Recommendation for a COUNCIL RECOMMENDATION on the economic policies of the Netherlands and delivering a Council opinion on the 2022 Stability Programme of the Netherlands
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Netherlands, economic policy, economic recovery, economic reform, energy policy, labour market, public finance, social security, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 621 final  Recommendation for a COUNCIL RECOMMENDATION on the economic policies of the Netherlands and delivering a Council opinion on the 2022 Stability Programme of the Netherlands {SWD(2022) 621 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic policies of the Netherlands and delivering a Council opinion on the 2022 
Stability Programme of the Netherlands 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof,  

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

1 
2 
3 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241. 

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 

OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

EN 

1 

  EN 

                                                 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 
Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it identified the Netherlands as one of the Member States for which 
an in-depth review4 would be needed. On the same date, the Commission also adopted 
a recommendation for a Council recommendation on the economic policy of the euro 
area, which was adopted on 5 April 2022 by the Council, as well as the proposal for 
the 2022 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 14 March 2022. 

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered5  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education and training, labour market, healthcare, housing and social welfare.  

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20206. In its Communication 
of  3  March  20217,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p.25. 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1.   
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 
Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

4 

5 

6 

7 

EN 

2 

  EN 

                                                 
(6) 

(7) 

supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following the approach in the Council opinion of 18 June 2021 on the 2021 Stability 
Programme,  the  fiscal  stance  is  currently  best  measured  as  the  change  in  primary 
expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19  crisis-
related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  relative  to  medium-term  potential  growth8.  Going  beyond  the  overall  fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed9  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment.] 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination10. The Commission noted that, based on the macroeconomic outlook of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

On  29  April  2022,  the  Netherlands  submitted  its  2022  Stability  Programme,  in  line 
with  Article 4 of Regulation  (EC) No 1466/97. The Netherlands has not submitted a 
National Reform Programme yet, as the programme will be integrated in the recovery 
and resilience plan. 

8 

9 
10 

The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

EN 

3 

  EN 

                                                 
(10)  The Commission published the 2022 country report for the Netherlands11 on 23 May 
2022. It assessed the Netherlands’ progress in addressing the relevant country-specific 
recommendations adopted by the Council in 2019, 2020 and 2021, as well as new and 
emerging challenges, including those emerging from Russia’s invasion of Ukraine. It 
also assessed the Netherlands’ progress on implementing the European Pillar of Social 
Rights  and  on  achieving  the  EU  headline  targets  on  employment,  skills  and  poverty 
reduction, as well as progress in achieving the UN’s Sustainable Development Goals. 

(11)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No  1176/2011  for  the  Netherlands  and  published  its  results  on  23  May  202212.  The 
Commission  concluded 
is  experiencing  macroeconomic 
imbalances. In particular, vulnerabilities relate to high private debt and a large current 
account surplus, which carry cross-border relevance.  

the  Netherlands 

that 

(12)  On 20 July 2020, the Council recommended the Netherlands to take in 2020 and 2021 
all  necessary  measures, in  line  with  the  general  escape  clause,  to  effectively  address 
the  pandemic,  sustain  the economy  and  support  the  ensuing  recovery.  It  also 
recommended  the  Netherlands  to  pursue,  when  economic  conditions  allow,  fiscal 
policies  aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, the Netherlands’ general government deficit decreased from 3.7% of GDP in 
2020  to  2.5%  in  2021.  The  fiscal  policy  response  by  the  Netherlands  supported  the 
economic recovery in 2021, while temporary emergency support measures  amounted 
to  3.3%  of  GDP  in  both  2020  and  2021.  The  measures  taken  by  the  Netherlands  in 
2021  have  been  in  line  with  the  Council  Recommendation  of  20  July  2020.  The 
discretionary budgetary measures adopted by the government in 2020 and 2021 were 
temporary  or  matched  by  offsetting  measures.  Based  on  data  validated  by  Eurostat, 
general government debt stood at 52.1% of GDP in 2021. 

(13)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Stability Programme is realistic. The government projects real GDP to grow by 3.6% 
in 2022 and 1.7% in 2023. The Commission’s 2022 spring forecast projects a similar 
real GDP growth of 3.3% in 2022 and 1.6% in 2023. In its 2022 Stability Programme, 
the Government expects that the headline deficit will remain at 2.5% of GDP in 2022 
and decrease to 2.3% in 2023. According to the Programme, the general government 
debt-to-GDP  ratio  is  expected  to  decrease  to  53.1%  in  2022,  and  to  52.7%  in 
2023. Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission 2022 spring forecast projects a government deficit for 2022 and 2023 of 
2.7%  of  GDP  and  2.1%  respectively.  This  is  higher  than  the  deficit  projected  in  the 
2022  Stability  Programme  for  2022,  mainly  because  the  Programme  only  partially 
included measures taken in response to the high energy prices, and slightly lower for 
2023,  mainly  due  to  a  lower  level  of  gross  fixed  capital  formation  and  other 
expenditure  expected  by  the  Commission.  The  Commission  2022  spring  forecast 
projects a lower general government debt-to-GDP ratio of 51.4% in 2022 and 50.9% 
in 2023. The difference is due to a different forecast for nominal GDP.  

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.5%. 

(14) 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures  are projected 

11 
12 

 SWD(2022) 621 final. 
 SWD(2022) 636 final. 

EN 

4 

  EN 

                                                 
to  decline  from  3.4%  of  GDP  in  2021  to  0.9%  in  2022.  The  government  deficit  is 
impacted  by  the  measures  adopted  to  counter  the  economic  and  social  impact  of  the 
increase in energy prices, which in the Commission spring 2022 forecast are estimated 
at 0.7% of GDP in 2022 and phased out in 2023.13 These measures mainly consist of 
social transfers to poorer households and cuts to indirect taxes on energy consumption. 
These  measures  have  been  announced  as  temporary.  However,  in  case  energy  prices 
remain  elevated  also  in  2023,  some  of  these  measures  could  be  continued.  One  of 
these  measures  is  not  targeted,  notably  the  cut  to  indirect  taxes  on  energy 
consumption. The government deficit is also impacted by the costs to offer temporary 
protection to displaced persons from Ukraine, which in the Commission 2022 spring 
forecast  are  projected  at  0.1%  of  GDP  in  both  2022  and  202314,  as  well  as  the 
increased cost of defence expenditure by 0.1% of GDP in 2023. 

(15)  On 18 June 2021, the Council recommended that in 2022 the Netherlands15 pursues a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed 
It  also 
recommended  the  Netherlands  to  pursue,  when  economic  conditions  allow,  a  fiscal 
policy  aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  fiscal 
sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance  investment  to 
boost growth potential. 

investment. 

(16) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information  incorporated  in  the  Netherlands’  2022  Stability  Programme,  the  fiscal 
stance is projected in the Commission 2022 spring forecast to be supportive, at -2.6% 
of  GDP,  as  recommended  by  the  Council.16  The  positive  contribution  to  economic 
activity of expenditure financed by Recovery and Resilience Facility grants and other 
EU  funds  is  projected  to  remain  stable  compared  to  202117.  Nationally-financed 
investment  is  projected  to  provide  a  neutral  contribution  to  the  fiscal  stance  of  0.0 
percentage  points  in  2022.18  Therefore,  the  Netherlands  plans  to  preserve  nationally 
financed investment, as recommended by the Council. At the same time, the growth in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2022 is projected to provide an expansionary contribution of 2.0 percentage points to 
the  overall  fiscal  stance.  This  significant  expansionary  contribution  includes  the 
additional  impact  of  the  measures  to  address  the  economic  and  social  impact  of  the 
increase  in  energy  prices  (0.7  %  of  GDP)  as  well  as  the  costs  to  offer  temporary 

13 

14 

15 

16 

17 

18 

The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of the Netherlands, OJ C 304, 29.07.2021, p. 88. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
These are Commission projections based on a linear expenditure profile. The Commission has not yet 
received the Recovery and Resilience Plan for the Netherlands. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.5  percentage  points  of  GDP.  This  is  partially  explained  by  investment  funds  made  available  to 
municipalities for the implementation of climate policy and additional funding for youth.  

EN 

5 

  EN 

                                                 
(17) 

(18) 

protection to displaced persons from Ukraine (0.1 % of GDP), while, amongst others, 
additional climate measures (aimed at  reduction of greenhouse gas  emissions, and at 
the promotion of sustainable energy) and measures in the field of education (reskilling, 
training of teachers) are also projected to contribute 0.3% of GDP and 0.2% of GDP 
respectively to the growth in net current expenditure.  

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2022  spring  forecast  at 
+0.5%  of  GDP  on  a  no-policy  change  assumption.19  The  positive  contribution  to 
economic activity of expenditure financed by Recovery and Resilience Facility grants 
and other EU funds is projected to remain unchanged compared to 2022. Nationally-
financed investment is projected to provide an expansionary contribution to the fiscal 
stance of 0.1 percentage point in 2023.20 At the same time, the growth in nationally-
financed  primary  current  expenditure  (net  of  new  revenue  measures)  in  2023  is 
projected  to  provide  a  contractionary  contribution  of  1.0  percentage  points  to  the 
overall  fiscal  stance.  This  includes  the  impact  from  the  phasing  out  of  the  measures 
addressing the increased energy prices (0.7 % of GDP).  

In  the  2022  Stability  Programme,  the  general  government  deficit  is  expected  to 
gradually decline to 2.5% of GDP in 2024, before rising to 2.9% by 2025. Therefore, 
the  general  government  deficit  is  planned  to  remain  below  3%  of  GDP  within  the 
Programme  horizon.  These  projections  assume  some  additional  fiscal  consolidation 
measures  that  are  not  yet  specified.  According  to  the  Programme,  the  general 
government debt-to-GDP ratio is expected to increase by 2025, specifically increasing 
to 53.1% in 2024 and further to 54.4% in 2025. Based on the Commission’s analysis, 
debt sustainability risks appear medium over the medium term.  

(19)  Distortions  in  the  housing  market  contribute  to  rapidly  rising  house  prices  and  high 
household  indebtedness,  which  makes  households  vulnerable  to  economic  shocks. 
House price growth surged in 2021 with an annual growth rate of 15% and there are 
increasing  signs  of  overvaluation  in  the  housing  market,  which  increases  risks  and 
vulnerabilities.  While  mortgage  interest  tax  deductibility  is  being  reduced  gradually, 
the  reduction  is  only  partial,  with  the  tax  relief  it  provides  on  mortgage  payments 
remaining  generous.  Together  with  relatively  high  borrowing  limits  (loan-to-value), 
this continues to contribute to a strong debt bias for households. At the same time, the 
private  rental  market  remains  small  and  underdeveloped.  The  lack  of  a  well-
functioning middle segment on the rental market encourages households to buy rather 
than  rent,  contributing  to  high  debt-to-income  ratios  and  financial  vulnerability. 
Rigidities  on  the  supply  side  add  to  the  distortions  in  the  housing  market.  The 
relatively  inelastic  supply  of  homes  increases  the  risk  that  policies  meant  to  make 
housing more affordable end up stimulating demand and ultimately drive house prices 
up further, thereby undermining the policies’ original objective. 

(20)  While the pension system performs well on pension adequacy and fiscal sustainability, 
terms  of 
the  occupational  pension  system  (second-pillar)  has  drawbacks 
intergenerational fairness, transparency of pension rights and flexibility. Second-pillar 
pension contributions are high and potentially large adjustments to contributions could 
be needed to absorb imbalances in pension funds’ balance sheets. The large mandatory 

in 

19 

20 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.4  percentage  points  of  GDP.  This  is  partially  explained  by  investment  funds  made  available  to 
municipalities for the implementation of climate policy and additional funding for youth. 

EN 

6 

  EN 

                                                 
savings also contribute to the current account surplus. A reform of the pension system 
could make pension funds more resilient to shocks. Following a framework agreement 
on  broad  principles  for  pension  reform  in  2019,  the  government  and  social  partners 
agreed  on  a  new  second-pillar  contract  structure  in  June  2020.  Overall,  the  planned 
reform aims to address the pension system’s key vulnerabilities. Legislative measures 
to  implement  the  agreed  pension  reform  are  set  to  be  discussed  and  adopted  by  the 
Dutch parliament in the course of 2022. The main challenge will then be to implement 
the reform in full, which will need to be carefully monitored. 

(21)  The  Netherlands  submitted  the  cohesion  policy  programming  documents21  on  22 
December 2021, 23 December 2021 and 22 March 2022. In line with Regulation (EU) 
2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021,  the 
Netherlands shall take into account the relevant country-specific recommendations in 
the  programming  of  the  2021-2027  cohesion  policy  funds.  This  is  a  prerequisite  for 
improving the effectiveness  and maximising the added value of the financial support 
to  be  received  from  cohesion  policy  funds,  while  promoting  the  coordination, 
complementarity and coherence between these funds and other Union instruments and 
funds.  The  successful  implementation  of  the  cohesion  policy  programmes  also 
depends on the removal of bottlenecks to investment to support the green and digital 
transition and balanced territorial development. 

(22)  The share of flexible employment remains  high and represents  a substantial  share of 
the  labour  market  in  the  Netherlands.  This  points  to  an  increasing  risk  of  labour 
market segmentation. The use of these types of employment is to a considerable extent 
influenced  by  institutional  factors  and  national  policy  choices  such  as  differences  in 
tax treatment (for the self-employed without employees), social security coverage and 
labour  protection  regulations.  These  distinct  drivers  and  institutional  factors  create 
large financial (dis)incentives, with particularly distortive effects at the margins of the 
labour  market.  The  COVID-19  pandemic  also  highlighted  the  risks  of  a  segmented 
labour market and the unfavourable employment and social situation of certain groups, 
as well as the significant challenges in terms of access to adequate social protection for 
the  self-employed  that  are  more  often  underinsured  against  sickness,  disability, 
unemployment and old age. In addition, further measures to clarify the qualification of 
the working relationship  of self-employed and enforcement  of applicable rules  could 
help reduce bogus self-employment.  

(23)  Labour shortages have increased further and have become more general across sectors 
in  line  with  the  overall  economic  recovery  and  pick-up  in  labour  demand.  Labour 
market forecasts point to a continued tight labour market in the future and in particular 
for  education,  healthcare,  technical  jobs  and  in  the  ICT  sector.  In  the  near  term, 
shortages are also very high in construction. The tight labour market risks hampering 
the  large  investments  needed  as  part  of  the  green  and  digital  transition.  At  the  same 
time,  there  is  untapped  or  underutilised  labour,  in  particular  in  light  of  the  lower 
employment rate for people with a migrant background and the high share of part-time 
employment.  Incentivising  an  increase  in  the  number  of  hours  worked  by  part-time 
workers, many of whom are women (62.5% of employed women worked part-time in 

21 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy.. OJ L 231, 30.6.2021, p. 159. 

EN 

7 

  EN 

                                                 
2021),  could  further  reduce  the  existing  labour  market  shortages  and  reduce  the 
average  gender  pay  and  pension  gap.  Activating  and  up-skilling  or  re-skilling  of  the 
inactive (those neither working nor seeking work), those in long-term unemployment 
and those at the margins of the labour market via targeted and  tailored actions could 
help alleviate labour and skills shortages while fostering equal opportunities and active 
inclusion. 

(24) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels shift fossil fuel imports away from Russia. 

(25)  Dependence on fossil fuels is very high. According to 2020 data, dependence on fossil 
fuels from Russia is at the same level as the EU average for coal (54%) and crude oil 
(26%) and lower for natural gas (30% versus 44%).22 The shares in the energy mix of 
oil  (39%  versus  33%)  and  natural  gas  (44%  versus  24%)  are  both  above  the  EU 
average, while the share of coal is lower (6% versus 11%). The reliance on fossil fuels 
could  be  lowered  overall  by  increasing  investment  in  renewables  and  electrification, 
addressing  infrastructure  bottlenecks  and  boosting  energy  efficiency.  Stepping  up 
efforts to meet the EU 2030 renewable energy targets is crucial. The Netherlands was 
the fifth worst performing Member State in terms of the share of renewable energy in 
the gross final energy consumption in 2020, and has one of the largest gaps between 
the  2020  share  and  the  2030  targets.  Additional  investments  are  needed  to  increase 
renewable  energy  deployment,  as  well  as  to  increase  the  grid  capacity  necessary  to 
transmit  renewable  energy  from  production  sites  to  consumption  sites.  Building  up 
grid  capacity  is  especially  important  given  that  capacity  constraints  in  the  electricity 
grid  continued  to  increase  in  2021,  leading  to  implementation  delays  for  renewable 
energy  projects.  Administrative  procedures  for  deploying  renewable  energy  capacity 
could  be  further  simplified  and  streamlined.  New  infrastructure  and  network 
investments  related  to  gas  are  recommended  to  be  future-proof  where  possible,  in 
order  to  facilitate  their  long-term  sustainability  through  future  repurposing  for 
sustainable  fuels.  Moreover,  increasing  energy  efficiency  provides  a  cost-efficient 
opportunity  to  further  reduce  carbon  emissions  and  dependence  on  fossil  fuels, 
including  on  imports  from  Russia.  In  particular,  there  is  scope  for  improvements  in 
relation to building renovations and the roll-out of heat pumps and district heating in 
the building sector, as well as through the electrification and provision of clean energy 
for energy intensive industries. Further increase in ambition for reducing greenhouse 
gas emissions and increasing renewables and energy efficiency will be needed for the 
Netherlands to be in line with the ‘Fit for 55’ objectives. 

(26)  Further  investments  in  transport  infrastructure  could  help  remove  bottlenecks  and 
support  sustainable  mobility.  Rail  and  road  infrastructure  is  congested.  The  Dutch 
railway network is the most heavily used in Europe. The Netherlands is deploying the 
European  Rail  Traffic  Management  System  to  support  the  increase  in  its  railway 
network capacity. In 2019, road congestion, albeit slightly below the EU average, was 
estimated to have cost 4% of annual Dutch GDP. Investments in sustainable mobility 
infrastructure  can  have  positive  spill  over  effects  for  the  single  market,  given  the 

22 

Eurostat  (2020),  share  of  Russian  imports  over  total  imports  of  natural  gas,  crude  oil.  For  the  EU27 
average,  the  total  imports  are  based  on  extra-EU27  imports.  For  NL,  total  imports  include  intra-EU 
trade. 

EN 

8 

  EN 

                                                 
importance of Dutch transport hubs (Port of Rotterdam, Schiphol airport) and reduce 
further  the  high  dependency  of  the  country  towards  oil  (39%  of  the  energy  mix  in 
2020). 

(27)  Excessive  nitrogen  deposits  are  harming  the  environment  and  holding  back 
construction  and  agricultural  activities.  The  nitrogen  surplus  is  four  times  the  EU 
average  while  ammonia  emissions  per  hectare  are  the  highest  in  Europe.  Nitrogen 
deposition is too high to achieve biodiversity objectives, it affects the quality of water 
and  results  in  the  Netherlands  exceeding  the  thresholds  of  the  Nitrates  Directive. 
Further to a ruling of the Council of State in 2019, the Dutch government needs to take 
action to reduce nitrogen deposition in Natura 2000 areas. To further reduce nitrogen 
deposits,  a shift  towards sustainable agriculture is  needed, which  requires significant 
investments.  Agriculture is  responsible for 45% of nitrogen deposits notably because 
of  intensive  livestock  farming.  This  makes  it  the  country  with  the  highest  livestock 
density in the EU. 

(28)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil fuels will create significant restructuring costs in several sectors, the Netherlands 
can make use of the Just  Transition  Mechanism  in  the context  of cohesion policy  to 
alleviate the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition, the Netherlands can make use of the European Social Fund Plus to improve 
employment opportunities and strengthen social cohesion. 

(29) 

(30) 

(31) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Stability Programme and its opinion23 is reflected in recommendation (1) below. 

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union,  the  Council  recommended  that  the  euro  area  Member  States  take  action  to 
implement  the  recommendation  on  the  economic  policy  of  the  euro  area.  For  the 
Netherlands, this is reflected in particular in recommendations (1) and (3) below. 

In the light of the Commission’s in-depth review and this assessment, the Council has 
examined  the  2022  Stability  Programme.  Its  recommendations  under  Article  6  of 
Regulation  (EU)  No 1176/2011  are reflected in  recommendations  (1) and (4)  below. 
Recommendation  (1) also contributes to the implementation of the  Recommendation 
for the euro area, in particular the first euro area recommendation. Fiscal policies and 
other  policies  referred  to  in  recommendation  (1)  and  (4)  help  inter  alia  address 
imbalances  linked  to  the  large  current  account  surplus.  Policies  referred  to  in 
recommendation (1) also help address imbalances related to high private debt.  

HEREBY RECOMMENDS that Netherlands take action in 2022 and 2023 to:  

1. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term  fiscal  positions.  Reduce  the  debt  bias  for  households  and  the 
distortions  in  the  housing  market,  including  by  supporting  the  development  of  the 

23 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

EN 

9 

  EN 

                                                 
2. 

3. 

4. 

private  rental  sector,  and  taking  measures  to  increase  housing  supply.  Enact  and 
implement the reform of the pension system agreed in 2019 and 2020. 

Swiftly  finalise  the  negotiations  with  the  Commission  of  the  2021-2027  cohesion 
policy programming documents with a view to starting their implementation.  

Promote adequate social protection for the self-employed without employees, tackle 
bogus  self-employment  and  reduce  the  incentives  to  use  flexible  or  temporary 
contracts. Address labour and skills shortages, in particular in healthcare, education, 
digital and technical jobs and construction, including by tapping underutilised labour 
potential  originating  from  the  high  share  of  part-time  employment  and  the  lower 
employment rate of people with a migrant background. Strengthen up- and reskilling 
opportunities, notably for those at the margins of the labour market and the inactive.  

Reduce overall reliance on fossil fuels by accelerating the deployment of renewables, 
in  particular  by  boosting  complementary  investments  in  network  infrastructure  and 
further  streamlining  permitting  procedures, 
in 
particular  in  buildings,  and  accelerating  investments  in  sustainable  transport  and 
sustainable agriculture. 

improving  energy  efficiency, 

Done at Brussels, 

For the Council 
The President 

EN 

10 

  EN