth. Furthermore, the government plans to 
undertake  an  extensive  interinstitutional  policy 
analysis study on part-time work. The study should 
especially focus more on the consequences of part-
time  work  choices,  including  women’s  economic 

is 

42 

20,023,125,125,102040608010005101520253020072017% of women working part-timehours workedShare part-time, with child (rhs)Share part-time, without child (rhs)Hours worked, with child (lhs)Hours worked, without child (lhs) 
                                                           
 
 
4.3. Labour market, education and social policies 

impact  the  employment  rate  of  third-country 
immigrants among whom there is a higher share of 
migrants for family reasons, but also beneficiaries 
of international protection(41). 

(the 

The labour market outcomes of the native-born 
with  a  migrant  background 
'second 
generation')  are  also  unfavourable.  Among 
native-born persons aged 15-34, those with at least 
one foreign-born parent represented around 10.5% 
in 2016(42). Despite being born and educated in the 
Netherlands,  their  employment  situation  is  less 
favourable.  This  is  especially  true  for  those  with 
two foreign-born parents who had an employment 
rate  of  around  67%  in  2016,  21  pps  lower  than 
among native-born persons, one of the largest gaps 
among  EU  countries(43).  The  gap  was  more 
pronounced for young women with an employment 
rate  of  around  61%,  26  pps  lower  than  among 
those  with  a  native  background.  Men  performed 
better, with an employment rate of around 73%, 13 
pps  lower 
than  among  those  with  a  native 
background. While daughters of immigrant parents 
fare  well  in  the  education  systems  (often  better 
than  young  men),  this  does  not  always  translate 
into  success  in  the  labour  market.  An  even  wider 
gender  gap  appears  among  the  low-educated, 
where  low  educational  attainment  among  women 
labour 
frequently 
market(44). 

inactivity  on 

leads 

the 

to 

The  unfavourable  employment  situation  faced 
by native born with a migrant background can 
only  in  part  be  related  to  lower  educational 
outcomes(45).  Native  children  with  immigrant 
parents  are  less  likely  than  native  children  to  be 
tertiary-educated  (25%  and  35%  respectively), 
although  the  gap  is  relatively  small  compared  to 
countries(46). 
other 
the 
disadvantages  faced  by  second  generation  young 
people  is  due  to  the  lower  socio-economic  level 
(see  OECD 
inherited 

their  parents 

similar 

from 

Part 

of 

(41)  OECD-EU Settling in 2015, chapter 1 
(42)  Latest  data  available.  Source:  Dutch  LFS,  quoted  in 

OECD-EU Settling in 2018 

(43)  Latest  data  available.  Source:  Dutch  LFS,  quoted  in 
OECD-EU Settling in 2018. Definition used is employment 
rate among 15-34 excluding those still in education.   

(44)  OECD (2017a) 
(45)  Employment  rate  of  44.5%  in  2017,  one  of  the  lowest 

across EU MS 

(46)  OECD  (2017a),  There  is  also  evidence  (for  instance  by 
Zorlu 
the 
that  children  of 
Netherlands  are  more  likely  to  drop  out  of  university 
education. 

immigrants 

(2011)) 

in 

independence.  The  report 
delivered in spring 2019. 

is  expected 

to  be 

Labour  market  situation  of  people  with  a 
migrant background 

in 

face 

challenges 

While the overall participation rate is very high 
in  the  Netherlands,  people  with  a  migrant 
background 
their 
employment  situation (36).  Even  if  in  absolute 
numbers  the  labour  participation  of  people  with  a 
migrant  background  is  around  the  EU  average,  in 
2017  the  employment  rate  among  non-EU  born 
was  around  59.9%  (compared  to  58.9%  in  2016), 
20.6 pps  below  the  level  for  natives  (80.5%),  one 
of  the  largest  gaps  in  the  EU.  Compared  to  the 
previous year (2016) the gap remained unchanged. 
This 
is  a  concern  as  non-EU  born  persons 
represented as much as 11%(37) of the working age 
population (20-64) in the Netherlands in 2017. The 
for  non-EU  born 
gap 
women(38). 

is  particularly  high 

labour  market 
Part  of 
the  unfavourable 
in  the 
situation  of  non-EU-born  migrants 
Netherlands compared to natives is due to some 
of  their  socio-economic  characteristics  and  the 
reasons  for  migration.  Among  them  is  the 
relatively  high  share  of  low-educated  people, 
although the situation is improving(39), and limited 
level  of  language  proficiency.  However,  even 
when accounting for differences in education level, 
literacy,  age  and  sex(40),  the  relative  performance 
of 
the 
Netherlands  than  in  other  EU  countries  (with  an 
adjusted  employment  probability  14  pps  lower 
than for the native born- the largest gap in all EU 
countries  covered  by  the  analysis).  This  suggests 
that  other  factors  such  as  lack  of  recognition  of 
qualifications, language skills, limited professional 
networks  or  discrimination  play  a  role  (European 
Commission,  2017e).  Reasons  for  migration  also 

third-country  migrants  was  worse 

in 

(36)  Rapport  'De  positie  op  de  arbeidsmarkt  van  verschillende 
groepen personen met  een niet-westerse achtergrond' SEO 
economisch onderzoek, March 2018 

(37)  8% of those in employment, but 1 out of 5 unemployed and 

19% of the inactive population. 

(38)  Employment rate of 51.9% compared to 72.1% for native-

born women 

(39)  The share of non-EU born residents (aged 25-54) with low 
level of education was 31.2% in 2017 compared to 16.0% 
for natives. However it was down from 35.0% in 2014  
(40)  OECD  (2014)  IMO.  Note:  literacy  level  as  measured  by 
PIAAC (2012), migrants measured as all foreign-born.  

43 

 
                                                           
                                                           
4.3. Labour market, education and social policies 

raising(50).  Furthermore,  the  Federation  of  Private 
Employment 
Bond 
Uitzendondernemingen, ABU) published its action 
plan  on  diversity  in  the  labour  market  on  1  May 
2018 to address discriminatory practices(51).  

(Algemene 

Agencies 

is 

also 

programmes 

issued.  These 

Integration 
remain 
challenging  and  will  be  reformed.  There  have 
been  a  number  of  policy  changes  over  the  last 
years,  also  driven  by  the  inflows  of  asylum 
seekers. Measures were taken to improve the early 
integration  of  asylum  applicants(52)  even  before  a 
include 
residence  permit 
improving  the  quality  and  accessibility  of  courses 
to  prepare  for  the  civic  integration  test  and  by 
giving  additional  responsibilities  to  municipalities 
to  provide  social  counselling.  Further  changes  to 
improve  and  reform  the  integration  system  are 
planned  from  2020  onwards(53).  These  include 
involving 
the 
the  municipalities  more 
integration  process  with  an  individual  integration 
programme and increasing in the level of language 
required to pass the test for obtaining a permanent 
residence  permit(54).  The  main  goal  of  the  new 
integration  system  is  to  have  newcomers  working 
as  soon  as  possible  and  learning  the  language  as 
they go.  

in 

Labour market situation people with disabilities 

and 

remains 

challenging 

The  labour  market  situation  of  people  with 
disabilities 
in 
particular  young  people  with  disabilities  face 
vulnerability risks. Important implications for the 
labour  market  situation  of  specific  categories  of 
people with disabilities stem from the introduction 
of  the  Participation  Act  (Participatiewet)  in  2015 
(European  Commission,  2015b,  p.38,  European 
Commission, 2017d, p.29). As a result, the inflow 
(Sociale 
into 

workplaces 

sheltered 

(50)  Letter  to  Parliament  of  19  June  2018,  Hoofdlijnen 
Actieplan  Arbeidsdiscriminatie  2018-2021;  Kamerstukken 
II  2017/18,  29544-834.  See  also  the  implementation  plan 
Labour  market  discrimination  sent  to  Parliament  on  22 
November 2018. 

(51)  https://www.abu.nl/actueel/persberichten/abu-gaat-

discriminatie-te-lijf-actieplan-diversiteit-arbeidsmarkt-
verstuurd-naar-tweede-kamer 

(52)  Central  Agency  for  the  Reception  of  Asylum  Seekers 
(COA) programme "Vroege integratie en participatie" 

(53)  Letter 

'Inburgering  op  de  schop'  from  Minsister  to 
Parliament  2.7.2018;  further  details  on  the  timeframe, 
priorities  and  overview  responsibilities  were  given  in  the 
letter to Parliament on 23.10.2018 

(54)  From A2 to B1 language level 

(2018a))(47). Other factors include early tracking in 
fields  of  education  with  limited  possibilities  for 
good transitions to the labour market and the lack 
of  network  and  role  models,  while  also  (indirect) 
discrimination  plays  a  role  (Ministry  of  Social 
affairs  and  Employment,  VIA,  2018).  In  general, 
prioritising investments in employability of people 
with  a  migrant  background  could  contribute  to 
both social inclusion for this group and expansion 
of economic activities. 

Graph 4.3.8:  Employment rate of native born with migrant 

background (two foreign born parents) 
compared to native-born with native 
background (two native born parents) in the 
Netherlands and other EU MS (15-34), 2016-17 

Source: Eurostat 

to 

the 

improve 

In  March  2018,  the  government  presented  its 
programme(48)  Further  Integration  on 
the 
Labour  Market  proposing  a  multi-track 
approach 
labour  market 
situation  of  people  with  a  migrant  background 
and those granted asylum status. In addition, the 
government’s  approach  to  tackling  discrimination 
was  set  out  in  detail  in  April  2018(49).  The 
subsequently adopted action plan on labour market 
discrimination focusses on monitoring and control, 
research and knowledge gathering, and awareness-

(47)  In  Chapter  4. Crul  finds  that  the  difference  in  educational 
outcomes  is  reduced  by  half  for  the  children  of  Turkish 
immigrants  and  by  three-quarters  for  the  children  of 
Moroccan immigrants when accounting for the educational 
level of their parents. 

(48)  'Verdere  Integratie op de arbeidsmarkt: de economie heeft 
iedereen nodig', Kamerstukken II 2017/18, 29544, nr. 821 

(49)  Kamerstukken II 2017/18, 30 950, nr. 156 

44 

NLDKFIFRATDESEgap20,817,716,915,914,612,69,1NB with 2 FBparents67,158,361,061,576,074,977,0NB with 2 NBparents88,076,077,977,490,587,686,12118171615139405060708090100in % 
 
                                                           
                                                           
4.3. Labour market, education and social policies 

Werkvoorziening)  was blocked and the  number of 
workers  with  disabilities  in  sheltered  workplaces 
dropped  from  102 855  in  2014  to  86 959  in  2017 
(Panteia 2018). Only 30% of those on the (former) 
waiting list for the sheltered workspaces succeeded 
in finding work, whereas this figure had been 50% 
before  (Sadiraj  et  al.,  2018).  The  social  benefits 
for  young  persons  with  disabilities 
scheme 
(Wajong)  was  also  reformed.  As  a  result,  the 
entitlement to a Wajong benefits  was restricted to 
fully people with disabilities who reach the age of 
18  years  as  from  2015  onwards.  All  other 
categories  are  entitled  to  social  benefits  and 
receive  assistance  from  municipalities  to  find 
work.  

transfers  (excluding  pensions)  has  weakened 
considerably  in  recent  years  falling  from  51%  in 
2012  to  40%  of  the  at-risk-of-poverty  rate  before 
transfers  in  2017.  The  redistributive  impact  of 
social  transfers  decreased  more  for  individuals  of 
working age (18-64), households with no children 
and  single  parents.  The  reduced  impact  of  social 
transfers  could  be  partly  explained  by  a  break  in 
the series in 2015, as well as the (combined) effect 
of improving labour market conditions and reforms 
in  the  social  assistance  system  and  disability 
schemes.  In  addition,  the  depth  of  monetary 
poverty  before  social  transfers  is  also  increasing. 
The  latter  may  explain  why  the  share  of  working 
poor has also increased (SCP, 2018a).  

jobs  available 

to  persons  with 
Most  of 
disabilities  consist  of  part-time  and  fixed-term 
contracts  with  low  job  security.  Although  the 
share of employed young persons with disabilities 
increased from 22% in 2014 to 27% in 2015 (Kok 
et  al,  2018),  recent  research  shows  that  most  of 
them  employed  as  part  of  the  Job  Agreement 
(Banenafspraak) have a fixed-term contract (Smit, 
and  Scheeren,  2018).  Their  wage  depends  on  the 
level  of  the  lowest  wage  scale  that  is  included  in 
the applicable collective agreement. Those who are 
unable to hold a regular job can be offered a new 
sheltered  workplace  (beschut  werk)  created  by  a 
municipality.  By  the  end  of  2018  only  4 600  of 
these  sheltered  workplaces  had  been  created  and 
most  are  located  in  the  ‘old’  social  workshops 
(Sociale  Werkplaats)  where  workers  are  seconded 
by  the  municipality,  usually  on  a  fixed-term 
contract  (Smit  and  Scheeren,  2018).  To  increase 
the  labour  market  perspectives  of  persons  with 
disabilities,  the  government  has  launched  a  broad 
offensive to help more of them to get a job. 

Poverty  and 
Netherlands 

social  exclusion 

in 

the 

The  Netherlands  has  one  of  the  lowest  rates  of 
at risk of poverty or social exclusion, although it 
increased in recent  years. The population at-risk 
of  poverty  or  social  exclusion  further  increased 
from 364 000 in 2016 (16.7%) to 432 000 (17%) in 
2017, up by 67 000. The increase is mainly driven 
by an increase in monetary poverty as reflected by 
the  at-risk-of-poverty  rate.  This  increased  for  all 
population groups, in particular for those living in 
very low work intensity households (Graph 4.3.9). 
Moreover,  the  poverty  reducing  impact  of  social 

Graph 4.3.9:  Impact of social transfers on reducing the at-

risk of poverty rate (%) and the at-risk of 
poverty rate (%) (2005-2017) 

EU figures for 2005-2009 refer to the EU27; for 2010-2017 to 
the EU28 
Source: European Commission  

social  exclusion.  Among 
in 

Non-EU-born  people  face  a  higher  risk  of 
poverty  or 
the 
the 
population  aged  18  and  over  born 
Netherlands,  the  proportion  of  people  at  risk  of 
poverty  or  social  exclusion  remained  fairly  stable 
from  2008  to  2016  at  13.7%  despite  certain 
fluctuations  over  the  years.  However,  it  increased 
to 15.2% in 2017. Among non-EU-born residents, 
it increased with significant fluctuations over time 
from 31.7% in 2009 to 39.6% in 2016, then fell to 
35.8%  in  2017.  This  is  directly  related  to  the 
vulnerable  labour  market  position  of  many  non-
EU-born  migrants 
corresponding 
and 
investment priorities. 

the 

Poverty and social exclusion also have an urban 
dimension.  Large  cities  face  higher  rates  of 

45 

EUNetherlandsEUNetherlands01020304050602005200720092011201320152017Impact of social transfers on poverty reduction EUImpact of social transfers on poverty reduction NetherlandsAROP EUAROP Netherlands 
 
4.3. Labour market, education and social policies 

immigrant  status 
2018).  

(Inspectorate  of  Education, 

the  gap 

The  higher  education  attainment  rate  of 
persons  with  a  migrant  background  remains  a 
challenge.  Although 
in  educational 
attainment  between  foreign-born  and  native-born 
has been closing in secondary education, it remains 
significant  at  higher  education:  34.6%  of  foreign-
born  30-34  year  olds  hold  a  tertiary  diploma 
against 50.7% among native-born residents. 

to  amount 

to  4 100  full 

The Netherlands faces an increasing shortage of 
teachers. The teacher shortage at primary schools 
is  expected 
time 
equivalents by 2022. From 2018 the government is 
making available an additional EUR 270 million in 
salaries  for 
teachers  at  primary  schools.  A 
collective  labour  agreement  has  been  reached  on 
how  exactly  this  will  be  spent.  In  addition,  the 
‘work  pressure  agreement’  on  reducing  work 
pressure  in primary education  was signed in early 
2018.  This  means  that  as  of  2018-2019,  primary 
schools  will  receive  EUR 237 million  extra  to 
tackle  excessive  work  pressure.  In  the  2021-2022 
school  year,  funding  for  this  purpose  will  be 
increased to EUR 430 million. 

increasing 

While  there  are  no  skills  mismatches  at 
macroeconomic  level,  the  demand  for  skilled 
workers is expected to grow substantially. There 
is  growing  evidence(55)  of 
labour 
shortages  in  specific  sectors  (such  as  information 
and  communications  technologies,  ,  construction, 
and health care) and for people with the necessary 
technical  skills,  as  well  as  for  certain  professions 
(such  as  secondary  school  teachers  and  nurses) 
and/or at regional level(56). At the same time, there 
is  a 
technology, 
engineering  and  mathematics  study  fields:  only 
15%  of  students  graduated  from  these  fields 
against an EU-average of 26%.  

take-up  of 

science, 

low 

The Netherlands ranks among the frontrunners 
in terms of the number of individuals using the 

(55)  Getting  Skills  Right:  Skills  for  Jobs  Indicators,  OECD 
2017;  ROA  Rapport  'De  arbeidsmarkt  naar  opleiding  en 
beroep tot 2022, ROA-R-2017/10, December 2017 

(56)  Bijlage:  de  stand  van  de  krapte  op  de  Nederlandse 
arbeidsmarkt,  Appendix  letter  Arbeidsmarktbeleid  of  the 
Ministry  of  Social  Affairs  and  Employment  to  Parliament 
of 15.6.2018, Kamerstuk 29544 nr. 833, vergaderjaar 2017-
2018, 
at 
https://zoek.officielebekendmakingen.nl/blg-845833 

available 

unemployment  and  higher  rates  of  poverty  and 
social exclusion. Figures from 2017 show that the 
at-risk-of-poverty or social exclusion rate stands at 
19.8%  for  cities,  while  it  ranges  from  13.4%  to 
13%  for  towns  and  suburbs  and  rural  areas.  In 
Greater  Amsterdam,  The  Hague  and  Rotterdam, 
some 22%, 20% and 18% of people were at risk of 
poverty  in  2015  respectively.  In  cities,  11.6%  of 
people  live  in  households  with  very  low  work 
intensity compared to 7.2% and 5.1% respectively 
for  towns  and  suburb  and  rural  areas  (2017). 
Furthermore,  cities  are  characterised  by  a  higher 
lower 
unemployment 
employment  rate  (74.1%)  than  towns  and  suburbs 
(77.9%;  4.1%)  and  rural  areas  (79.6%;  3.8%) 
(2017). Migrants with a non-western background - 
a  group  that  does  not  score  well  on  poverty  and 
labour market indicators - live more in and around 
the  four  big  cities.  They  make  up  more  than  30% 
of  the  population  in  Amsterdam,  Rotterdam  and 
The Hague. 

(5.5%) 

rate 

and 

a 

4.3.2.  EDUCATION AND SKILLS 

Despite  performing  well  in  general,  there  has 
been  a  decline 
in  some  basic  skills  and 
increasing  differences  in  performance  levels 
between  schools.  While  the  proportion  of  low 
achievers  in  the  2015  OECD  Programme  for 
International  Student  Assessment  was  still  below 
the EU average, the OECD programme and Trends 
in  International  Mathematics  and  Science  Study 
2015 have shown declining trends for mathematics 
and  science.  The  share  of  students  achieving  the 
target level in the 2017 end-of-primary school tests 
has increased in somewhat in mathematics by 9%, 
while  it  has  dropped  significantly,  by  17%,  in 
reading (Inspectorate of Education, 2018). 

Children of lower and higher educated parents 
are  increasingly  being  educated  in  different 
schools.  Differences  between  schools  have  the 
largest impact on pupils’ performance of all OECD 
countries (OECD, 2016), and are strongly linked to 
tracks  offered  (Inspectorate  of 
the  different 
Education,  2017).  The  parental  choice  system 
contributes  to  creating  different  schools  (Ladd  et 
al, 2011) and strengthens the effects of residential 
segmentation  (Inspectorate  of  Education,  2018). 
The strongest factor in students’ being educated in 
different schools is parents’ educational attainment 
levels  and 
their 
levels,  followed  by 

income 

46 

 
                                                           
4.3. Labour market, education and social policies 

internet  and  those  with  advanced  digital  skills. 
However,  there  is  significant  demand  for  highly 
skilled ICT professionals in big data, cybersecurity 
and  artificial  intelligence.  In  January  2018,  there 
were more than 33 000 online ICT vacancies, with 
demand growing by 50% over the last 12 months.  

transitions,  and  promote 
all,  facilitate  career 
learning. 
professional  mobility  and 
Improving  society's 
innovation  capacity  also 
requires  investments  to  support  education  in  the 
field  of  science,  technology,  engineering  and 
mathematics.  

lifelong 

to 

in 

training 

learning 
Overall,  adult  participation 
increased  in  2017  although  lifelong  learning 
remains  a  challenge  for  those  in  a  vulnerable 
labour  market  situation.  Adult  participation  in 
learning increased to 19.1% in 2017, far exceeding 
the EU average of 10.9% (57). In 2015, 85% of the 
Dutch companies (compared to the EU average of 
72.6%)  provided  vocational 
their 
employees and 41.4% of employees participated in 
this type of training (compared to the EU average 
of  40.8%).  Despite  these  positive  developments, 
recent  research(58)  shows  that  employers  are  far 
less  willing  to  invest  in  training  for  employees 
permanent 
contracts 
with 
employees.  Often  they  restrict  training  to  what  is 
strictly  necessary  for  the  present  job  and/or 
organisation 
to  enable 
employees  in  a  vulnerable  labour  market  position 
to 
their 
follow 
employability.  

instead  of 

that  may 

temporary 

investing 

increase 

training 

than 

Investment needs 

Increased  investment  in  skills,  education  and 
training  are  important  for  improving  access  to 
the  labour  market  and  employability,  while 
fostering 
equal  opportunities  and  active 
inclusion.  The  employment  situation  of  low(er) 
skilled  workers,  (young)  people  with  disabilities, 
people  with  a  migrant  background  and  third 
country  nationals,  asylum  seekers  and  status 
holders,  which  remains  challenging,  points  to  the 
need  to  invest  more  in  targeted  active  inclusion 
policies  for  those  operating  at  the  margin  of  the 
labour  market  and  economically  inactive  people. 
Technical  skills  and  qualified  professionals  are 
crucial  for 
innovation 
the  Dutch  economy’s 
capacity  and  productivity  growth.  This  points  to 
the  need  to  invest  more  in  training,  to  promote 
flexible  upskilling  and  reskilling  opportunities  for 

(57)  According  to  the  Benchmarking  Framework  on  Skills 
conducted within the Social Policy Committee. For details, 
see  the  draft  Joint  Employment  Report  2019, COM(2018) 
761 final. 

(58)  ROA  Rapport  'Leren  onder  werkenden  met  een  kwetsbare 

positie op de arbeidsmarkt', 2018/5 

47 

 
                                                           
 
4.4. COMPETITIVENESS REFORMS AND INVESTMENT 

4.4.1.  PRODUCTIVITY AND INVESTMENT NEEDS*  

Graph 4.4.1:  Investment share by sectors (2017) 

levels, 

productivity 

to  maintain  a 

Investments 
in  R&D,  human  capital  and 
climate  and  energy  are  needed  to  boost 
productivity  and 
strong 
innovation  capacity.  While  R&D 
investment 
intensity  rose  to  1.99%  in  2017,  it  is  still  well 
below the 2.5% national target and the level of top 
performers.  On 
the 
Netherlands  is  close  to  or  at  the  frontier  in  many 
sectors.  This  implies  that  productivity  growth 
should  come  from  new  innovations.  A  further 
increase  in  R&D  investment,  especially  in  the 
private  sector,  is  needed  for  this  to  happen. 
Technical  skills  and  qualified  professionals  are 
crucial  for 
innovation 
the  Dutch  economy’s 
capacity and productivity growth (see Section 4.3). 
The energy transition and reduction of greenhouse 
gas  emissions  requires  substantial  investments  to 
support  a  more  sustainable  and  resource  efficient 
economic  development.  Annex  D  identifies  key 
priorities  for  support  by  the  European  Regional 
Development Fund and the European Social Fund 
Plus  over  2021-2027,  building  on  the  analysis  of 
investment  needs  and  challenges  outlined  in  this 
report. 

Investment and productivity 

Investment is increasing but remains below pre-
crisis  peaks.  The  ratio  of  investment  over  GDP 
reached  20.5%  in  2017,  up  from  17.5%  in  2014, 
but  still  below  pre-crisis  peak  levels.  Despite  the 
increase,  private  business 
investment  remains 
relatively low, in particular in relation to corporate 
savings.  Public  investment  rebounded  slightly  in 
2017  to  3.4%  of  GDP.  While  this  is  significantly 
above  the  euro  area  average  at  2.6%  of  GDP,  it 
remains  below  pre-crisis  levels  (Graph 4.4.1).  At 
the same time, the government is implementing an 
expansionary  fiscal  package 
including  higher 
public  investment  in  defence  and  infrastructure 
(Section 4.1). 

Source: Eurostat 

Although  productivity  growth  slowed  down 
more than in peer countries, the Dutch economy 
remains  one  of  the  most  productive  in  the  EU. 
Annual productivity growth has gone from 4% per 
year  in  the  1960s  to  less  than  1%  per  year  today. 
This  trend  is  partly  due  to  economic  activity 
shifting to sectors that have traditionally had lower 
productivity  growth,  e.g.  support  services  or 
education,  health,  and  social  work.  For  the  last 
decade,  it  might  also  be  explained  by  cyclical 
factors related to the impact of the global financial 
crisis.  Other  specific  factors,  such  as  labour 
productivity.  The 
hoarding, 
slowdown  of  productivity  growth 
the 
Netherlands  was  relatively  pronounced.  However, 
with  hourly  productivity  26%  above  the  EU 
average,  it  still  has  one  of  the  most  productive 
economies 
(Graph 4.4.2).  The 
Netherlands  has  appointed  the  CPB  Netherlands 
Bureau for Economic Policy Analysis, as National 
Productivity Board in 2017. National Productivity 
Boards  are  mandated  to  investigate  productivity 
through  neutral  and 
challenges 
independent 
evidence-based 
contributing 
analysis, 
of 
ownership 
and 
policymaking 
structural reforms. 

to 
domestic 

the  EU 

affected 

also 

in 

in 

48 

12,811,812,810,82,62,23,43,55,36,15,75,70510152025Euro area (19 countries)GermanyFranceNetherlands% of GDPBusinessGovernmentHouseholds 
 
 
4.4. Competitiveness reforms and investment 

Graph 4.4.2:  Productivity level compared to EU average 

Graph 4.4.3:  Productivity by sector (2015) 

(1) Productivity is measured as GDP per hour worked in 
purchasing power standards. 
Source: European Commission 

(1) Productivity is measured as value added in purchasing 
power standards per hour worked. The frontier is defined as 
the 90th percentile, seperating the top 10% best performers. 
Source: European Commission (EU KLEMS Database) 

the 

At  sectoral  level,  the  Netherlands  generally 
performs well and is among the top performers 
in  agriculture  and  transport.  In  most  other 
sectors, productivity  is relatively close  to the EU-
15  average  but  below 
top  performers, 
suggesting  potential  scope  for  higher  productivity 
growth (Graph 4.4.3). At corporate level, big firms 
performed  better  than  small  and  medium  size 
enterprises  during  and  after  the  economic  crisis. 
They  also  reported  higher  profitability.  Recent 
OECD  research  and  CompNet  data  suggest  that 
laggard 
the  pace  of 
productivity  growth  of  leading  firms,  which  may 
imply  that  there  is  a  hold-up  in  knowledge 
transmission.  However,  analysis  on  register  data 
covering all Dutch firms does not find evidence of 
a  divide  in  productivity  growth  between  leading 
firms and laggard firms (CPB, 2018b).  

firms  do  not 

follow 

Investment in R&D  

a 

relatively 

small  R&D 

Despite  the  Netherlands  being  a  top  innovator, 
R&D  expenditure  remains  below  national 
targets. R&D intensity was 1.99% in 2017, lower 
than  the  national  R&D  target  of  2.5%  and  below 
other  top  innovators.  Private  R&D  expenditure  is 
relatively  low  in  high-tech  manufacturing.  Private 
R&D  reached  1.17%  of  GDP  in  2017,  up  from 
0.79% in 2009, but below the EU average (1.3%) 
and  top  performers.  This  difference  is  usually 
explained  by  the  structure  of  the  Dutch  economy, 
with 
intensive 
manufacturing sector and a relatively large service 
sector. A sectoral analysis of business expenditure 
on  R&D  shows  that  the  Netherlands  is  the 
European leader in sectors such as agriculture and 
transport. However, in other sectors such as ICT or 
manufacturing 
(e.g.  pharma  and  hardware, 
including  computer  and  optic  instruments),  the 
country trails significantly behind the frontrunners 
(Graph 4.4.4).  When  considering  intangibles  in 
general  the  Netherlands  is  one  of  the  largest 
investors in the EU. This explains its high ranking 
in international benchmarks (such as the European 
Innovation Scoreboard). 

49 

809010011012013014015000010203040506070809101112131415161718% EUNLITESFRDE020406080100120AgricultureManufacturingElectricityConstructionTradeTransportAccommodation and foodInformationFinancialReal estateProfessional and scientific…Other services% frontierNetherlandsEU-15 
 
 
4.4. Competitiveness reforms and investment 

for 

instruments.  The  Act 

requires  the  right  mix  between  direct  and  indirect 
government 
the 
Stimulation  of  Research  &  Development  (Wet 
Bevordering  Speur-  &  Ontwikkelingswerk)  is  an 
R&D tax credit that lowers the wage costs of R&D 
employees  and  other  R&D  costs,  while 
the 
‘innovation box’ provides a tax break on corporate 
profits  from  innovative  activities.  In  2018  these 
indirect  instruments  amounted  to  EUR 1.2 billion 
(0.2%  of  GDP)  and  EUR 1.5 billion  (0.2%  of 
GDP)  respectively.  In  2016,  direct  subsidies  to 
private  R&D  amounted  to  just  EUR 137 million, 
the 
limiting 
government.  In  addition,  while  tax  benefits  based 
on  the  wages  of  researchers  appear  to  be  a  more 
effective  tool  to  boost  R&D,  especially  among 
SMEs,  the  effectiveness  of  the  innovation  box 
remains  limited  (European  Commission  2015a, 
Dumont  2017,  CPB  2018a,  Alstadsæter  et  al. 
2015).  

the  direct  steering  capacity  of 

in 

for 

in  other 

strategies 

in  R&D 

innovation 

expenditure 

smart 
Regional 
specialisation(59)  strengthen 
innovation  eco-
systems  thanks  to  concentrated  investments 
based on regional needs and potential. Regional 
differences 
largely 
correspond  to  the  relative  concentration  of  R&D 
intensive  large  firms  in  some  regions  and  the 
predominance of small firms, with relatively lower 
R&D  expenditure, 
regions.  Smart 
specialisation 
the  Netherlands  concentrates 
investment  in  R&D  and  innovation  on  selected 
regional  smart 
in 
identified 
priorities, 
specialisation  strategies  covering 
the  country, 
where  the  impact  on  competitiveness  can  be  the 
greatest,  and  stimulates  cooperation  between 
research  institutes  and  businesses,  in  particular 
small  and  medium  size  enterprises.  This  regional 
dimension  of  the  innovation  policy  strengthens 
cooperation across stakeholders and across sectors 
and  triggers  targeted  additional  investments  that 
complement  national  innovation  policy  based  on 
particular 
regional  strengths.  The  provinces, 
supported by the European Regional Development 
Fund,  are  the  main  public  funding  resource  for 

four 

(59)  Smart  specialisation  strategies  aim  to  prioritise  public 
research  and  innovation  investments  through  a  bottom-up 
approach  for  the  economic  transformation  of  regions, 
building on their strengths and competitive advantages and 
facilitating  market  opportunities  in  new  inter-regional  and 
also 
European 
https://ec.europa.eu/regional_policy/sources/docoffic/2014/
com_2017_376_2_en.pdf )  

chains 

value 

(see 

Graph 4.4.4:  Business expenditure on R&D, 2015 

Source: Ecorys, 2018 

investment 

further  private 

is 
Leveraging 
needed  to  meet  the  2.5%  of  GDP  target. 
According  to  analysis  by  the  Rathenau  Institute, 
total  R&D  expenditure  needs  to  increase  by 
EUR 5.8 billion  between  2016  and  2020  to  reach 
the  national  target  (Vennekens  and  De  Jonge, 
2018).  Looking  ahead,  the  government  is  seeking 
to  use  public  R&D  investment  to  bolster  private 
R&D  via  public-private  partnerships.  A  potential 
policy  lever  to  achieve  higher  public  and  private 
investment  may  come  from  the  Dutch  enterprise 
policy  and  the  new  mission-driven  innovation 
policy.  The  latter  focuses  on  maximising  the 
economic  opportunities  that  accrue  from  societal 
challenges  through  public-private  partnerships  in 
certain top sectors. 

Further innovation and investment in R&D are 
needed  to  achieve  the  long-term  targets  of 
climate  policy  and  the  energy  transition.  The 
draft  Climate  Agreement  recognises  that  forward-
looking  research  and  innovation  are  necessary  to 
enable  the  achievement  of  the  2030  targets  for 
emission  reduction  and  create  the  basis  for  the 
realisation  of 
the  2050  ambitions.  The  new 
mission-driven  innovation  policy  will  support  an 
agenda  for  climate  and  energy  whereby  public 
investments in R&D needs to be tuned with private 
resources. 
innovative 
to  necessary  cost 
lead 
technologies  would 
reductions  for  environmental  improvements  and 
competitive business development. 

Eco-innovation 

and 

support 
composition 
The 
mechanisms  may  need 
to  be  examined. 
Effectively  supporting  private  R&D  investment 

innovation 

of 

50 

SENLSEEEFIHUNLFIDKAT024681012% of (sectoral) Gross Value AddedFrontrunnerEU averageNetherlands 
 
                                                           
4.4. Competitiveness reforms and investment 

smart 

regional 
leverage 
specialisation 
significant  private  funding.  The  four  current 
strategies will be revisited in 2019 in parallel with 
further development of the national mission driven 
innovation policy.  

that 

Investment in climate and energy 

strategy 

the  Europe  2020 

Despite  missing  short-term  targets,  including 
that  of 
the 
Netherlands  is  expected  to  meet  its  national 
2023 target of 16% renewable energy thanks to 
investments  in  off-shore  wind  farms.  With  a 
6.0% renewable energy share in gross final energy 
consumption  in  2016,  the  Netherlands  missed  its 
2015-2016 indicative trajectory. With a renewable 
energy  share  growing  to  6.6%  in  2017,  the 
Netherlands  is  expected  to  miss  its  target  of  14% 
by  2020.  One  of  the  reasons  is  the  slow  progress 
on  achieving  a  target  of  6  gigawatt  of  onshore 
wind in 2020, with only 3.2 gigawatt achieved by 
the  end  of  2017.  The  national  target  of  16% 
renewable  energy  by  2023  is  expected  to  be  met, 
mainly  due  to  the  build  out  of  offshore  wind  to 
almost  4.5  gigawatt  by  2023  (from  1  gigawatt 
installed  in  2017),  with  most  wind  farms  coming 
online between 2020 and 2023. As part of the new 
climate  programme,  the  Dutch  government  has 
already  agreed  on  a  further  build  out  of  offshore 
wind  parks  to  more  than  10  gigawatt  by  2030. 
According to national projections submitted to the 
Commission  and  taking  into  account  existing 
measures, the Netherlands will meet its 2020 target 
of  reducing  greenhouse  gas  emissions  by  16% 
compared to 2005, with a margin of 10%. 

For the longer term, the Dutch government has 
launched  a  process  to  establish  a  policy  to 
reduce  greenhouse  gas  emission  by  49%  in 

2030,  compared  to  1990  levels.  The  government 
is currently drawing up sectoral plans for meeting 
its  climate  objective 
in  collaboration  with 
stakeholders  and  knowledge  institutes,  in  order  to 
conclude a "National Climate Agreement", a draft 
of  which  was  presented  in  December  2018.  The 
government has proposed a Climate Change Act as 
an  overarching  framework  to  help  achieve  the 
long-term goal of a  -95% reduction in greenhouse 
gas  emissions  by  2050  compared  to  1990.  It  has 
been adopted by the House of Representatives, but 
not  yet  by  the  Senate.  Once  completed,  the 
National  Climate  Agreement  and  accompanying 
assessments  will  provide  a  strong  basis  for 
deciding on policy and investment priorities. In its 
National  Energy  and  Climate  Plan  to  be  adopted 
by 31 December 2019 in line  with the Regulation 
on  the  Governance  of  the  Energy  Union  and 
Climate  Action(60),  the  Netherlands  will  provide 
an overview of its investment needs until 2030 for 
the  different  dimensions  of  the  Energy  Union, 
including  renewable  energy,  energy  efficiency, 
security  of  supply,  and  climate  mitigation and 
adaptation. The information provided, including in 
the  draft  plan  submitted  on  21  December  2018, 
will  further  contribute  to  the  identification  and 
assessment 
climate-related 
investment needs for the Netherlands. 

energy 

and 

of 

(60)  Regulation  (EU)  2018/1999  of  the  European  Parliament 
and  of  the  Council  of  11  December  2018  on  the 
Governance  of  the  Energy  Union  and  Climate  Action, 
amending  Regulations  (EC)  No  663/2009  and  (EC)  No 
715/2009  of  the  European  Parliament  and  of  the  Council, 
Directives  94/22/EC,  98/70/EC,  2009/31/EC,  2009/73/EC, 
2010/31/EU, 2012/27/EU and 2013/30/EU of the European 
Parliament  and  of 
the  Council,  Council  Directives 
2009/119/EC and (EU) 2015/652 and repealing Regulation 
(EU)  No  525/2013  of  the  European Parliament and  of  the 
Council (Text with EEA relevance.) 

51 

 
                                                           
 
4.4. Competitiveness reforms and investment 

Box 4.4.1: Circular economy 

The Netherlands is in many cases leading by example and partnering up to push circularity 
in the EU. Circular (secondary) use of materials in the Netherlands stood at 29% of total material 
use in 2016, compared to an EU-28 average of 11.7%(1). Following the government's commitment 
to a greener economy and its good practice of over 200 ‘green deals’(2) already with private sector 
and  other  organisations,  a  new  green  deal  on  circular  procurement  was  signed  by  50  public  and 
private  organisations  and  companies  in  June  2018,  leading  to  EUR 100 million  in  'green' 
purchasing power. Circularity is for example also applied in the area of medicine waste. The Royal 
Dutch  Pharmacists  Organisation  has  initiated  medicine  use  monitoring  and  incentives  for  a  new 
waste  collection  system  in  pharmacies.  This  should  reduce  the  amount  of  unused  medications 
ending up in the environment. 

There are  still a  number of barriers to promoting  innovation in the circular economy. The 
Netherlands  ranks  surprisingly  low  in  the  EU  Eco-Innovation  Index,  with  scores  below  the  EU 
average  for  4  out  of  5  indicators:  eco-innovation  inputs,  outputs,  activities,  and  socio-economic 
outcomes (e.g. changes in employment, turnover or exports that can be related to eco-innovation 
activities).  The  country  only  scores  (slightly)  above  the  EU  average  on  resource  efficiency 
outcomes (material, water, energy productivity and greenhouse gas emissions intensity)(3). 

Investments in waste management are needed to meet the municipal waste recycling targets 
(up to 65% of all municipal waste). Moreover, projects that support a shift in recyclable waste 
away from incineration towards  recycling should be prioritised as, recycling is more in line  with 
the circular economy and is also higher up in the ‘waste hierarchy’(4) than incineration.  

(1)  Eurostat,  Circular  material  use  rate.  This  indicator  measures  the  share  of  material  recovered  and  fed  back  into  the 

economy. 

https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=cei_srm030&plugin=1  
(2)  A  Green  Deal  is  a  mutual  agreement  or  covenant  under  private  law  which  is  closed  between  central  government,  a 
coalition of companies, civil society organizations and local and regional government, aimed at overcoming barriers to 
sustainable innovation. For further details see: https://www.greendeals.nl/ 

(3)  https://ec.europa.eu/environment/ecoap/netherlands_en  
(4)  The 

approach 

EU’s 

(see 
http://ec.europa.eu/environment/waste/index.htm) which sets a priority order when shaping waste policy and managing 
waste: prevention, (preparing for) reuse, recycling, recovery and, as the least preferred option, disposal (which includes 
landfilling and incineration without energy recovery). 

to  waste  management 

the  waste 

hierarchy 

based 

on 

is 

Investment  needs  to  decarbonise  the  economy 
are  substantial  and  differ  per  sector.  The 
Netherlands  Environmental  Assessment  Agency 
(PBL)  analysed  the  additional  annual  investment 
needed  to  achieve  the  target  for  the  reduction  in 
greenhouse  gas  emissions  (Koelemeijer  et  al., 
2018).  A  significant  reduction  will  be  achieved 
through  investments  in  renewable  energy  and 
energy  efficiency.  Six  different  scenarios  have 
been  explored.  The  most  cost-effective  scenario 
(which  uses  the  cheapest  options  in  all  sectors  to 
achieve the target) would require additional annual 
investments of EUR 2.2 billion per year. The most 
ambitious  scenario  (which  includes  additional 
investments  up  to  2030  to  help  the  Netherlands 
achieve the target of a 95% reduction in emissions 
by  2050)  would  require  EUR 4.1 billion  per  year. 
The  electricity  sector,  whose  emissions  must  be 

reduced the most by 50%, would require additional 
investment  of  EUR 1.1 billion  per  year  depending 
on  the  options  chosen  (solar  power  or  offshore 
wind  and  scale  of  deployment).  The  industrial 
sector  could  need  further  investment  of  between 
EUR 0.9-1.6 billion  per  year  depending  on  the 
scenarios  -  from  the  scaling  up  of  recycling  to  a 
new  infrastructure  for  carbon  capture  and  storage 
to  full  electrification.  The  construction  sector 
could  make  use  of  additional  investment  ranging 
from  EUR 0.1-1.3 billion  per  year  in  insulation  to 
reach  its  target  of  near-zero  energy  consumption 
buildings.  

The  Dutch  government  also  uses 
fiscal 
instruments  and  minimum  prices  for  CO2 
emissions. While the tax burden on labour is being 
fields  of  energy, 
reduced, 

taxation 

the 

in 

52 

 
 
 
 
4.4. Competitiveness reforms and investment 

environment  and  consumption  is  being  increased. 
The government also aims to introduce a minimum 
price  for  CO2  from  electricity  generation  -  a 
carbon price floor - starting at EUR 18 in 2020 and 
rising to EUR 43 by 2030 to supplement the price 
signal  from  the  EU  Emissions  Trading  System. 
Companies  that  produce  electricity  would  be 
charged  an  additional  levy  based  on  the  price 
difference  between  the  EU  allowances  and  the 
price  floor.  To  better  reflect  CO2  emissions,  the 
energy  tax  on  consumers  will  be  recalibrated 
across  energy  products.  The  rate  on  natural  gas 
will increase while the rate on electricity will fall.  

the  Netherlands  has 

Climate  change  is  expected  to  increase  flood 
risks  and  may  warrant  additional  investment. 
With  more  than  60%  of  the  country  vulnerable  to 
flooding and 75% of the population living in those 
areas, 
introduced  new 
standards  to  respond  to  the  challenges  linked  to 
climate change, urban development and economic 
forthcoming).  The  Delta 
growth 
initiatives  have 
programme  and  other  public 
helped  protect 
flooding. 
from 
the  country 
However,  climate  change  is  expected  to  increase 
risks; in the absence of measures, potential damage 
can be sizeable (RPA, 2014). 

(OECD, 

53 

 
 
4.4. Competitiveness reforms and investment 

Box 4.4.2: Investment challenges and reforms 

Section 1. Macroeconomic perspective  

In 2018 business and residential investment supported economic growth. The tight labour market and high 
capacity utilisation rate combined with the positive economic outlook, low capital cost and high profitability 
led to an increase in business investment. Total investment reached 20.5% of GDP in 2017, slightly above 
long  term  average  but  still  some  2  percentage  points  below  the  pre-crisis  peak  level.  This  is  largely 
explained  by  the  dynamics  in  construction  investment.  Residential  investment  fell  sharply  during  the 
economic recession and has not yet recovered entirely. The ratio of business investment to GDP edged up to 
11.3% of GDP, while public investment stabilised at 3.5% of GDP.  

Section 2. Assessment of barriers to investment and ongoing reform 

The  Netherlands  benefits  from  an  investment-friendly  institutional  and  political  setting.  Overall,  there  are 
very  few  genuine  regulatory  barriers  to  investments  (see  European  Commission,  2015b  and  the  Flash 
Eurobarometer  459:  Investment  in  the  EU  Member  States).  The  Netherlands  qualifies  as  an  “innovation 
leader"  (European  Innovation  Scoreboard  2018),  benefiting  from  an  attractive  research  system  and  an 
innovation friendly environment. However, the level of R&D investment  remains a weak point. While the 
Netherlands  performs  reasonably  well  in  terms  of  public  R&D  investment,  it  underperforms  on  private 
investment  compared  to  both  the  EU  average  and  the  top performers.  The  government  has  reaffirmed  the 
intention to increase efforts to reach an R&D intensity of 2.5% of GDP. This will require extra investments 
from  the  government  and  private  sector  (see  Section 4.4).  According  to  the  World  Bank  Ease  of  Doing 
Business indicators, some sectoral regulations, such as obtaining a building permit may be burdensome and 
hamper construction investments. On this indicator, the Netherlands fell from 76th to 84th position in 2018. 
In order to boost investment, the government announced that a new development and investment institution 
will be established: Invest-NL. The Netherlands Investment Agency will merge with Invest-NL. Invest-NL 
will  provide  risk  capital:  guarantees,  subordinated  loans  and  equity  to  project  sponsors  and  enterprises  if 
necessary. The government will be the sole shareholder, investing up to EUR 2.5 billion in Invest-NL.  

4.4.2.  SINGLE MARKET INTEGRATION  

Connectivity 

The  Netherlands  is  one  of  the  best  performers 
in  the  area  of  connectivity.  It  has  already 
achieved  the  Digital  agenda  2020  targets  and  for 
the  future  the  government  has  set  even  more 

ambitious  goals  than  the  Gigabit  Society  Strategy 
objectives. Fixed broadband coverage and take-up 
are  high  (>99.5%  and  98%  respectively)  and 
fourth generation mobile broadband is available to 
the 
entire  population.  Ultrafast  broadband 
coverage is nearly complete (97%) with take-up at 
around one third of households. Mobile broadband 
take-up is relatively low (88 subscriptions per 100 
people),  possibly  due  to  the  wide  availability  of 

54 

Regulatory/ administrative burdenTaxationPublic administrationAccess to financePublic procurement /PPPsCooperation btw academia, research and businessJudicial systemFinancing of R&D&ICSRInsolvency frameworkBusiness services / Regulated professionsCompetition and regulatory frameworkRetailEPL & framework for labour contracts ConstructionWages & wage settingDigital Economy / TelecomEducation, skills, lifelong learning EnergyTransportLegend:No barrier to investment identifiedSome progressCSRInvestment barriers that are also subject to a CSRSubstantial progressNo progressFully addressedLimited progressNot assessed yetPublic administration/ Business environmentFinancial Sector / TaxationR&D&ISector specific regulationLabour market/ Education 
 
4.4. Competitiveness reforms and investment 

(developing 

supercomputers 

programmes funded or coordinated by the EU. For 
example,  it  is  a  member  of  the  EuroHPC  Joint 
Undertaking 
to 
process  big  data),  it  has  the  European  Blockchain 
Partnership, and has signed the EU Declaration on 
Artificial Intelligence. In December 2018, pursuant 
to 
the  EU  eIDAS  Regulation  on  electronic 
identification,  authentication  and  signatures,  the 
Netherlands notified its e-Identification scheme for 
businesses.  This  is  a  welcome  first  step,  which  is 
expected to be followed by the notification of an e-
Identification for citizens. 

4.4.3.  INSTITUTIONAL QUALITY  

Business environment 

in 

Index, 

is  significantly  high 

The  Netherlands  maintains  a  business-friendly 
environment.  According  to  the  World  Economic 
the 
Forum  Global  Competitiveness 
Netherlands  ranked  6th  out  of  140  countries  in 
2018,  just  behind  four  non-EU  countries  and 
Germany. In comparison to other EU countries, its 
infrastructure, 
score 
innovation  and  business 
sophistication.  The 
number  of 
registered  businesses  has  grown 
consistently  in  recent  years.  The  number  of  new 
businesses  created  (including  sole-proprietors) 
continued  to  increase  reaching  130%  of  the  2012 
level (OECD, 2018b). The number of bankruptcies 
has  declined  in  recent  years,  and  in  2017  reached 
40%  of  the  2012  level.  Nonetheless  there  is  still 
room  for 
its  scores  on 
enforcing  contracts  and  getting  credit  are 
significantly  below  the  euro  area  average  (World 
Bank, 2018). 

improvement  since 

Public procurement  

but 

could  be 

transparency 

The  public  procurement  system  generally 
and 
well, 
works 
accountability 
improved.  The 
Netherlands  scores  below  the  EU  average  on  the 
publication rate of public tenders, which was 2.4% 
of  GDP  in  2015.  Moreover,  the  level  of  direct 
awards  is  also  relatively  high  (6%)  compared  to 
peer  countries.  It  has  doubled  compared  to  2016 
when  it  was  2.9%.  Direct  awards  prevent  the 
benefits  of  competitive  tendering  being  reaped  in 
terms of choice of suppliers and price. The current 
contract 
includes  currently  available 
information  (contract  notices  and  contract  award 

register 

WiFi  networks.  A  fifth  generation  frequency 
auction is planned for 2019 or early 2020. 

The Netherlands plays an important role in the 
Single  Market  and  has  particularly  benefitted 
from  the  integration  in  the  Single  Market.  It  is 
also  among  the  largest  importers  of  goods  in  the 
EU, with Rotterdam as the largest port in the EU. 
In this position, the Netherlands play an important 
role  in  ensuring  that  non-compliant  products  do 
not enter the EU. However, according to the Dutch 
authorities,  a  lot  of  shipments  that  answer  risk-
based criteria for inspection are not inspected due 
to the  high  number of  shipments entering through 
the  port  of  Rotterdam  in  relation  to  the  available 
workforce for inspection(61). 

Digitalisation  

technologies 

it  recognises 

technologies.  The 

Dutch enterprises have stepped up their efforts 
to integrate digital technologies. The Knowledge 
and  Innovation  Agenda  2018-2021  opens  up  new 
topics (such as creative industries) and more cross-
sectoral ones, while developing societal challenges 
information  and 
and  key 
communications 
is 
agenda 
instrumental  in  developing  a  more  cross-sectoral 
approach  and  in  fostering  radical  innovation.  For 
the  strategic  cross-
2018-2021, 
sectoral impact of big data, cybersecurity, artificial 
intelligence,  blockchain  and 
fifth  generation 
(European Commission, 2018d). In 2014-2017, the 
Smart  Industry  programme,  the  most  important 
cross-cutting  scheme  for  digitalisation  of  the 
manufacturing industry, created 35 field labs and 5 
regional  Smart  Industry  Hubs.  An  investment  of 
EUR 163 million is put in place to help companies 
test 
and  knowledge 
information  and  communications 
technologies 
applications.  The  Smart  Industry  Implementation 
Agenda  2018  –  2021  aims  to  further  increase 
productivity,  create  new  jobs  and  therefore  help 
solve  societal  challenges  such  as  reducing  raw 
materials  and  energy  consumption.  Nonetheless, 
while  small  and  medium  size  enterprises  selling 
the 
online  have 
percentage  exploiting 
the  opportunities  of  e-
commerce is still below the EU average (European 
Commission,  2018c).  The  government  has 
repeatedly  expressed  its  intention  to  strategically 
including  via 
invest 

institutes  develop  and 

technologies, 

in  digital 

improved 

turnover, 

their 

(61)  See https://ec.europa.eu/docsroom/documents/32863  

55 

 
                                                           
4.4. Competitiveness reforms and investment 

notices). Its expansion to cover other aspects (e.g. 
contract  completion,  payment  register)  would 
greatly contribute to help improve the transparency 
and accountability of public procurement.  

the 

Cooperation  between  public  buyers  may 
improve  expertise  in  public  procurement.  In 
February  2018,  the  Ministry  of  Economic  Affairs 
and  Climate  (2018)  released  the  ‘Better  Public 
Procurement’  (Beter  Aanbesteden).  This  aims  to 
improve 
of 
procurement 
municipalities  and  government  entities.  One  way 
to  improve  the  expertise  of  public  buyers  is  to 
enhance cooperation between them. In 2016, only 
4%  of  procedures  involved  more  than  one  buyer, 
one  of  the  lowest  levels  in  the  EU.  There  are 
currently  50  municipal  procurement  partnerships 
varying  from  actual  cooperative  procurement  to 
knowledge sharing. 

expertise 

these 

size  enterprises 

still 
Small  and  medium 
encounter  many  problems  when  bidding  for 
public  contracts.  The  Public  Procurement  Act 
(Aanbestedingswet  2012)  provided  legal  tools  to 
improve  the  participation  of  small  and  medium 
size  enterprises.  However, 
firms  still 
consider  the  requirements  laid  down  in  tendering 
procedures to be too high. This means that the new 
law  helped  improve  access  for  themin  the  tender 
practice  to  a  limited  extent.  For  instance,  the 
division  of  contracts  into  lots  slightly  increased 
compared 
the  Public 
the  situation  before 
Procurement  Act  became  law  (KWINK,  2015). 
However,  the  practice  of  clustering  of  contracts 
that are above the EU thresholds has not changed. 

to 

An  ambitious  digitalisation  strategy  could 
simplify  procedures  for  the  benefit  of  buyers 
and  suppliers.  The  e-procurement  services  in  the 
Netherlands are provided to contracting authorities 
by  the  market  together  with  the  government-run 
TenderNed  system.  However,  there  is  no  plan  yet 
to  connect  the  national  databases  to  facilitate 
implementation  of  the  ‘once-only’  principle.  In 
particular, 
the  European  Single  Procurement 
Document  –  a  standard  self-declaration  form 
created  by  the  Commission  –  is  not  linked  to  the 
national databases. 

56 

 
ANNEX A: OVERVIEW TABLE 

Commitments  

Summary assessment (1) 

2018 country-specific recommendations (CSRs)  

CSR 1: While respecting the medium-term objective, 
use  fiscal  and  structural  policies  to  raise  public  and 
private  investment  in  research,  development  and 
innovation. Take measures to reduce the debt bias for 
households  and  the  remaining  distortions  in  the 
housing  market,  in  particular  by  supporting  the 
development of the private rental sector  

Netherlands  has  made  substantial  progress 
addressing CSR 1  

in 

While  respecting  the  medium-term  objective,  use 
fiscal  and  structural  policies  to  raise  public  and 
private  investment  in  research,  development  and 
innovation.  

government 

progress.  The 

Substantial 
is 
implementing  a  fiscal  stimulus,  which  includes 
public investment, while respecting the medium-term 
in  R&D 
objective.  The  announced 
expenditure  in  2019  has  been  incorporated  in  the 
budget  law.  The  R&D  tax  credit  budget  (WBSO) 
will also be increased from 2020 onwards, increasing 
the subsidy on R&D related costs. At the same time, 
a gap remains compared to the R&D target of 2.5% 
of GDP. 

increase 

Take measures to reduce the debt bias for households 
and the remaining distortions in the  housing market, 
in  particular  by  supporting  the  development  of  the 
private rental sector  

Some  progress.  The  announced  acceleration  of  the 
reduction in mortgage interest deductibility has been 
adopted  by  Parliament  and  will  take  effect  between 
2020 and 2023. While this helps to address the debt 
bias  for  households,  a  substantial  subsidy  on  debt-
financed  homeownership  remains.  The  government 
also  submitted  a  draft  law  to  Parliament  to  increase 
the  mid-priced  rental  market  (Wet 
supply 
maatregelen middenhuur).  

in 

Netherlands  has  made 
addressing CSR 2  

CSR  2:  Reduce  the  incentives  to  use  temporary 
contracts  and  self-employed  without  employees, 
while  promoting  adequate  social  protection  for  the 
self-employed,  and  tackle  bogus  self-employment. 
Create  conditions  to  promote  higher  wage  growth, 
respecting the role of the social partners. Ensure that 
the  second  pillar  of  the  pension  system  is  more 
transparent, 
inter-generationally  fairer  and  more 
resilient to shocks.  

limited  progress 

in 

Reduce the incentives to use temporary contracts and 
self-employed  without  employees,  while  promoting 
adequate social protection for the self-employed,  

Limited  progress.  The  draft  bill  Wet  Arbeidsmarkt 
in Balans  (sent to Parliament on 7 November 2018) 
contains a package of proposed measures to make it 
easier  to  hire  permanent  employees  and  to  make 
flexible contracts less flexible. It should be seen as a 
first  step  in  a  broader  process  of  labour  market 
regulation  reform  measures  and  ongoing  reflections 

57 

 
 
 
A. Overview table 

on  how  to  best  tackle  distinct  institutional  drivers 
properly.  In  addition,  a  committee  of  independent 
experts was set up to advise the government on how 
to regulate the labour market in the future taking into 
account the changing economy and society. It should 
present  its  report  and  findings  at  the  latest  by  1 
November 2019. On possible initiatives for the self-
employed without employees, the Minister informed 
Parliament on 26 November 2018 on the current state 
of  play  of  ongoing  reflections  on  possible  social 
security  coverage  for  sickness  and  disability  of  the 
self-employed. However, no concrete measures have 
been announced/adopted yet. 

No  progress.  Despite  ongoing  reflections  and 
discussions on how to tackle bogus self-employment 
no  concrete  measures  have  been  adopted  or 
announced. 

and tackle bogus self-employment.  

Create  conditions  to  promote  higher  wage  growth, 
respecting the role of the social partners.  

Some  progress.  Wages  in  collective  agreements 
increased on average by 2.1% in 2018. Public sector 
wages increased at a faster rate (by 3% in the second 
half  of  2018),  with  wage  agreements  leading  to  a 
nominal  increase  of  7%  in  two  years  for  all  civil 
servants  in  central  government.  Additional  funding 
has been provided to increase the salaries of primary 
school  teachers.  The  government  has  taken  tax 
measures that support higher disposable real incomes 
of  households.  Overall,  wage  growth  is  expected  to 
increase  further  due  to  a  further  tightening  labour 
market. 

Ensure that the second pillar of the pension system is 
more 
inter-generationally  fairer  and 
transparent, 
more resilient to shocks.  

reform,  negotiations 

Limited  progress.  Despite  a  shared  understanding 
among  stakeholders  of  the  need  for  comprehensive 
in  mid-
pension 
November 
informed 
Parliament  with  a  letter  setting  out  the  government 
initiatives  to  continue  reforming  the  occupational 
pension system in early February 2019.  

stalled 
government 

2018.  The 

Europe 2020 (national targets and progress)  

Employment rate target set in the 2016 NRP: 80%.   The employment rate is on an upward trend, reaching 
79.6%  in  Q3-2018.  The  Netherlands  is  on  target  to 
reach this goal by 2020.  

R&D target set in the NRP: 2.5% of GDP  

At 1.99% of GDP in 2017, a substantial increase both 
in private  and public  R&D is necessary to reach the 
target by 2020.  

58 

 
 
A. Overview table 

In  2017,  R&D  intensity  in  the  Netherlands  was 
composed  of  59%  private  investment  (1.17%  of 
GDP) and 41% public investment (0.82% of GDP). 

National  greenhouse  gas  (GHG)  emissions  target:  
-16%  in  2020  compared  with  2005  (in  sectors  not 
included in the EU emissions trading scheme)  

According to national projections, the Netherlands is 
expected to overachieve its greenhouse gas reduction 
target  under  the  Effort  Sharing  Regulation  of  -16% 
by 10 pp compared to 2005. 

2020 renewable energy target: 14%  

Energy efficiency, 2020 energy consumption targets: 

- 60.7 Mtoe in primary energy consumption  

- 52.2 Mtoe in final energy consumption 

Despite  a  strong  increase  in  renewable  energy  from 
offshore wind farms, the target of 14% for renewable 
energy consumption in 2020 will not be met, with an 
expected  share  of  12.4%  according  to  the  national 
outlook.  In  2016,  the  renewable  energy  share  was 
6%. 

With  an  estimated  absolute  level  of  final  energy 
consumption  of  49.5  Mtoe,  the  Netherlands  has 
already exceeded its target.  

Early school/training leaving target: <8.0%.  

After achieving the target in 2016, the percentage of 
early  school  leavers  has  been  further  reduced.  In 
2017, the percentage amounted to 7.1%. 

Tertiary  education  target:  >40%  of  population  aged 
30-34.  

The rate was 47.9% in 2017, which is well above the 
national target and the EU average.  

Target  for  reducing  the  number  of  people  at  risk  of 
poverty  or  social  exclusion:  100 000  thousands  less 
people  living  in  jobless  household  (compared  to 
2008) 

The  number  of  people  in  jobless  households  was 
1 516 000  in  2017.  This  is  97 000  less  than  in  2008 
(1 613 000). Thus the target has almost been reached. 

• 

(1) The following categories are used to assess progress in implementing the country-specific recommendations (CSRs):  
No progress: The Member State has not credibly announced nor adopted any measures to address the CSR. This category covers a 
number  of  typical  situations  to  be  interpreted  on  a  case  by  case  basis  taking  into  account  country-specific  conditions.  They 
include the following:  
no legal, administrative, or budgetary measures have been announced in the national reform programme, in any other official 
communication to the national Parliament/relevant parliamentary committees or the European Commission, publicly (e.g. in a 
press statement or on the government's website); 
no non-legislative acts have been presented by the governing or legislative body; 
the Member State has taken initial steps in addressing the CSR, such as commissioning a study or setting up a study group to 
analyse possible measures to be taken (unless the CSR explicitly asks for orientations or exploratory actions). However, it has 
not proposed any clearly-specified measure(s) to address the CSR. 

• 
• 

Limited progress: The Member State has:  
• 
• 

announced certain measures but these address the CSR only to a limited extent; and/or 
presented legislative acts in the governing or legislative body but these have not been adopted yet and substantial further, non-
legislative work is needed before the CSR is implemented; 
presented non-legislative acts, but has not followed these up with the implementation needed to address the CSR. 

• 
Some progress: The Member State has adopted measures  
• 

that partly address the CSR; and/or  

59 

 
 
 
 
A. Overview table 

• 

that address the CSR, but a fair amount of work is still needed to fully address the CSR fully as only a few of the measures have 
been implemented. For instance, a measure or measures have been adopted by the national Parliament or by ministerial decision 
but no implementing decisions are in place.  

Substantial progress: The Member State has adopted measures that go a long way towards addressing the CSR and most of them 

have been implemented.  

Full implementation: The Member State has implemented all measures needed to address the CSR appropriately. 

60 

 
 
ANNEX B: COMMISSION DEBT SUSTAINABILITY ANALYSIS AND 

FISCAL RISKS 

61 

General Government debt projections under baseline, alternative scenarios and sensitivity tests2017201820192020202120222023202420252026202720282029Gross debt ratio57.053.249.646.945.043.742.741.640.639.638.938.438.2Changes in the ratio (-1+2+3)-4.9-3.7-3.6-2.8-1.9-1.3-0.9-1.1-1.0-1.0-0.7-0.5-0.2of which(1) Primary balance (1.1+1.2+1.3)2.21.91.81.61.20.90.60.60.60.70.60.40.3(1.1) Structural primary balance (1.1.1-1.1.2+1.1.3)1.71.10.50.60.50.50.60.60.60.70.60.40.3(1.1.1) Structural primary balance (bef. CoA)1.71.10.50.60.60.60.60.60.60.60.60.60.6(1.1.2) Cost of ageing0.10.20.20.30.40.40.60.81.1(1.1.3) Others (taxes and property incomes)0.00.10.20.30.40.40.60.70.7(1.2) Cyclical component0.00.61.01.00.70.30.00.00.00.00.00.00.0(1.3) One-off and other temporary measures0.40.10.30.00.00.00.00.00.00.00.00.00.0(2) Snowball effect (2.1+2.2+2.3)-1.4-1.8-1.7-1.1-0.7-0.5-0.4-0.5-0.4-0.3-0.20.00.1(2.1) Interest expenditure1.00.80.70.70.70.70.70.80.90.91.01.11.2(2.2) Growth effect-1.7-1.5-1.2-0.8-0.5-0.3-0.3-0.5-0.5-0.4-0.4-0.4-0.4(2.3) Inflation effect-0.7-1.1-1.3-1.0-0.9-0.9-0.9-0.8-0.8-0.8-0.8-0.8-0.8(3) Stock-flow adjustments-1.30.00.00.00.00.00.00.00.00.00.00.00.0Note: For further information, see the European Commission Fiscal Sustainability Report (FSR) 2018. b. For the medium-term, the risk category (low/medium/high) is based on the joint use of the S1 indicator and of the DSA results. The S1 indicator measures the fiscal adjustment required (cumulated over the 5 years following the forecast horizon and sustained thereafter) to bring the debt-to-GDP ratio to 60 % by 2033. The critical values used are 0 and 2.5 pps. of GDP. The DSA classification is based on the results of 5 deterministic scenarios (baseline, historical SPB, higher interest rate, lower GDP growth and negative shock on the SPB scenarios) and the stochastic projections. Different criteria are used such as the projected debt level, the debt path, the realism of fiscal assumptions, the probability of debt stabilisation, and the size of uncertainties. c. For the long-term, the risk category (low/medium/high) is based on the joint use of the S2 indicator and the DSA results. The S2 indicator measures the upfront and permanent fiscal adjustment required to stabilise the debt-to-GDP ratio over the infinite horizon, including the costs of ageing. The critical values used are 2 and 6 pps. of GDP. The DSA results are used to further qualify the long-term risk classification, in particular in cases when debt vulnerabilities are identified (a medium / high DSA risk category). [2]Thechartspresentaseriesofsensitivitytestsaroundthebaselinescenario,aswellasalternativepolicyscenarios,inparticular:thehistoricalstructuralprimarybalance(SPB)scenario(wheretheSPBissetatitshistoricalaverage),theStabilityandGrowthPact(SGP)scenario(wherefiscalpolicyisassumedtoevolveinlinewiththemainprovisionsoftheSGP),ahigherinterestratescenario(+1pp.comparedtothebaseline),alowerGDPgrowthscenario(-0.5pp.comparedtothebaseline)andanegativeshockontheSPB(calibratedonthebasisoftheforecastedchange).Anadversecombinedscenarioandenhancedsensitivitytests(ontheinterestrateandgrowth)arealsoincluded,aswellasstochasticprojections. Detailed information on the design of these projections can be found in the FSR 2018.NL - Debt projections baseline scenario[1]Thefirsttablepresentsthebaselineno-fiscalpolicychangescenarioprojections.Itshowstheprojectedgovernmentdebtdynamicsanditsdecompositionbetweentheprimarybalance,snowballeffectsandstock-flowadjustments.Snowballeffectsmeasurethenetimpactofthecounteractingeffectsofinterestrates,inflation,realGDPgrowth(andexchangerates in some countries). Stock-flow adjustments include differences in cash and accrual accounting, net accumulation of assets, as well as valuation and other residual effects.[3] The second table presents the overall fiscal risk classification over the short, medium and long-term. a. For the short-term, the risk category (low/high) is based on the S0 indicator. S0 is an early-detection indicator of fiscal stress in the upcoming year, based on 25 fiscal and financial-competitiveness variables that have proven in the past to be leading indicators of fiscal stress. The critical threshold beyond which fiscal distress is signalled is 0.46. 30354045505560657020162017201820192020202120222023202420252026202720282029Debt as % of GDP -NLBaselineEnhanced lower GDP growth scenarioAdverse combined scenarioEnhanced higher interest rate scenario304050607020162017201820192020202120222023(% of GDP)Stochastic debt projections 2019-2023 -NLp10_p20p20_p40p40_p60p60_p80p80_p90p50Baseline30354045505560657020162017201820192020202120222023202420252026202720282029Debt as % of GDP -NLBaselineHistorical SPB scenarioSGP scenario30354045505560657020162017201820192020202120222023202420252026202720282029Debt as % of GDP -NLBaselineHigher interest rate scenarioNegative shock on the SPBLower GDP growth scenarioBaselineHistorical SPBLower GDP growthHigher interest rateNegative shock on SPBStochastic projectionsRisk categoryLOWLOWLOWLOWLOWLOWDebt level (2029)38.238.240.640.540.5Debt peak year20182018201820182018Percentile rank47.0%47.0%Probability debt higher5.5%Dif. between percentiles14.7MEDIUMLong termDSALOWDebt sustainability analysis (detail)Medium termLOWLOWShort termLOW(S0 = 0.1)(S1 = -1.7)S2MEDIUM(S2 = 3)S1 
 
ANNEX C: STANDARD TABLES 

Table C.1: 

Financial market indicators 

1) Latest data Q3 2018. Includes not only banks but all monetary financial institutions excluding central banks. 
2) Latest data Q2 2018. 
3) As per ECB definition of gross non-performing debt instruments 
4) Quarterly values are not annualised 
* Measured in basis points. 
Source: European Commission (long-term interest rates); World Bank (gross external debt); Eurostat (private debt); ECB (all 
other indicators). 

62 

201320142015201620172018Total assets of the banking sector (% of GDP)1)332.7359.4352.3353.5322.5312.3Share of assets of the five largest banks (% of total assets)83.885.084.684.783.8-Foreign ownership of banking system (% of total assets)2)7.56.77.26.97.47.6Financial soundness indicators:2)              - non-performing loans (% of total loans)-3.42.72.42.12.0              - capital adequacy ratio (%)15.318.420.622.422.122.1              - return on equity (%)3)5.03.37.07.38.89.4Bank loans to the private sector (year-on-year % change)1)-1.11.1-1.90.5-2.0-3.7Lending for house purchase (year-on-year % change)1)-0.11.35.43.53.3-1.9Loan to deposit ratio2)-127.0122.2119.6117.7115.7Central Bank liquidity as % of liabilities1)-0.60.70.81.51.4Private debt (% of GDP)254.9268.1264.2262.1252.1-Gross external debt (% of GDP)2) - public38.040.637.632.525.523.1    - private316.8332.9349.7353.8349.3347.0Long-term interest rate spread versus Bund (basis points)*39.229.219.420.320.417.6Credit default swap spreads for sovereign securities (5-year)*49.028.216.123.417.99.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Standard Tables 

Table C.2: 

Headline Social Scoreboard indicators 

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) and/or suffering from 
severe material deprivation (SMD) and/or living in households with zero or very low work intensity (LWI). 
2 Unemployed persons are all those who were not employed but had actively sought work and were ready to begin working 
immediately or within two weeks. 
3 Long-term unemployed are people who have been unemployed for at least 12 months. 
4 Gross disposable household income is defined in unadjusted terms, according to the draft Joint Employment Report 2019. 
5 Reduction in percentage of the risk of poverty rate, due to social transfers (calculated comparing at-risk-of poverty rates 
before social transfers with those after transfers; pensions are not considered as social transfers in the calculation). 
6 Average of first three quarters of 2018 for the employment rate, unemployment rate and gender employment gap. Data for 
unemployment rate is seasonally adjusted. 
Source: European Commission 

63 

201320142015201620172018 6Equal opportunities and access to the labour marketEarly leavers from education and training (% of population aged 18-24)9.38.78.28.07.1:Gender employment gap (pps)10.511.411.111.010.510.2Income inequality, measured as quintile share ratio (S80/S20)3.63.83.83.94.0:At-risk-of-poverty or social exclusion rate1 (AROPE)15.916.516.416.717.0:Young people neither in employment nor in education and training (% of population aged 15-24)5.65.54.74.64.0:Dynamic labour markets and fair working conditionsEmployment rate (20-64 years)75.975.476.477.178.079.0Unemployment rate2 (15-74 years)7.37.46.96.04.93.9Long-term unemployment rate3 (as % of active population)2.52.93.02.51.91.6Gross disposable income of households in real terms per capita4 (Index 2008=100) ::100.1101.5102.0:Annual net earnings of a full-time single worker without children earning an average wage (levels in PPS, three-year average)26958278002857028768::Annual net earnings of a full-time single worker without children earning an average wage (percentage change, real terms, three-year average)0.20.91.41.2::Public support / Social protection and inclusionImpact of social transfers (excluding pensions) on poverty reduction550.045.548.042.539.7:Children aged less than 3 years in formal childcare46.044.646.453.061.6:Self-reported unmet need for medical care0.40.50.10.20.1:Individuals who have basic or above basic overall digital skills (% of population aged 16-74)::72.077.079.0:201320142015201620172018 6Equal opportunities and access to the labour marketEarly leavers from education and training (% of population aged 18-24)9.38.78.28.07.1:Gender employment gap (pps)10.511.411.111.010.510.2Income inequality, measured as quintile share ratio (S80/S20)3.63.83.83.94.0:At-risk-of-poverty or social exclusion rate1 (AROPE)15.916.516.416.717.0:Young people neither in employment nor in education and training (% of population aged 15-24)5.65.54.74.64.0:Dynamic labour markets and fair working conditions†Employment rate (20-64 years)75.975.476.477.178.079.0Unemployment rate2 (15-74 years)7.37.46.96.04.93.8Long-term unemployment rate3 (as % of active population)2.52.93.02.51.91.5Gross disposable income of households in real terms per capita4 (Index 2008=100) 97.898.9100.1101.5102.0:Annual net earnings of a full-time single worker without children earning an average wage (levels in PPS, three-year average)26958278002857028768::Annual net earnings of a full-time single worker without children earning an average wage (percentage change, real terms, three-year average)0.20.91.41.2::Public support / Social protection and inclusionImpact of social transfers (excluding pensions) on poverty reduction550.045.548.042.539.7:Children aged less than 3 years in formal childcare46.044.646.453.061.6:Self-reported unmet need for medical care0.40.50.10.20.1:Individuals who have basic or above basic overall digital skills (% of population aged 16-74)::72.077.079.0: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Standard Tables 

Table C.3: 

Labour market and education indicators 

* Non-scoreboard indicator 
1 Difference between the average gross hourly earnings of male paid employees and of female paid employees as a 
percentage of average gross hourly earnings of male paid employees. It is defined as "unadjusted", as it does not correct for 
the distribution of individual characteristics (and thus gives an overall picture of gender inequalities in terms of pay). All 
employees working in firms with ten or more employees, without restrictions for age and hours worked, are included 
2 PISA (OECD) results for low achievement in mathematics for 15 year-olds. 
3 Impact of socio-economic and cultural status on PISA (OECD) scores. Values for 2012 and 2015 refer respectively to 
mathematics and science. 
4 Average of first three quarters of 2018. Data for youth unemployment rate is seasonally adjusted. 
Source: European Commission, OECD 

64 

Labour market indicators201320142015201620172018 4Activity rate (15-64)79.479.079.679.779.7:Employment in current job by durationFrom 0 to 11 months11.511.913.013.914.6:From 12 to 23 months8.27.67.78.49.2:From 24 to 59 months16.015.614.814.414.7:60 months or over63.063.663.061.860.0:Employment growth* (% change from previous year)-1.2-0.11.01.12.22.5Employment rate of women(% of female population aged 20-64)70.669.770.871.672.873.9Employment rate of men (% of male population aged 20-64)81.181.181.982.683.384.1Employment rate of older workers* (% of population aged 55-64)59.259.961.763.565.767.4Part-time employment* (% of total employment, aged 15-64)49.849.650.049.749.850.2Fixed-term employment* (% of employees with a fixed term contract, aged 15-64)20.221.120.020.621.721.4Participation in activation labour market policies(per 100 persons wanting to work)28.727.828.830.6::Transition rate from temporary to permanent employment(3-year average)16.516.222.530.936.9:Youth unemployment rate (% active population aged 15-24)13.212.711.310.88.97.2Gender gap in part-time employment51.150.650.450.248.848.3Gender pay gap1 (in undadjusted form)16.516.116.115.6::Education and training indicators201320142015201620172018Adult participation in learning(% of people aged 25-64 participating in education and  training)17.918.318.918.819.1:Underachievement in education2::16.7:::Tertiary educational attainment (% of population aged 30-34 having successfully completed tertiary education)43.244.846.345.747.9:Variation in performance explained by students' socio-economic status3::12.5:::Labour market indicators201320142015201620172018 4Activity rate (15-64)79.479.079.679.779.7:Employment in current job by durationFrom 0 to 11 months11.511.913.013.914.6:From 12 to 23 months8.27.67.78.49.2:From 24 to 59 months16.015.614.814.414.7:60 months or over63.063.663.061.860.0:Employment growth* (% change from previous year)-1.2-0.11.01.12.22.5Employment rate of women(% of female population aged 20-64)70.669.770.871.672.873.9Employment rate of men (% of male population aged 20-64)81.181.181.982.683.384.1Employment rate of older workers* (% of population aged 55-64)59.259.961.763.565.767.4Part-time employment* (% of total employment, aged 15-64)49.849.650.049.749.850.1Fixed-term employment* (% of employees with a fixed term contract, aged 15-64)20.221.120.020.621.721.4Participation in activation labour market policies(per 100 persons wanting to work)28.727.828.830.6::Transition rate from temporary to permanent employment(3-year average)16.516.222.530.936.9:Youth unemployment rate (% active population aged 15-24)13.212.711.310.88.97.2Gender gap in part-time employment51.150.650.450.248.848.1Gender pay gap1 (in undadjusted form)16.616.216.115.615.2:Education and training indicators201320142015201620172018Adult participation in learning(% of people aged 25-64 participating in education and  training)17.918.318.918.819.1:Underachievement in education2::16.7:::Tertiary educational attainment (% of population aged 30-34 having successfully completed tertiary education)43.244.846.345.747.9:Variation in performance explained by students' socio-economic status3::12.5::: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Standard Tables 

Table C.4: 

Social inclusion and health indicators 

* Non-scoreboard indicator 
1 At-risk-of-poverty rate (AROP): proportion of people with an equivalised disposable income below 60 % of the national 
equivalised median income.  
2 Proportion of people who experience at least four of the following forms of deprivation: not being able to afford to i) pay 
their rent or utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have a washing 
machine, viii) have a colour TV, or ix) have a telephone. 
3 Percentage of total population living in overcrowded dwellings and exhibiting housing deprivation. 
4 People living in households with very low work intensity: proportion of people aged 0-59 living in households where the 
adults (excluding dependent children) worked less than 20 % of their total work-time potential in the previous 12 months. 
5 Ratio of the median individual gross pensions of people aged 65-74 relative to the median individual gross earnings of 
people aged 50-59.   
6 Fixed broadband take up (33%), mobile broadband take up (22%), speed (33%) and affordability (11%), from the Digital 
Scoreboard. 
Source: European Commission, OECD 

65 

201220132014201520162017Expenditure on social protection benefits* (% of GDP)Sickness/healthcare10.310.19.99.39.2:Disability2.32.32.22.72.6:Old age and survivors11.912.112.211.911.9:Family/children1.00.90.91.11.1:Unemployment1.41.61.61.51.3:Housing0.40.40.40.40.5:Social exclusion n.e.c.1.41.51.41.21.3:Total28.528.828.628.128.0:of which: means-tested benefits3.73.93.74.14.1:General government expenditure by function (% of GDP, COFOG)Social protection16.817.016.916.316.2:Health8.38.28.28.17.7:Education5.55.45.45.35.3:Out-of-pocket expenditure on healthcare (% of total health expenditure)10.411.712.211.611.5:Children at risk of poverty or social exclusion (% of people aged 0-17)*16.917.017.116.817.616.6At-risk-of-poverty  rate1 (% of total population)10.110.411.611.612.713.2In-work at-risk-of-poverty rate (% of persons employed)4.64.55.35.05.66.1Severe material deprivation rate2  (% of total population)2.32.53.22.62.62.6Severe housing deprivation rate3, by tenure statusOwner, with mortgage or loan0.20.20.10.40.50.5Tenant, rent at market price1.92.11.62.43.32.2Proportion of people living in low work intensity households4 (% of people aged 0-59)8.99.310.210.29.79.5Poverty thresholds, expressed in national currency at constant prices*113781121510962111361186512284Healthy life years (at the age of 65)Females10.19.210.29.49.9:Males10.09.510.710.510.3:Aggregate replacement ratio for pensions5 (at the age of 65)0.50.50.50.50.50.5Connectivity dimension of the Digital Economy and Society Inedex (DESI)6::71.673.780.181.7GINI coefficient before taxes and transfers*46.546.448.049.048.848.6GINI coefficient after taxes and transfers*25.425.126.226.726.927.1201220132014201520162017Expenditure on social protection benefits* (% of GDP)Sickness/healthcare10.310.19.99.39.2:Disability2.32.32.22.72.6:Old age and survivors11.912.112.211.911.9:Family/children1.00.90.91.11.1:Unemployment1.41.61.61.51.3:Housing0.40.40.40.40.5:Social exclusion n.e.c.1.41.51.41.21.3:Total28.528.828.628.128.0:of which: means-tested benefits3.73.93.74.14.1:General government expenditure by function (% of GDP, COFOG)Social protection16.817.016.916.316.2:Health8.38.28.28.17.7:Education5.55.45.45.35.3:Out-of-pocket expenditure on healthcare (% of total health expenditure)10.411.712.211.611.5:Children at risk of poverty or social exclusion (% of people aged 0-17)*16.917.017.116.817.616.6At-risk-of-poverty  rate1 (% of total population)10.110.411.611.612.713.2In-work at-risk-of-poverty rate (% of persons employed)4.64.55.35.05.66.1Severe material deprivation rate2  (% of total population)2.32.53.22.62.62.6Severe housing deprivation rate3, by tenure statusOwner, with mortgage or loan0.20.20.10.40.50.5Tenant, rent at market price1.92.11.62.43.32.2Proportion of people living in low work intensity households4 (% of people aged 0-59)8.99.310.210.29.79.5Poverty thresholds, expressed in national currency at constant prices*113781121510962111361186512284Healthy life years (at the age of 65)Females10.19.210.29.49.9:Males10.09.510.710.510.3:Aggregate replacement ratio for pensions5 (at the age of 65)0.50.50.50.50.50.5Connectivity dimension of the Digital Economy and Society Inedex (DESI)6::71.673.780.181.7GINI coefficient before taxes and transfers*46.546.448.049.048.848.6GINI coefficient after taxes and transfers*25.425.126.226.726.927.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Standard Tables 

Table C.5: 

Product market performance and policy indicators 

1 Value added in constant prices divided by the number of persons employed. 
2 Compensation of employees in current prices divided by value added in constant prices. 
3 The methodologies, including the assumptions, for this indicator are shown in detail here: 
http://www.doingbusiness.org/methodology.  
4 Average of the answer to question Q7B_a. "[Bank loan]: If you applied and tried to negotiate for this type of financing over 
the past six months, what was the outcome?". Answers were codified as follows: zero if received everything, one if received 
75% and above, two if received below 75%, three if refused or rejected and treated as missing values if the application is still 
pending or don't know. 
5 Percentage population aged 15-64 having completed tertiary education. 
6 Percentage population aged 20-24 having attained at least upper secondary education. 
7 Index: 0 = not regulated; 6 = most regulated. The methodologies of the OECD product market regulation indicators are 
shown in detail here: http://www.oecd.org/competition/reform/indicatorsofproductmarketregulationhomepage.htm  
8 Aggregate OECD indicators of regulation in energy, transport and communications (ETCR). 
Source: "European Commission; World Bank — Doing Business (for enforcing contracts and time to start a business); OECD (for 
the product market regulation indicators); SAFE (for outcome of SMEs' applications for bank loans)." 

66 

Performance indicators201220132014201520162017Labour productivity per person1 growth (t/t-1) in %Labour productivity growth in industry0.402.98-0.49-1.690.501.33Labour productivity growth in construction-5.670.426.147.888.873.55Labour productivity growth in market services-0.281.331.500.490.360.39Unit Labour Cost (ULC) index2 growth (t/t-1) in %ULC growth in industry2.11-0.603.990.891.820.32ULC growth in construction7.92-1.97-6.46-8.70-6.41-1.88ULC growth in market services1.660.16-1.05-1.271.281.03Business environment201220132014201520162017Time needed to enforce contracts3 (days)514514514514514514Time needed to start a business3 (days)5.04.03.53.53.53.5Outcome of applications by SMEs for bank loans41.801.581.641.300.900.72Research and innovation201220132014201520162017R&D intensity1.921.931.981.982.001.99General government expenditure on education as % of GDP5.505.405.405.305.30:Employed people with tertiary education and/or people employed in science and technology as % of total employment464747484848Population having completed tertiary education5292930313132Young people with upper secondary education6797879808182Trade balance of high technology products as % of GDP2.832.232.711.601.671.70Product and service markets and competition200320082013OECD product market regulation (PMR)7, overall1.490.960.92OECD PMR7, retail1.470.910.91OECD PMR7, professional services1.571.281.23OECD PMR7, network industries82.061.711.57 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
C. Standard Tables 

Table C.6:  Green growth 

All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2010 prices) 
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR) 
          Carbon intensity: greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR) 
          Resource intensity: domestic material consumption (in kg) divided by GDP (in EUR) 
          Waste intensity: waste (in kg) divided by GDP (in EUR) 
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP   
Weighting of energy in HICP: the proportion of 'energy' items in the consumption basket used for the construction of the HICP 
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual % 
change) 
Real unit energy cost: real energy costs as % of total value added for the economy 
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in 2010 EUR)  
Real unit energy costs for manufacturing industry excluding refining : real costs as % of value added for manufacturing sectors 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP 
Electricity and gas prices for medium-sized industrial users: consumption band 500–20 00MWh and 10 000–100 000 GJ; figures 
excl. VAT. 
Recycling rate of municipal waste: ratio of recycled and composted municipal waste to total municipal waste 
Public R&D for energy or for the environment: government spending on R&D for these categories as % of GDP 
Proportion of GHG emissions covered by EU emissions trading system (ETS) (excluding aviation): based on GHG emissions 
(excl. land use, land use change and forestry) as reported by Member States to the European Environment Agency. 
Transport energy intensity: final energy consumption of transport activity (kgoe) divided by transport industry gross value 
added (in 2010 EUR) 
Transport carbon intensity: GHG emissions in transport activity divided by gross value added of the transport industry 
Energy import dependency: net energy imports divided by gross inland energy consumption incl. consumption of 
international bunker fuels 
Aggregated supplier concentration index: covers oil, gas and coal. Smaller values indicate larger diversification and hence 
lower risk. 
Diversification of the energy mix: Herfindahl index covering natural gas, total petrol products, nuclear heat, renewable 
energies and solid fuels 
* European Commission and European Environment Agency 
Source: European Commission and European Environment Agency (Share of GHG emissions covered by ETS); European 
Commission (Environmental taxes over labour taxes and GDP); Eurostat (all other indicators) 

67 

Green growth performance201220132014201520162017MacroeconomicEnergy intensity kgoe / €0.130.120.120.110.110.11Carbon intensity kg / €0.300.300.290.290.29-Resource intensity (reciprocal of resource productivity)kg / €0.280.260.270.280.240.24Waste intensity kg / €0.19-0.20-0.21-Energy balance of trade % GDP-2.6-1.4-1.6-1.1-0.6-0.7Weighting of energy in HICP%11.2811.6611.699.779.368.67Difference between energy price change and inflation %3.60.0-1.5-2.9-5.60.4Real unit of energy cost% of value added13.910.59.29.610.1-Ratio of environmental taxes to labour taxesratio0.160.160.160.170.16-Environmental taxes% GDP3.23.33.33.33.43.3Sectoral Industry energy intensity kgoe / € 0.110.110.110.110.110.11Real unit energy cost for manufacturing industry excl. refining% of value added25.319.416.117.218.3-Share of energy-intensive industries in the economy% GDP8.58.68.17.77.67.3Electricity prices for medium-sized industrial users€ / kWh0.100.090.090.090.080.08Gas prices for medium-sized industrial users€ / kWh0.040.040.040.040.030.03Public R&D for energy % GDP0.020.020.010.020.010.02Public R&D for environmental protection% GDP0.010.010.000.000.000.00Municipal waste recycling rate%49.449.850.951.853.154.2Share of GHG emissions covered by ETS*%39.944.647.648.048.1-Transport energy intensitykgoe / €0.550.540.510.520.530.53Transport carbon intensitykg / €1.231.211.091.111.14-Security of energy supplyEnergy import dependency%30.623.730.948.445.951.8Aggregated supplier concentration indexHHI15.815.317.021.025.6-Diversification of energy mixHHI0.340.340.330.320.330.34 
 
 
 
 
 
ANNEX D: INVESTMENT GUIDANCE ON COHESION POLICY 
FUNDING 2021-2027 FOR THE NETHERLANDS 

Building  on  the  Commission  proposal  for  the  next  Multi-Annual  Financial  Framework  for  the  period 
2021-2027 of 2 May 2018 (COM (2018) 321), this Annex presents the preliminary Commission services 
views  on  priority  investment  areas  and  framework  conditions  for  effective  delivery  for  the  2021-2027 
Cohesion  Policy.  These  priority  investment  areas  are  derived  from  the  broader  context  of  investment 
bottlenecks, investment needs and regional disparities assessed in the report. This Annex(62) provides the 
basis for a dialogue between the Netherlands and the Commission services in view of the programming of 
the cohesion policy funds (European Regional Development Fund and European Social Fund Plus). 

Policy Objective 1: A Smarter Europe – Innovative and smart industrial transformation 

Even though the Netherlands ranks high in terms of innovation and competitiveness indices, expenditure 
on  research  and  development  relative  to  gross  domestic  product  remains  below  national  targets,  with 
private  expenditure  on  research  and  development  below  the  EU  average.  High  priority  investment 
needs(63)  have  been  identified  to  enhance  research  and  innovation  capacities  and  the  uptake  of 
advanced  technologies,  within  the  framework  of  regional  smart  specialisation  strategies  that  identify 
priority areas based on regional needs and potential, and in particular to: 

 

 

 

 

 

develop  and  utilise  the  innovation  eco-system  and  stimulate  market  oriented  cooperation 
between business and research centres in order to increase business investment in research and 
innovation, in particular in small and medium-sized enterprises;  

stimulate interregional cooperation in new value chains, also with other Member States; 

strengthen investment in developing new processes, products and services; 

support the development of campuses and living labs with participation of small and medium-
sized enterprises; 

address  skills  challenges  for  smart  specialisation  and  the  innovation  capacity  of  small  and 
medium-sized enterprises, linked in an integrated manner to investments in the above areas. 

Such investments could also help address the important challenges that the Netherlands faces related to 
the energy and climate transition and the circular economy.  

Policy Objective 4: A more social Europe – Implementing the European Pillar of Social Rights 

The  employment  situation  of  low(er)  skilled  workers,  (young)  people  with  disabilities,  people  with  a 
migrant background and third country nationals, asylum seekers and status holders remains challenging, 
while  some  groups  face  an  increased  risk  of  (in-work)  poverty.  High  priority  investment  needs  have 
therefore been identified to improve access to employment for those operating at the margins of the 
labour market and of inactive people, to foster active inclusion and improve employability and to 
promote the socio-economic integration of third country nationals in particular to: 

 

develop  active  and  preventive  labour  market  measures  as  well  as  integrated  active  inclusion 
policies  in  cooperation  with  various  actors  providing  for  integrated  pathways  and  targeted 
individualised support; on-the-job training; and access to mainstream services; 

(62)  This Annex is to be considered in conjunction with the EC Proposal for a Regulation of the European Parliament and of the 
Council on the European Regional Development Fund and on the Cohesion Fund COM(2018) 372 and the EC Proposal for a 
Regulation of the European Parliament and of the Council on the European Social Fund Plus COM(2018) 382, in particular as 
regards the requirements for thematic concentration and urban earmarking outlined in these proposals. 

(63)  The intensity of needs is classified in three categories in a descending order – high priority needs, priority needs, needs. 

68 

 
 
                                                           
D. Investment guidance on cohesion policy funding 2021-2027 for the Netherlands 

 

 

increase registration with employment services of non-registered unemployed, (young) people 
with disabilities, people with a migrant background and inactive persons; 

support  advocacy  and  awareness  measures  to  improve  hiring  practices  of  the  employers,  to 
fight  discrimination  and  overcome  prejudices,  in  particular  against  people  with  migrant 
background and third-country nationals; 

 

support measures providing access to integrated social services for third-country nationals. 

Ensuring  basic  skills  and  adapting  to  new  skills  requirements  pose  considerable  challenges.  High 
priority  investment  needs  have  therefore  been  identified  to  promote  lifelong  learning,  flexible 
upskilling  and  reskilling,  taking  into  account  digital  skills,  better  anticipating  change  and  new 
skills  requirements,  facilitate  career  transitions  and  promote  professional  mobility,  and  in 
particular to: 

 

 

 

 

implement comprehensive lifelong learning strategies in cooperation with social partners, civil 
society, employers and other relevant stakeholders; 

implement  schemes  to  incentivise  investment  in  training  by  employers,  promoting  workplace 
learning  and  career  progression  or  supporting  workers’  professional  mobility  to  another 
employer /sector; 

upgrade  the  basic  skills  of  those  at  the  margins  of  the  labour  market  and  create  new 
opportunities to capitalise on their existing knowledge and skills; 

support  innovative  actions  and  experimentation  aimed  at  better  anticipating  change  and  new 
(digital) skills requirements, and facilitating career transitions and professional mobility. 

Policy  Objective  5  –  A  Europe  closer  to  citizens  by  fostering  the  sustainable  and  integrated 
development of urban, rural and coastal areas and local initiatives 

Large Dutch cities face important challenges with regard to employment, poverty and social inclusion. 
Cities are also drivers of innovation and economic development, but face important societal challenges 
such  as  the  transition  to  a  low-carbon  and  circular  economy.  Therefore,  investment  needs  have  been 
identified to foster integrated social, economic and environmental development in urban areas, and 
in particular to: 

 

support the regeneration of deprived urban neighbourhoods in an integrated manner, including 
those with important integration challenges for their migrant population, by promoting business 
incubators  and  investment  support  for  micro-enterprises  and  business/job  creation  and  social 
innovation, supporting equipment and infrastructure upgrades aimed at re/upskilling people in 
order to secure their life-long learning, employability and adaptation to labour market changes 
and to integrate them into the workforce, and addressing the complex and interlinked needs of 
people, notably in the fields of skills and employment; 

 

strengthen investment by cities in research and innovation, in cooperation with all stakeholders; 
promote  social  innovation  and  demonstration  or  test  projects  in  support  of  the  low-carbon 
agenda and the transition to a circular economy; 

 

promote cooperation in these areas between cities, also across borders. 

69 

 
D. Investment guidance on cohesion policy funding 2021-2027 for the Netherlands 

Factors for effective delivery of Cohesion policy 

Broader  use  of  financial  instruments  and/or  contributions  to  a  compartment  for  the  Netherlands  under 
InvestEU for revenue-generating and cost-saving activities. 

Strong  support  and  involvement  of  social  partners,  local  authorities  and  other  public  bodies  and 
stakeholders are essential for effective implementation. 

70 

 
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Alstadsæter, A., Barrios, S., Nicodeme, G., Skonieczna, A. and Vezzani, A. (2015), Patent Boxes Design, 
Patents,  Location  and  Local  R&D.  Taxation  Papers.  Working  Paper  N.  57,  Publications  Office  of  the 
European Union, Luxembourg. 

Baarsma,  B.  and  Vrieselaar,  N.  (2018),  Acht  redenen  waarom  de  lonen  achterblijven,  RaboResearch, 
Utrecht 

Centraal  Bureau  voor  de  Statistiek  (CBS)  (2016),  https://www.cbs.nl/nl-nl/nieuws/2016/41/bijdrage-
wederuitvoer-aan-bbp-in-20-jaar-verdubbeld  

Centraal Bureau voor de Statistiek (CBS) (2018), Multinationals en niet-multinationals in de Nederlandse 
economie, Oktober 2018. 

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