COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - The Netherlands Accompanying the document 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  SWD(2022) 621 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - The Netherlands Accompanying the document 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 {COM(2022) 621 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

A strong recovery with challenges 
ahead 

The Dutch economy has recovered quickly 
from  the  COVID-19  pandemic.  Consumer 
spending  in  particular  picked  up  swiftly,  with 
the  vaccination  campaign  in  the  first  half  of 
2021 allowing the economy to open up again. 
The recovery in global trade resulted in strong 
exports  and  net  trade  making  a  significant 
contribution to GDP growth. At the same time, 
investment  activity  suffered  from  supply  side 
constraints  mainly  due  to  labour  shortages 
and  global  supply  chain  disruptions.  Despite 
new  restrictions  triggered  by  the  Omicron 
variant  in  the  fourth  quarter  of  2021,  overall 
GDP growth in 2021 was robust, coming in at 
5.0%.  

Consumer  price 
inflation  has  surged 
because  of  rising  energy  prices.  Annual 
average  inflation  increased  to  2.8%  in  2021. 
For 2022, inflation is forecast to rise further to 
7.4%  mostly  due 
to  continued  upward 
pressure on energy prices. Authorities are only 
partially  able  to  cushion  the  energy  price 
impact by lowering energy taxes and providing 
lump sum transfers.  

Nominal  house  prices  have  climbed 
sharply.  With  a  growth  of  around  15%  in 
2021, up from below 8% in 2020, it has been 
one  of  the  strongest  increases  in  the  EU  and 
has been felt quite evenly across the country. 
Continued  tax  advantages  linked  to  mortgage 
interest 
structurally 
insufficient  housing  supply  together  with  an 
underdeveloped  private  rental  market  are 
fuelling  both  prices  and  debt.  This  puts 
households in a financially vulnerable position 

payments 

and 

a 

if  there  were  to  be  major  house  price 
corrections (1). 

inflation 

affecting 

Growth momentum from 2021 provides a 
solid  basis  for  2022,  but  the  economy 
faces  new  headwinds.  Russia’s  invasion  of 
Ukraine has increased uncertainty and led to a 
strong drop in confidence of households. While 
COVID-19 restrictions were lifted at the end of 
January,  growth  in  consumer  spending  is 
expected  to  be  relatively  subdued  due  to 
surging 
households’ 
disposable  income.  The  increased  uncertainty 
is  also  expected  to  weigh  on  the  investment 
activity  of  businesses  while  supply  side 
constraints  are  expected  to  persist  given  the 
new  lockdowns  in  China  and  the  impact  of 
invasion  of  Ukraine.  Overall,  the 
Russia’s 
Commission’s  Spring  Economic 
Forecast 
projects  GDP  growth  of  3.3%  for  2022  and 
1.6% for 2023. To continue supporting growth 
in  the  medium  and  long  term,  measures  to 
address  below-target  investments  in  research 
(see  Annex  9)  and 
and  development 
(see 
comparably 
Annex 10) could be beneficial. 

low  productivity  growth 

Russia's  invasion  of  Ukraine  is  affecting 
the Dutch economy mainly through higher 
energy  and  raw  material  prices.  Gas  and 
oil price increases have a large impact on the 
Dutch  economy  given  the  energy  mix,  which 
relies  heavily  on  these  two  energy  sources. 
However, more than half of Dutch households 
have  electricity  and  gas  contracts  that  are 
longer than a year, which will make the impact 
of  rising  prices  on  disposable  income  rather 
gradual. In addition, the government has taken 
measures to ease the impact of higher energy 
prices  on  household  budgets.  Businesses  in 
turn will also be hit by rising input and energy 
prices  while  the 
is 
investment 
expected  to  weigh  on  firms’ 

increased  uncertainty 

(1)  In-depth review of macroeconomic imbalances for the 

Netherlands 2022, European Commission. 

2 

 
                                                 
 
(excluding 

decisions.  Trade  links  with  Russia  are  limited 
but  direct  investments  by  Dutch  firms  in 
Russia  were  relatively  high  compared  to  EU 
averages  in  2020,  with  net  foreign  direct 
purpose 
investments 
entities) in Russia amounting to 3.5% of Dutch 
GDP.  Russian  firms’  investments  (excluding 
special  purpose  entities)  in  the  Netherlands 
over  the  past  years  were  very  limited.  The 
trade and financial links of the Dutch economy 
with Ukraine are limited overall. 

special 

related 

The  government  has  taken  large-scale 
emergency and support measures to limit 
the  impact  of  the  COVID-19  pandemic (2) 
and  the  new  government  is  planning 
additional  spending  to  address  major 
societal  challenges.  Higher  spending  on 
healthcare 
to  COVID-19  and  on 
support measures to protect jobs and maintain 
household  purchasing  power  caused 
the 
general government deficit to increase to 3.7% 
of GDP in 2020. The deficit narrowed to 2.5% 
of GDP in 2021. At the same time, government 
debt decreased from 54.3% of GDP in 2020 to 
52.1%  of  GDP in  2021.  The  new  government, 
which  took  office  on  10  January  2022, 
announced that it will increase expenditure for 
its  entire  mandate.  Until  mid-2025,  it  intends 
to  increase  spending  by  EUR  79  billion  (9.2% 
of  2021  GDP).  Additional  spending  is  planned 
to address challenges such as climate change, 
excessive  nitrogen  deposits,  rising  energy 
prices  and  insufficient  housing  supply.  The 
lowering  of  energy  taxes  and  provision  of 
lump  sum  transfers  currently  adds  up  to  EUR 
3.7  billion  for  2022.  Aside  from  that,  long-
term  care  and  pension  expenditure  are 
expected 
the 
medium term due to population ageing. 

increase  starting  from 

to 

The  labour  market  is  performing  well 
overall,  but  challenges  remain  with 
increasing labour and skill shortages and 
labour 
segmentation. 
Unemployment dropped from 4.7% in 2020 to 
4.2%  in  2021.  In  addition,  the  number  of  job 
vacancies  has  even  surpassed  the  number  of 

market 

(2)  European Commission Quarterly Report on the Euro 
Area (QREA), Vol. 20, No. 4 (2021), Chapter I on 
assessing the cushioning role of tax-benefit systems on 
households’ income in the euro area during the COVID-
19 pandemic: a microsimulation analysis. 

found 

result,  employers  have 

unemployed  in  the  past  year  (see  Graph  1.1). 
As  a 
it 
increasingly  difficult  to  find  people  with  the 
right  skills.  Wage  growth  is  gradually  picking 
up, which is expected to continue in 2022 with 
shortages  likely  to  persist.  Overall,  the  Social 
Scoreboard, which supports the European Pillar 
of  Social  Rights,  points  to  a  well-performing 
labour  market  and  good  social  outcomes, 
although  challenges  related  to  labour  market 
segmentation  remain.  In  particular,  the  high 
level  of  flexible  employment  requires  further 
attention in terms of equal opportunities in the 
labour  market, 
conditions, 
adequate  social  protection  as  well  as  its 
contribution  to  slow  productivity  growth  (see 
Annexes 10 and 12).  

fair  working 

Graph 1.1: Number of unemployed and number 
of job vacancies (in thousands) 

Source: CBS 

climate 

is  one  of 

The  strong  reliance  on  fossil  fuels  casts 
doubts  on  whether  the  country  can  meet 
The 
time. 
targets  on 
its 
Netherlands 
five  worst 
the 
performing  EU  countries  in  terms  of  its  share 
of  renewable  energy  in  gross  final  energy 
consumption and will need to fill  a significant 
gap  to  achieve  the  current  2030  targets. 
Further  investments  to  remove  bottlenecks 
and digitalise the grid will help to increase the 
share  of  energy  from  renewable  sources  and 
the uptake of sustainable mobility. 

Construction  and  farming  are  being  held 
back  by  excessive  nitrogen  deposits, 
harming  the  environment.  Over  the  past 

3 

0100200300400500600700800900Q1 2013Q3 2013Q1 2014Q3 2014Q1 2015Q3 2015Q1 2016Q3 2016Q1 2017Q3 2017Q1 2018Q3 2018Q1 2019Q3 2019Q1 2020Q3 2020Q1 2021Q3 2021Number of unemployed (in thousands)Number of open vacancies (in thousands) 
                                                 
  
The  Netherlands  has  made  progress  in 
addressing  aggressive 
tax  planning 
issues  in  recent  years.  The  country  has 
implemented  a  conditional  withholding  tax  on 
interest  and  royalty  payments  made  to  low-
tax jurisdictions and to jurisdictions on the EU 
list  of  uncooperative 
jurisdictions.  The 
withholding  tax  also  applies  to  interest  and 
royalty  payments  in  certain  abuse  situations. 
The government has committed to renegotiate 
clauses 
that  could 
neutralise  the  effect  of  the  withholding  tax. 
Moreover,  the  government  has  adopted  a 
proposal  to  strengthen  its  withholding  tax  on 
dividend payments to low-tax jurisdictions and 
to jurisdictions on the EU list of uncooperative 
jurisdictions per 1 January 2024. 

in  bilateral 

treaties 

(SDGs), 

although 

The  Netherlands  scores  very  well  on  the 
United  Nations  Sustainable  Development 
Goals 
significant 
challenges remain in a few areas, such as 
access  to  affordable  and  clean  energy 
(SDG  7).  The  country  performs  very  well  on 
economic growth and employment (SDG 8). On 
SDG  4  (quality  education),  it  outperforms  the 
EU average for advanced digital skills and has 
shares  of  adult 
one  of 
participation  in  learning.  Its  performance  on 
SDG  10  (migration  and  social  inclusion)  could 
improve  by  including  people  with  a  migrant 
background more in the labour market. 

the  highest 

decades,  nitrogen  deposition  has  increased 
sharply,  also  in  nature  protection  areas.  To 
reduce  it,  the  government  has  taken  action, 
which  has  negatively  affected  agricultural  as 
well  as  construction  activity.  A  key  step  to 
tackling  the  nitrogen  crisis  is  the  transition  to 
sustainable  agriculture.  To  facilitate  it,  the 
coalition agreement proposes a transition fund 
of EUR 25 billion until 2035.  

One  of  the  reasons  why  the  country  has 
weathered  the  COVID-19  crisis  relatively 
well is the high degree of digitalisation of 
its  economy.  The  Netherlands  ranks  among 
the  highest  performing  EU  Member  States  in 
the  Digital  Economy  and  Society  Index (3).  It 
performed  particularly  well  on  the  uptake  of 
digital  technologies  by  companies  and  use  of 
online  services.  However,  while  the  Dutch 
population  has  a  good  level  of  basic  and 
advanced  digital  skills (4),  the  relatively  low 
share  of  ICT  graduates  adds  to  the  difficulty 
for  companies  to  find  digitally  qualified 
personnel  to  fill  vacancies.  The  country  could 
also  make  further  progress  on  5G  readiness 
and high broadband prices (see Annex 8). 

The  Netherlands  continues  to  experience 
macroeconomic  imbalances  related  to  a 
large  current  account  surplus  and  a  high 
stock  of  private  debt.  The  current  account 
surplus increased from 7% of GDP in 2020 to 
9.5% in  2021 (5). From a sectoral  perspective, 
the  surplus  in  the  household  and  corporate 
sectors  widened  compared  to  2020.    But  this 
was  partially  offset  by  public  sector  net 
borrowing  with  a  substantial  set  of  crisis-
related  fiscal  support  measures.  Household 
debt  is  composed  mainly  of  mortgage  debt 
and is expected to increase further in nominal 
terms  due  to  the  rapidly  increasing  house 
prices mentioned above (see Annex 17).  

(3)  Digital Economy and Society Index (DESI) 2021, 

European Commission. 

(4)  While young people and adults in the Netherlands have 
strong digital, expanding university degrees in advanced 
digital technologies and aiming for a stronger gender 
balance among ICT specialists could further solidify the 
country’s chances of managing the digital transition in a 
fair and successful way (Resilience country fiche: the 
Netherlands 2021, JRC - February 2022). 

(5)  In-depth review of macroeconomic imbalances for the 

Netherlands 2022, European Commission. 

4 

 
                                                 
PRIORITIES AHEAD 
PRIORITIES AHEAD 

economy 

the  Dutch 

challenges  prevent 

Although 
is 
recovering rapidly from the impact of the 
COVID-19  pandemic,  several  challenges 
remain.  These 
the 
economy  from  building  up  resilience  and 
continuing  to  grow  in  the  long  term  in  a 
sustainable  and  inclusive  manner.  The  long-
standing issues related to the housing market 
have,  if  anything,  intensified.  The  pandemic 
pointed  to  the  risks  of  a  highly  segmented 
labour  market.  Other  issues  relate  to  labour 
shortages, 
the 
transformation  into  a  green  and  climate-
neutral economy. Addressing these challenges 
will  also  help  the  country  make  further 
the 
progress 
the 
corresponding  areas  and 
European Pillar of Social Rights. 

the  pension  system  and 

in 
implement 

the  SDGs 

reaching 

in 

Addressing tax distortions and 
supply constraints on the housing 
market 

House  prices  in  the  Netherlands  have 
increased further over the past year, with 
growth  continuing  to  spread  from  the 
major  cities  to  the  whole  country.  Annual 
house  price  growth  between  2016  and  2020 
already  averaged  above  7%  and  reached 
15.2%  on  average  in  2021.  Prices  surged 
especially  towards  the  end  of  the  year,  with 
house  prices  in  December  20.1%  higher  than 
in  the  same  month  a  year  earlier.  The 
affordability  and  availability  of  housing  has 
worsened  significantly,  in  particular  in  major 
cities  and  their  surroundings,  which  have 
experienced  strong  price  growth  for  several 
years.  For  example,  the  price  of  a  100m2 
apartment in North Holland,  the province with 
the highest average price level in the country, 
is  equal  to  17  years  of  income  for  a  typical 
household - 45% above its value in 2014.  

in  2021.  Pent-up 

A  combination  of  one-off  effects  and 
long-standing  features  of  the  Dutch 
housing market led to the sharp increase 
in  prices 
savings 
accumulated  during  the  pandemic  increased 
household  budgets.  The  abolishment  of  the 
transfer  tax  for  first-time  buyers  drove  up 
demand  in  2021.  Behavioural  effects  pushed 
up  prices  further  -  the  tight  market  prompted 
existing  homeowners  searching  for  a  new 
home to adopt a ‘buy first, sell later’ strategy. 
This  effectively  brought  the  market  to  a 
standstill,  with  the  number  of  transactions 
dropping  below  2020  levels  (see  Graph  2.1). 
The  limited  supply  on  the  market  in  turn 
prompted house buyers to use pent-up savings 
to pay more than the list price out of ‘fear of 
missing  out’.  These  special  factors  in  2021 
come  on  top  of  pre-existing  factors,  such  as 
low  interest  rates,  relatively  loose  mortgage 
borrowing  limits (6),  insufficient  and  inelastic 
supply  and 
that  stimulate 
demand. 

tax  benefits 

to 

issue. 

deduct 

Mortgage 

households 

Tax  distortions  that  incentivise  debt-
financed  home  ownership  are  a  long-
standing 
interest 
deductibility  is  the  main  feature  at  play.  It 
interest 
allows 
payments from their taxable income. Despite a 
gradual  reduction  in  the  deductibility  rate  in 
recent years, the incentive remains substantial. 
The  coalition  agreement  of 
the  current 
government  includes  abolishing  the  possibility 
for  tax-free  gifts  for  the  purchase  of  homes. 
While  this  is  welcome,  the  effect  on  overall 
distortions  in  the  housing  market  is  expected 
to be marginal.  

(6)  For more details see Annex 17 and the In-depth review 
of macroeconomic Imbalances for the Netherlands 
2022, European Commission. 

5 

 
 
                                                 
 
Graph 2.1: Growth in house prices and number 
of transactions on the housing market 

prices (11). Dutch authorities estimate that an 
additional  279 000  homes  would  have  been 
needed to satisfy demand in 2021, equivalent 
to  3.5%  of  the  total  housing  stock (12). 
Construction  activity  has  recovered  to  some 
degree after a sharp fall in building permits in 
2019 linked to uncertainty over environmental 
protection measures (13). 

reforms 

the  exact 

In  a  pledge  to  boost  the  housing  supply, 
the  new  government  has  raised  the 
target  of  new-build  homes  from  75 000 
to  100 000  units  per  year.  While  the 
government has outlined broad areas in which 
it  plans  to  take  action (14),  e.g.  the  length  of 
planning processes  at the local  administrative 
levels, 
that  will  be 
implemented  to  reach  this  new  target  still 
need  to  be  determined.  A  swift  increase  in 
new-builds is complicated by increased labour 
and  material  shortages  that  have  emerged  in 
recent  years.  On  top  of  these  shortages,  the 
Netherlands faces challenges in administrative 
capacity at municipal level,  which slows down 
planning  processes,  as  well  as  strict  land  use 
regulation  that 
land  for 
housing development (15). 

limits  available 

A  malfunctioning  rental  market  creates 
further  incentives  for  households  to  buy 
rather  than  rent.  Access  to  social  housing 
(rented  at  a  discount  compared  to  market 
rates)  is  income-dependent  only  to  a  limited 
degree  and  thus  relatively  untargeted.  Along 
with  subsidies  in  the  owner-occupied  market, 
this leads to an underdeveloped private rental 

(11)  For more details see the in-depth review of 

macroeconomic Imbalances for the Netherlands 2022, 
European Commission. 

Source: Eurostat, CBS 

for 

recent 

debt-financed 

buyers.  However, 

Subsidies 
home 
ownership  contribute  heavily  to  the 
comparably high level of household debt. 
Additionally, relatively high borrowing limits (7) 
for residential mortgages could raise concerns 
about  household  debt  sustainability  if  there 
are  major  house  price  corrections,  primarily 
among 
even 
households  with  a  positive  net  asset  position 
could  be  vulnerable  to  shocks  on  financial 
markets  given  the  illiquidity  of  their  assets 
(primarily  homes) (8).  In  2019,  the  European 
issued 
Systemic 
recommendations (9)  to  the  Dutch  authorities 
to address vulnerabilities in the housing sector, 
including 
reduce 
maximum borrowing limits. While some limited 
steps  have 
the 
recommendation  on  maximum  borrowing 
limits remains unaddressed.  

recommendation 

since  been 

taken (10), 

Board 

Risk 

the 

to 

The  insufficient  supply  of  homes  puts 
additional  upward  pressure  on  house 

(12) BZK (2021), Staat van de Woningmarkt – 

Jaarrapportage 2021. 

(7)  The maximum loan-to-value ratio in the Netherlands is 

100%, which is among the highest in the EU.  

(8)  In-depth review of macroeconomic Imbalances for the 

(13)  This was addressed with a set of temporary measures 
in 2021, with a more permanent solution still to be put 
in place – see the section Investments for energy 
import independence and the green transition below.  

Netherlands 2022, European Commission. 

(14)  BZK (2022), Nationale Woon- en Bouw Agenda. 

(9)  European Systemic Risk Board (2019), 

Recommendation 2019/7. 

(10)  The Dutch National Bank introduced minimum risk 

weight floors for mortgages on 1 January 2022 and 
announced the intention to build up a countercyclical 
buffer. See the in-dept review (IDR) for additional 
details.  

(15)  The obstacles to increasing the Dutch housing supply 

are described in ’’Het bouwproces van nieuwe 
woningen’’, CPB (2019). For more details on the supply 
of Dutch houses see also the in-depth review of 
macroeconomic imbalances for the Netherlands 2022, 
European Commission. 

6 

-20-10010203040-10-505101520201320142015201620172018201920202021House prices (% year-on-year growth, lhs)Real house prices (% year-on-year growth, lhs)Number of transactions (% year-on-year growth, rhs) 
  
                                                 
                                                 
 
market  and  long  waiting  lists  for  those  who 
need social housing most. Therefore, there is a 
lack  of  viable,  affordable  alternatives  for 
many  households  in  search  of  a  home.  This 
home 
pushes 
ownership,  while  the  high  prices  have  made 
this option unaffordable for large parts of the 
population. 

debt-financed 

them 

to 

Boosting fairness and 
transparency in the pension 
system 

of 

fundamental 

The  social  partners  and  the  government 
agreed  in  2019  and  2020  on  the  main 
principles 
pension 
reform.  The  main  points  of  the  agreement 
include  eliminating  ex-ante  inter-generational 
redistribution  in  the  current  second  pillar 
pension system while preserving some degree 
of  intergenerational  risk  sharing,  introducing 
additional  flexibility 
in  accessing  pension 
assets  and  strengthening  the  link  between 
pension  fund  performance  and  payouts.  Draft 
toekomst 
(Wetsvoorstel 
legislation 
pensioenen)  was  submitted  to  parliament  on 
30  March  2022  and  is  currently  foreseen  to 
enter  into  force  as  of  1  January  2023.  Once 
adopted, the new framework will be phased in 
gradually from 2023 until 2027. 

The  planned  pension  reform  is  expected 
to address structural shortcomings in the 
second  pillar  of  the  pension  system 
intergenerational  fairness, 
related  to 
shock 
flexibility 
transparency, 
resilience. The planned phasing-out of the de 
facto 
from 
younger to older workers (17) will improve both 

redistribution (16) 

systematic 

and 

(16) Regardless of age, employees build up the same 

amount of pension rights for every euro of pension 
premium paid. However, the contributions paid by 
younger employees normally have a much longer period 
to benefit from returns on investments. Decoupling the 
build-up of pension rights from distance to retirement 
age (and therefore the investment horizon) means that 
younger workers de-facto subsidise the pension build-
up of older workers. 

(17) CPB Netherlands Bureau for Economic Policy Analysis 

(2018), Effecten van afschaffing van de 

7 

intergenerational  fairness  and  transparency, 
the latter since the link between contributions 
and  benefits  will  become  clearer.  Another 
weakness in the current system is its reliance 
on  pension  premium  adjustments  to  absorb 
imbalances  in  pension  funds’  balance  sheets, 
an  issue  that  is  aggravated  by  demographic 
developments (18).  The 
strengthened 
link 
fund  performance  and 
between  pension 
payout  in  the  proposed  new  system  implies 
that  benefit  adjustments (19)  will  become  the 
primary  mechanism  to  absorb  imbalances, 
which  would  improve  shock  resilience  of  the 
system. The new system is based on life-cycle 
investing  and  better  allocation  of  risks  to  the 
groups  that  can  best  bear  them  (e.g.  less 
interest rate risk for the elderly) Moreover, the 
current  system  is  also  not  well  equipped  to 
deal  with  the  needs  of  a  modern  labour 
market,  where  more  flexibility  would  help 
workers  that  are  moving  between  different 
types of employment.  

savings 

compulsory 

At  macroeconomic  level,  second  pillar 
pension  contributions  are  an  important 
driver  of 
for 
households,  contributing  to  the  current 
account surplus. The relatively large pension 
contributions,  especially  when  combined  with 
high mortgage debt and related amortisations, 
can 
consumption 
smoothing  across  different  phases  of  life (20). 
In  other  words,  in  some  cases,  households 
save  more  than  they  would  like,  while  once 
they  reach  retirement  age  they  often  enjoy 
high  pension  income  with  limited  housing 
expenses. 

suboptimal 

lead 

to 

doorsneesystematiek en de gelijktijdige overgang naar 
een nieuw pensioencontract. 

(18)  With an ageing population, increasingly large premium 
adjustments would be needed to maintain the pensions 
of an increasingly large share of the population beyond 
the retirement age. As a result of these developments, 
there has already been a shift to a conditional 
(indexation depending on pension fund performance) 
defined benefit system in recent years. 

(19) These adjustments only apply to second-pillar pension 
benefits. The presence of the basic state pension under 
the first-pillar as well as the high average replacement 
rates (estimated at 97% by the OECD) imply that old-
age poverty risks are limited.  

(20)  CPB Netherlands Bureau for Economic Policy Analysis 
(2020), Are the savings of Dutch households optimal? 

 
                                                 
                                                                        
Tackling money laundering risks  

measures  still  needs  to  be  assessed  and 
evidenced.  

direct 

foreign 

The  Netherlands  is  among  the  countries 
with  the  largest  flows  of  inward  and 
outward 
investment 
worldwide  and  therefore  subject  to  high 
money  laundering  risks.  A  substantial  part 
of  these  flows  (some  80%)  is  ultimately 
transferred  to  a  foreign  destination  through 
special  purpose  entities,  letterbox  or  shell 
companies  with  no  real  economic  activity  in 
the  Netherlands.  Against  this  backdrop,  it  is 
key that entities involved in company and trust 
formation 
service 
providers, tax and legal advisers) are aware of 
the  money  laundering  risks  linked  to  those 
business structures.  

(trust  and 

company 

In  recent  years,  the  Dutch  government 
has  taken  several  measures  to  combat 
the  misuse  of  company  and 
legal 
laundering 
for  money 
structures 
purposes.  This  includes  a  wide  range  of 
measures  featured  in  the  government’s  Anti-
Money  Laundering  Action  Plan  launched  in 
2019. The plan intends among other things to 
strengthen  the  role  of  trust  and  company 
services as gatekeepers and address the risks 
this  sector  is  exposed  to.  Furthermore,  in 
November  2021,  the  implementation  of  a 
publicly  accessible 
that  contains 
certain  personal  information  on  the  ultimate 
beneficial  owners  of  trusts  and  similar  legal 
the  Trust 
arrangements,  also  known  as 
Register, was approved by the Dutch Senate. 

register 

However,  the  Netherlands  still  needs  to 
tackle  remaining  challenges.  In  addition  to 
incorporating  the  5th  Anti-Money  Laundering 
Directive  into  national  law,  the  Trust  Register 
still  needs  to  be  set  up  and  populated  with 
actual  data.  Furthermore,  several 
issues 
related 
compliance  with  anti-money 
laundering  and  countering  the  financing  of 
terrorism  requirements  by  obliged  entities  in 
the  entire  non-financial  sector,  including  trust 
and  company  service  providers, 
remain 
important  challenges  for  the  Netherlands.  In 
that  respect,  the  effectiveness  of  the  new 
enforcement 
supervisory 

regime 

and 

to 

Opportunities to improve social 
outcomes and support inclusive 
growth 

level  of 

the  high 

Overall  labour  market  performance  is 
good,  with  high  participation  and  low 
unemployment,  but  important  challenges 
remain  on  labour  market  segmentation. 
The  Social  Scoreboard  that  supports  the 
European  Pillar  of  Social  Rights  points  to  a 
well-performing labour market and good social 
outcomes  in  the  Netherlands  (see  Annex  12). 
Nevertheless, 
flexible 
employment  (39%  of  the  labour  force  in 
2021) (21)  and  its  strong  growth  in  the  last 
decade (see Graph 3.2) remain a concern also 
in comparison to other EU Member States. This 
development  requires  further  attention  with 
regard  to  equal  opportunities  in  the  labour 
market,  fair  working  conditions,  adequate 
social  protection  coverage  and  its  role  in  low 
productivity growth. While certain workers may 
choose  flexible  employment  due  to  changing 
individual  preferences,  some  do  not  have  a 
choice (22).  The  use  of 
types  of 
these 
is  to  a  considerable  extent 
employment 
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. For example, the 
self-employed  are  not  subject 
to  social 
security  contributions  related  to  sickness, 
disability,  unemployment  and  old  age.  Rather 

(21) This includes flexible work arrangements (around 2.5 
million / 28% of the labour force), self-employed 
without employees (around 1.1 million in total / around 
11% of the labour force). 

(22)  Especially those on flexible, zero-hour, on-call or 

temporary agency contracts, doing platform work or the 
self-employed without employees operating at the 
margins of the labour market. Regulation of Work report 
by the Bortslap Committee (2020) and the Better Work 
(‘Het betere werk’) report by the Scientific Board of 
Government policies (WRR, 2020). See also SER MLT 
advice (Sociaal-economisch beleid 2021-2025 – 
Zekerheid voor mensen, een wendbare economie en 
herstel van de samenleving), Advies 21/08, June 2021.  

8 

 
                                                 
than  being  determined  by  the  characteristics 
of  the 
job,  these  financial  (dis)incentives 
influence  the  type  of  employment  status 
chosen. 

with  a  (considerable)  drop  in  income  and  a 
number of them applied for temporary income 
support  measures  and/or  had  to  use  their 
financial buffers (25). 

Graph 2.2: Evolution of employment status by 
type 

(1) Index, 2013=100 
Source: CBS 

Ambitions  have  been  expressed 
to 
address  institutional  drivers  of  labour 
market  segmentation,  but  challenges 
remain.  Some  measures  have  been  adopted 
to  reduce  the  gap  between  the  different  tax 
treatments, such as gradually reducing the tax 
deduction  for  self-employment  from  2020 
onwards (26).  However,  significant  differences 
remain  in  the  working  conditions  (e.g.  limited 
income  security  for  those  with  on-call  and 
zero-hour  contracts)  and  adequate  social 
different 
protection 
employment  and  work  arrangements.  The 
coalition agreement of the current government 
to  address  differences  between 
intends 
permanent  and  flexible  work  arrangements 
and  to  improve  social  protection  for  the  self-
employed,  notably  by  introducing  mandatory 
disability insurance.  

coverage 

under 

the 

and 

The  pandemic  further  highlighted  the 
risks  of  a  highly  segmented 
labour 
market 
unfavourable 
employment  and  social  situation  of 
certain  groups.  People  with  flexible  and/or 
temporary  contracts (23)  (mostly  the  young, 
low(er)  skilled,  people  with  a  migrant 
background or disabilities), along with the self-
employed without employees, were the groups 
hit  hardest  during  the  pandemic  (see  Graph 
3.2) (24).  As  a  consequence  they  were  faced 

(23)  CPB Netherlands Bureau for Economic Policy Analysis 
(2021), Notitie economische analyse steunpakket, 
https://www.cpb.nl/sites/default/files/omnidownload/CPB
-Notitie-Economische-analyse-steunpakket-2020.pdf . 
See also Centraal Bureau voor de Statistiek (CBS) 
(2021), Ontwikkelingen flexwerk (https://www.cbs.nl/nl-
nl/dossier/dossier-
flexwerk/hoofdcategorieen/ontwikkelingen-flexwerk See 
also Fana, M., Tolan, S., Torrejón, S., Brancati, C. U., & 
Fernández-Macías, E. (2020). The COVID confinement 
measures and EU labour markets. Luxembourg: 
Publications Office of the European Union, 
https://publications.jrc.ec.europa.eu/repository/handle/JR
C120578. 

(24)  Diris, R., Jongen, E., Van Vliet, O., (2022), Zelfstandigen 

hard geraakt door coronacrisis, Economische 
Statistische berichten. 

still 

notice 

entrepreneurs 

Despite  the  crisis,  labour  shortages  have 
increased further and have become more 
general across sectors. While some sectors 
and 
the 
consequences  of  the  pandemic,  pre-existing 
labour  market  shortages  resurfaced  in  line 
with the overall economic recovery and pick-up 
in  labour  demand.  Labour  market  tightness 
reached historic levels at the end of 2021 (see 
the  Economic  and  Employment  Snapshot  and 
Graph 1.1). Shortages based on the number of 
job vacancies are currently most concentrated 
in 
communication 
technologies,  construction  and  the  hospitality 
sector (27).  Labour market  forecasts point to a 

information 

and 

(25)  CPB Netherlands Bureau for Economic Policy Analysis 
(2022), Ontwikkeling van het arbeidsinkomen tijdens 
corona. 

(26)  While compensating them fully in 2020, 2021 and 
2022 by increasing the ‘arbeidskorting’ (general tax 
credit), the government intends to continue 
compensating self-employed via this tax credit until 
2025. 

(27)  Centraal Bureau voor de Statistiek (CBS) (2021), 

Vacaturegraad naar bedrijfstak (https://www.cbs.nl/nl-
nl/visualisaties/dashboard-
arbeidsmarkt/vacatures/vacaturegraad-naar-
bedrijfstak).  

9 

9095100105110115120125201320142015201620172018201920202021Permanent labour relationFlexible labour relationSelf-employed without employeesSelf-employed with employees 
  
 
                                                 
 
                                                 
in  the 

continued tight labour market in the future for 
education, healthcare, technical jobs (including 
science  and  engineering)  and 
IT 
sector (28).  The  tight  labour  market  also  risks 
hampering the realisation of the government’s 
ambitious  plans  in  the  context  of  the  green 
and  digital  transition.  In  addition,  the  low 
degree  of  housing  affordability 
in  some 
regions  also  hampers  mobility  in  the  Dutch 
labour  market  and  could  increase  regional 
labour shortages. 

Despite  a  high  overall  participation  rate, 
the  Netherlands  still  has  a  pool  of 
untapped  and  underutilised  labour  that 
could  be  activated. 
In  2020,  the  gap 
between  non-EU  citizens  and  Dutch  nationals 
in terms of employment rates was 26.0 pp (29), 
which is higher than the EU average (15.7 pp). 
The  employment  rate  for  women  is  high  and 
still on the rise, with a high share of women in 
part-time employment (in 2021, around 62.5% 
of  employed  women  worked  part-time 
compared  to  an  EU  average  of  28.3%) (30). 
This  results  in  an  above-average  gender  pay 
gap (14.2% in 2020, while the EU average was 
13%) (31), which is one of the largest in the EU 
(see  Annex  12).  Activating  and  up-  and  re-
skilling the inactive people, those in long-term 
unemployment  and  those  at  the  margins  of 
the 
targeted  and 
personalised  actions  could  help  alleviate 
labour shortages. More than 500 000 workers 
in  the  Netherlands  (around  5%  of  the  labour 
force)  indicate  that  they  would  like  to  work 

labour  market 

via 

(28)  Bakens, J., Bijlsma, I., Dijksman, S., Fouarge, D., 

Goedhart, R. (2021). De arbeidsmarkt naar opleiding en 
beroep tot 2026. ROA. ROA Reports No. 005.  

(29)  The gap between non EU-citizens and Dutch national in 
terms of employment rates (% of population aged 20 
to 64) increased slightly between 2016 and 2021, from 
25.3 pp to 26 pp, which is higher than the EU average 
(14.9 pp).  

(30)  The Netherlands continues to have the highest gender 
gap in the EU in part-time employment, which stood at 
44.1 pp in 2021. 

(31)  Even if the employment rate of women is high and still 
on the rise (77.5% in 2021 compared to 76.6% in 
2020), the gender gap in hours worked results in an 
above-average gender pay gap and one of the largest 
gender pensions gaps later in life (women aged over 65 
received 36.9% less pension than men in 2020, 
compared to an estimated EU average gap of 27.5%). 

more  hours (32).  Furthermore,  incentivising  an 
increase  in  the  number  of  hours  worked  by 
part-time workers, among them many women, 
could  further  reduce  the  existing 
labour 
market  shortages.  For  example,  improving 
access to high-quality and affordable childcare 
and  introducing  measures  to  help  parents 
achieve  a  better  work-life  balance  could 
facilitate an increase in the hours worked. 

EU 

the 

and 

support 

Targeted 
continued 
investments in basic, technical and digital 
training  could 
skills,  education  and 
improve  access  to  the  labour  market 
while  promoting  equal  opportunities  and 
active  inclusion.  Overall,  adult  participation 
in lifelong learning remains significantly higher 
than 
average.  Nevertheless, 
participating  in  learning  is  a  challenge  for 
those  in  a  vulnerable  labour  market  situation 
because  of 
their  uncertain  employment 
relationship  (flexible  or  temporary  work/self-
employed),  and 
lower 
education  level  or  low  literacy.  More  targeted 
support, 
increasing 
including  focusing  on 
cross-sector  mobility,  may  be  required  to 
reach  people  at  the  margin  of  the  labour 
these 
market  more  effectively.  Tackling 
challenges is key for the Netherlands to reach 
the 2030 EU headline target on skills. 

in  certain  cases 

in 

performance 

The rate of early school leaving is in line 
with  the  EU-level  target,  but  there  has 
been  a  decline  in  basic  skills  and  the 
differences 
levels 
between  schools  are  increasing.  Children 
of lower and more highly educated parents are 
increasingly  being  educated 
in  different 
schools.  Among  all  EU  Member  States,  the 
Netherlands  is  the  country  where  differences 
between schools have the strongest impact on 
pupils’  performance,  reflecting  ability-based 
tracking  from  an  early  age.  The  proportion  of 
low  achievers is especially  high  (56%)  among 
pupils  born  abroad.  Native-born  pupils  with  a 
migrant  background  only  partially  catch  up. 
Furthermore, expected teacher shortages could 

(32)  Central Bureau for Statistics (CBS) (2021), dashboard 

beroepsbevolking (https://www.cbs.nl/nl-
nl/visualisaties/dashboard-beroepsbevolking/wil-meer-
uren-werken-beschikbaar). 

10 

 
                                                 
                                                 
negatively affect the quality of education and 
educational outcomes (see Annex 13). 

Reducing fossil energy dependence 
and advancing the green transition 

The Netherlands has made good progress 
in  reducing  greenhouse  gas  emissions, 
but  more  is  needed  to  reach  EU  and 
national  targets.  The  country  has  exceeded 
the 2020 target in the Effort Sharing Decision 
although this is partially due to the impact of 
the 
structural 
rather 
reductions. Greenhouse gas emissions in 2020 
were 23% lower compared to 1990. By 2030, 
emissions are estimated to be at 38% to 48% 
below 1990 levels with current policies, which 
in  the  coalition 
is  below  the  target  set 
agreement of 55% lower emissions. 

pandemic 

than 

in 

fossil 

The Netherlands relies strongly on energy 
from 
fuels,  with  persistent 
dependence  on  Russian  oil  and  gas. 
Natural  gas  and  oil  together  provided  around 
the 
the  energy  consumed 
80%  of 
Netherlands  in  2020,  compared  to  the  EU 
average  of  below  60%.  Due  to  the  extraction 
of  natural  gas  on  its  own  territory,  the 
Netherlands  has  traditionally  been  a  net 
exporter  of  gas  and  its  network  is  strongly 
interconnected with other Member States. With 
the  phase-out  of  domestic  gas  extraction, 
import dependency has significantly increased 
and gas imports surpassed exports in 2017. A 
considerable part of the imports come through 
the  LNG  (liquefied  natural  gas)  terminal  in 
Rotterdam or through the connection with the 
terminal 
Belgium. 
Zeebrugge 
Nonetheless,  dependence  on  Russian  gas  has 
been considerable, although to a lesser extent 
than  in  many  other  Member  States  (30%  of 
imported natural gas in the Netherlands came 
from  Russia  in  2021  compared  to  an  EU 
average  of  44%).  Through  energy  savings 
measures  and  expansion  of  LNG  capacities, 
the  government  aims  to  be  independent  of 
Russian gas supplies by the end of 2022. The 
domestic  oil  supply  is  small  and  the  reliance 
on  crude  oil  imports  from  Russia  is  at  the 
same  level  as  the  EU  average  (26%).  The 

of 

in 

to 

reduce 

from  Russia 

Dutch  government  also  aims  to  become 
independent  of  Russian  oil  by  the  end  of  the 
year  and  has  called  on  firms  exposed  to  oil 
imports 
their 
dependence to contribute to a fast phasing out 
of imports. With 54%, the dependence on coal 
import from Russia is at the same level as the 
EU  average.  Overall,  the  Dutch  economy  is 
somewhat  less  exposed  to  risks  of  supply 
disruptions  from  Russia  than  other  Member 
States  but  the  impact  of  rising  gas  prices  is 
expected to be relatively strong (33).  

is 

substantial  potential 

There 
for 
reducing  the  share  of  fossil  sources  in 
the  energy  mix  by  expanding 
the 
production  of  renewable  energy.  The 
Netherlands  has  the  fifth  lowest  share  of 
renewable  energy 
in  gross  final  energy 
consumption  in  the  EU,  despite  having  made 
progress in 2020 (see Graph 2.3 and Annex 5). 
It  also  has  one  of  the  largest  gaps  between 
the  2020  shares  (14.7%  in  2020)  and  the 
targets  for  2030  (27%).  However,  there  is 
significant potential to boost this share as the 
North  Sea  offers  major  opportunities  to 
expand generation of power from wind.  

the 

The  Netherlands  is  taking  measures  to 
increase 
supply  and  use  of 
sustainable  bio-methane  and  hydrogen. 
The  Netherlands  intends  to  accelerate  the 
production  of  bio-methane,  notably  through 
the  introduction  of  a  blending  obligation  for 
energy suppliers. There are also plans to invest 
for  hydrogen 
into  electrolysis 
production as well as to transform part of the 
existing  gas  transmission  network 
into  a 
hydrogen  backbone  by  2027,  covering  the 
including 
main 
interconnections  with  Antwerp  and  the  Ruhr 
area in Germany. 

clusters  and 

industrial 

capacity 

Frontloading  renewable  energy  requires 
additional investments in energy network 
infrastructures.  This 
concerns  network 
for  electricity,  heat  and 
infrastructure 

(33)  Eurostat (2020), share of Russian imports over total 

imports of natural gas, crude oil and hard coal. For the 
EU27 average, the total imports are based on extra-
EU27 imports. For the Netherlands, total imports include 
intra-EU trade. Crude oil does not include refined oil 
products. 

11 

 
                                                 
energy 

projects. 

renewable  hydrogen.  The  electricity  grid  is 
strongly  connected  to  surrounding  countries. 
However, capacity constraints in the Dutch grid 
continued  to  increase  in  2021,  leading  to 
for  new  onshore 
implementation  delays 
renewable 
Capacity 
constraints are acute in particular in Flevoland, 
Drenthe  and  North  Limburg.  According  to 
Netbeheer  Nederland,  implementation  of  the 
current plans in the nationwide programme of 
the 
requires 
substantial  network  expansion  to  overcome 
network  bottlenecks (32).  The 
lack  of  a 
sufficiently 
to 
energy 
accommodate variable  renewable  energy  also 
limits  the  effectiveness  and  speed  of  the 
energy transition.  

strategy 

regional 

‘smart’ 

energy 

grid 

Further  simplification  of  administrative 
procedures  could  also  increase the  share 
of energy produced from renewables.  The 
Netherlands  has  taken  several  measures  in 
recent  years  to  simplify  permitting  of  energy 
projects  (e.g.  only  renewable  project  above 
certain  thresholds  can  be  appealed  in  higher 
courts,  online  platform  for  “All  in  One  Permit 
for  Physical  Aspects”  for  onshore  wind  and 
ground-mounted  photovoltaic,  environmental 
pre-assessment  of  offshore  wind  sites),  but 
bottlenecks  remain,  notably  at  local  level  to 
authorise renewable energy projects, given the 
high  density  of  population.  The  coalition 
to  accelerate 
includes  plans 
agreement 
administrative 
energy 
for 
procedures 
infrastructure  projects  and  set  up  a  climate 
transition  fund  of  EUR  35  billion  for  the  next 
10 years. It aims to achieve the climate goals 
laid  down  at  national  and  European  level, 
notably  by  developing  the  necessary  energy 
infrastructure  and  stimulating  the  supply  of 
renewable energy. 

Energy  efficiency  improvements  are  a 
cost-efficient  way  to  reduce  emissions 
and  dependence  on  fossil  fuels  in  the 
Netherlands.  There  is  considerable  potential 
for  improvements  in  building  renovations  and 
the  roll-out  of  heat  pumps  in  the  private 
housing  sector,  which  is  often  preferable  to 
installing new gas boilers. 

Graph 2.3: Share of renewable energy in gross 
final energy consumption (in %) 

Source: Eurostat 

in 
help 

infrastructure 

transport 
investments 
Further 
infrastructure 
remove 
could 
bottlenecks  and  support  sustainable 
is 
mobility.  Rail  and  road 
congested.  The  Dutch  railway  network  is  the 
most  heavily  used  in  Europe  (RMMS,  2020). 
The  deployment  of  European  Railway  Traffic 
Management  System  (ERTMS)  in  the  Dutch 
railway  network  is  ongoing  to  support  the 
increase  in  traffic  capacity.  In  2019  road 
congestion,  albeit  slightly  below  the  EU 
average,  was  estimated  to  have  cost  4%  of 
Dutch  GDP (34).  The  coalition  agreement 
includes 
transport 
infrastructure  maintenance  and  contains  the 
introduction  of  “mileage”  dependent  taxation 
by  2030  (betalen  naar  gebruik/MRB-plus).  It 
also envisages the further roll-out of charging 
infrastructure.  The  country  is  also  leading 
inland  waterway 
efforts 
transport.  Investments  in  sustainable  mobility 
infrastructure  can  have  positive  spill  over 
effects  for  the  single  market,  given  the 
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). 

to  decarbonise 

investments 

in 

(34)  Schroten, A., van Essen, H., van Wijngaarden, L., Sutter, 

D., Andrew, E. (2019), Sustainable Transport 
Infrastructure Charging and Internalisation of Transport 
Externalities (study prepared for the European 
Commission, Publications Office of the European Union, 
Luxembourg).  

12 

051015202520042005200620072008200920102011201220132014201520162017201820192020European UnionNetherlands 
  
                                                 
Directive 

Excessive nitrogen deposits in agriculture 
are harming the environment. The nitrogen 
surplus  is  four  times  the  EU  average,  with 
ammonia  emissions  per  hectare  also  the 
highest  in  Europe  (60  kg  NH3/ha).  Nitrogen 
deposition  (the  Netherlands  exceeding  the 
Nitrates 
hinders 
biodiversity  objectives  and  affects  the  quality 
of water (35). Further to a ruling of the Council 
of  State  in  2019,  the  government  needs  to 
take  action  to  reduce  nitrogen  deposits  in 
Natura  2000  areas.  The  ruling  has  affected 
existing and new building permits, constraining 
construction  activity  in  2020  and  creating 
uncertainty for agricultural activity. 

thresholds) 

A shift towards sustainable agriculture is 
necessary  to  reduce  nitrogen  deposits 
and  will  require  significant  investments. 
Agriculture is responsible for 45% of nitrogen 
deposits (36),  mainly  because  of 
intensive 
livestock farming. This makes the Netherlands 
the  country  with  the  highest  livestock  density 
the  EU (37).  The  coalition  agreement 
in 
envisages  a  transition  fund  of  EUR  25  billion 
up  to  2035  to  support  the  transition  to 
sustainable  agriculture  (including  downsizing), 
tackle  the  nitrogen  crisis  and  restore  nature. 
The  care-taker  government  prepared 
the 
law  that  anchors  the 
nitrogen  reduction 
nitrogen 
the 
reduction  programme 
government  decided  on  following  the  Council 
of State rulings. 

that 

(35)  15% of ground water station report poor quality. 

(36)  RIVM (2022), Wat is Stikstof?. 

(37)  European Commission (2021), Nitrates Directive 

Implementation Report. 

13 

 
                                                 
KEY FINDINGS 
KEY FINDINGS 

Given  the  key  challenges  outlined  in  this 
report,  the  Netherlands  would  benefit 
from: 

protect  biodiversity  by  reducing  nitrogen 
emissions. 

  Limiting  the  tax  incentives  that  favour 
debt-financed  home  ownership,  thereby 
reducing  the  high  level  of  household  debt 
and  bringing  down  the  strong  growth  in 
house  prices,  as  well  as  increasing  the 
housing  supply,  in  particular  by  relaxing 
land-use 
improving 
planning  capacity  at  local  administrative 
level. 

regulations 

and 

  Addressing  shortcomings  in  the  second 
pillar  pension  system  by  implementing  the 
2019  and  2020  pension  agreement,  which 
will make the system more shock resilient, 
transparent and fair. 

  Further  improving  social  outcomes  and 
inclusive growth by reducing labour market 
segmentation  and  promoting  adequate 
social protection for the self-employed. 

  Addressing labour shortages to support the 
implementation 
in 
of 
particular  those  supporting  the  green  and 
digital  transition,  notably  by  activating 
untapped  labour  and  up-  and  reskilling 
measures. 

investments, 

  Boosting  energy  efficiency  as  well  as 
increasing  investments  in  grid  capacity, 
renewables  and  electrification  to  reduce 
dependence  on  fossil  fuels,  including  from 
Russia. 

  Easing  pressures  on  congested  road  and 
supporting 
further 

rail 
sustainable  mobility 
investments in transport infrastructure.  

and 
through 

infrastructure 

  Encouraging  more  sustainable  agriculture 
to  reduce  soil  and  water  pollution  and 

14 

 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan - implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Macroeconomic Imbalance Procedure assessment matrix 

Annex 18: Taxation 

Annex 19: Key economic and financial indicators 

Annex 20: Debt sustainability analysis 

LIST OF TABLES 

Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 

Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 

17 

19 

19 

21 

22 

24 

26 

26 

30 

32 

32 

34 

36 

38 

41 

43 

43 

45 

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49 

52 

52 

54 

56 

58 

59 

25 
29 
33 
35 
37 

 
 
 
Table A10.1: 
Table A10.2: 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A20.1: 
Table A20.2: 

Key Single Market and Industry Indicators (1 of 2) 
Key Single Market and Industry Indicators (2 of 2) 
Public administration indicators - Netherlands 
Social scoreboard for the Netherlands 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at regional level – The Netherlands 
Financial soundness indicators 
Assessment of Macroeconomic Imbalances matrix 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for the Netherlands 
Heat map of fiscal sustainability risks for the Netherlands 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in the Netherlands in the last five years 

Graph A3.1: 

ESIF 2014-2020 Total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

The Netherlands' progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition 

Graph A5.2: 

Thematic – Energy  Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic - Biodiversity Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic - Mobility Share of zero emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Economic importance and expansion of the circular economy - employment and value added in the circular economy 

sectors 

Graph A11.1: 

Performance on the single market public procurement indicator 

Graph A13.1: 

Proportion of teachers with at least a master's degree, by schools' socio-economic profile, PISA 2018 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (AWG reference scenario) 

Graph A15.1: 

GDP per head (2010) and GDP growth (2010-2019) 

Graph A15.2: 

Territories most affected by the climate transition in the Netherlands 

Graph A15.3: 

Innovation performance in the Netherlands 

Graph A18.1: 

Tax wedge indicators 

39 
40 
42 
43 
45 
48 
51 
53 
55 
57 
58 
59 
60 

19 

22 

23 

24 

26 

27 

27 

28 

31 

31 

32 

41 

46 

47 

47 

49 

49 

50 

57 

18 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

towards 

the  Netherlands' 
This  Annex  assesses 
progress 
Sustainable 
the 
Development  Goals  (SDGs)  along  the  four 
dimensions of competitive sustainability.  The 
17  SDGs  and  their  related  indicators  provide  a 
policy framework under the UN’s 2030 Agenda for 
towards  ending  all 
Sustainable  Development 
forms of poverty, fighting inequalities and tackling 
climate change, while ensuring that no one is left 
behind.  The  EU  and  its  Member  States  are 
committed  to  this  historic  global  framework 
agreement  and  to  playing  an  active  role  in 
maximising progress towards the SDGs. The graph 
below is based on the EU SDG indicator set which 
was developed to monitor progress towards SDGs 
in an EU context. 

SDG 

related 

indicators 

The  Netherlands  performs  very  well  on 
to 
several 
environmental sustainability (SDG 2, 6, 9, 11, 
12,  13,  15)  and  is  improving  on  one  more 
(SDG  7).  On  addressing  ‘Affordable  and  clean 
country  has  made 
the 
energy’ 
considerable  progress  on  the  share  of  renewable 
total  energy  consumption,  which 
energy 

(SDG  7), 

in 

increased from 5.7% in 2015 to 14% in 2020, but 
is still below the EU average (22.1% in 2020). The 
country  also  improved  on  indicators  like  ‘primary 
energy consumption” (3.4 tonnes of oil  equivalent 
per capita in 2020) and ‘final energy consumption’ 
(2.6  tonnes  in  2020)  but  consumption  remains 
above  the  EU  average 
(2.8  and  2  tonnes 
respectively in 2020). Regarding the environmental 
impacts  of  agricultural  production 
(SDG  2), 
ammonia emissions from agriculture have slightly 
decreased  from  61.7  kg  per  ha  of  utilised 
agricultural  area  in  2014  to  58.9  kg  in  2019, 
which  is  still  very  high  compared  to  the  EU 
average (19.7 kg in 2019).  

The Netherlands performs very well on most 
SDG indicators related to fairness (SDG 1, 2, 
3,  4,  5,  8,  10).  The  country  outperforms  the  EU 
average  in  most  indicators  related  to  poverty, 
health and education (SDGs 1, 3, 4). It historically 
performs  very  well  on  economic  growth  and 
employment 
(SDG  8).  The  employment  rate 
increased from 77.9% in 2016 to 81.7% in 2021, 
which  makes  the  Netherlands  one  of  the  best 
performers in the EU (EU average: 73.1% in 2021). 

Graph A1.1: Progress towards SDGs in the Netherlands in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-03-21-096; Extensive country specific data on the short-term 
progress of Member States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu).  
Source: Eurostat 

19 

 
 
 
 
 
At  the  same  time,  the  long-term  unemployment 
rate  decreased  from  2.3%  in  2016  to  0.8%  in 
2021  and  is  well  below  the  EU  average  (2.8%  in 
2021). On migration and social inclusion (SDG 10), 
the  gap  between  non-EU  citizens  and  Dutch 
nationals  at  risk  of  income  poverty  after  social 
transfers  rose  sharply  from  4.7%  in  2015  to 
25.9%  in  2020,  above  the  EU  average  (23.8%  in 
2020).  Similarly,  the  gap  between  these  two 
categories in terms of employment rates increased 
slightly  between  2016  and  2021  (from  25.3%  to 
26.0%  in  2021),  and  remains  higher  than  the  EU 
average (14.9%).  

The  Netherlands  performs  very  well  on  SDG 
indicators  related  to  productivity  (SDG  4,  8, 
9).  The  country  has  the  highest  share  of  people 
with  at  least  basic  digital  skills  (79%  in  2021, 
compared to the EU average of 54%), and one of 
the  highest  shares  of  adult  participation 
in 
learning,  which  has  increased  since  2015  (18.8% 
in 2016 and 26.6% in 2021) (SDG 4). The share of 
households  with  high-speed  internet  in  2021 
(90.6%) is well above the EU average (70.2%) and 
represents  significant  progress  on  this  indicator 
since 2016 (31.2% in 2016). The Netherlands has 
increased  its  share  of  GDP  on  R&D  from  2.1%  in 
2015  to  2.3%  in  2020  and  now  meets  the  EU 
average  (2.3%  in  2020).  The  share  of  R&D 
personnel  among  the  active  population  rose  from 
1.6% in 2015 to 1.7% in 2020 (EU average: 1.4% 
in 2020) (SDG 9).  

The  Netherlands  performs  very  well  on  SDG 
indicators related to macroeconomic stability 
(8,  16).  In  particular,  the  indicators  on  "peace, 
justice  and  strong  institutions'  (SDG  16)  have 
further improved and it scores highly on indicators 
relating to access to justice. The Netherlands also 
outperforms the  EU  average  on  indicators  related 
to employment and decent work (SDG 8). Although 
the  percentage  of  the  population  reporting  crime, 
violence  or  vandalism  decreased  from  17.4%  in 
2014  to  15.7%  in  2020,  it  is  still  above  the  EU 
average (11% in 2019) (SDG 16).  

20 

 
  
  
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  European  Union’s 
efforts to support the Union’s recovery from 
the  COVID-19  pandemic  and  strengthen 
resilience  against  future  shocks.  By  13  May 
2022,  the  Netherlands  had  not  yet  officially 
submitted its RRP. 

21 

 
 
 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth.  

its 

Graph A3.1: ESIF 2014-2020 Total budget by fund 

(1) EUR billion in current prices, % of total 
(2) Please note that the data for the EAFRD refers to the 
period 2014-2022 according to EU regulation 2020/2220 
laying down certain transitional provision for support from the 
EAFRD and EAGF in the years 2021 and 2022. 
Source: European Commission, Cohesion Open Data 

support 

In  2021-2027,  EU  cohesion  policy  funds (38) 
will 
development 
long-term 
objectives  in  the  Netherlands  by  investing 
EUR  1.92  billion (39).  This  includes  EUR  623.1 
million  from  the  Just  Transition  Fund  directed  at 
alleviating  the  socio-economic  impacts  of  the 
green  transition  in  the  most  vulnerable  regions. 
The 2021-2027 cohesion policy funds partnership 
agreements  and  programmes  take  into  account 
the 2019-2020 country-specific recommendations 
and  investment  guidance  provided  as  part  of  the 
European  Semester.  In  addition,  the  Netherlands 
will  benefit  from  EUR  4.1  billion  support  for  the 
2023-27  period  from  the  Common  Agricultural 
Policy,  which  supports  social,  environmental,  and 
economic 
in 
agriculture  and  rural  areas,  contributing  to  the 
European Green Deal, and ensuring long-term food 
security. 

sustainability  and 

innovation 

In  2014-2020,  the  European  Structural  and 
Investment  Funds  (ESIF)  allocated  EUR  2.73 
billion (40)  from  the  EU  budget  to  the 
Netherlands,  with  another  EUR  2.18  billion 
(Graph  A3.1), 
financing 
from  national 
representing  around  0.1%  of  GDP  for  2014-
2020  annually  and  2.5%  of  public 
investment (41). By 31 December 2021, the total 
ESIF budget was allocated to specific projects and 
60%  was  reported  as  spent,  leaving  EUR  1.97 
billion to be spent by the end of 2023 (42). Among 
the  11  objectives  the  most  relevant  ones  for 
cohesion  policy  funding  in  the  Netherlands  are 
research  and  innovation,  low-carbon  economy, 
sustainable  and  quality  employment  and  social 
inclusion, (EUR 2.25 billion in total). By the end of 
2020, cohesion policy investments supported over 
8  000  businesses,  of  which  around  2  700  aimed 
to  introduce  new  products  to  the  market.  760 
businesses  received  support  to  cooperate  with 
research  institutions.  Private  investment matching 
the support for R&D and innovation projects adds 
up to almost EUR 614 million. Cohesion policy also 
helped  over  589  000  people  on  join  the  labour 
market  and  financed  dedicated  traineeships  that 
led  to  jobs  being  offered  to  almost  111  000 
trainees who would otherwise have had very little 
chances on the labour market.  

Cohesion  policy  funds  already  substantially 
contribute  to  the  Sustainable  Development 
Goals  (SDGs)  objectives.  In  the  Netherlands, 
these funds are supporting 5 of the 17 SDGs with 
up  to  98%  of  expenditure  contributing  to  the 
attainment of the goals.  

REACT-EU 

instrument 

The 
(Recovery 
Assistance  for  Cohesion  and  the  Territories 
of the EU) under NextGeneration EU provided 
EUR  668.4  million  of  additional  funding  to 
2014-2020  cohesion  policy  allocations  for 
the  Netherlands  to  ensure  a  balanced  recovery, 

(40)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for the 
years 2014-2020 must be spent by 2023 at latest (by 2025 
for EAFRD). Data source: Cohesion Open data, cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF. 

(38) European Regional Development Fund (ERDF), European 

(41)  Public investment is gross fixed capital formation plus 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(39) Current prices, Cohesion Open Data. 

capital transfers, general government. 

(42)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/NL. 

22 

1.7035%0.133%1.7435%1.3327%EAFRDEMFFERDFESF 
 
   
                                                 
                                                 
 
Graph A3.2: Cohesion policy contribution to the SDGs (EUR billion) 

Source: European Commission 

boost  convergence  and  provide  vital  support  to 
regions  following  the  impact  of  the  coronavirus 
outbreak.  REACT-EU  supports  investments  that 
help  transition  towards  a  digital  and  green 
economy  and  make  the  regional  economy  more 
resilient. It supports vulnerable groups that are hit 
hardest  by  the  COVID-19  crisis  by  providing 
support  and  guidance  in  finding  (new)  work  and 
developing  the  necessary  basic  and  professional 
skills  –  also  in  light  of  the  green  and  digital 
transitions. 

via 

the 

provides 

Technical 

Commission 

tailor-made 
The 
expertise 
Support 
Instrument  to  help  the  Netherlands  design 
and  implement  growth-enhancing  reforms. 
Since  2019,  the  country  has  received  assistance 
through  19  technical  support  projects.  Projects 
delivered  in  2021  aimed  for  example  to  improve 
local  employment  services  or  accelerating  the 
implementation of car sharing strategies. In 2022, 
new projects will start to support, amongst others, 
the 
the 
Netherlands.  

integration  of  non-EU  nationals 

in 

The Netherlands benefits also from other EU 
programmes,  such  as  the  Connecting  Europe 
Facility,  which  allocated  EU  funding  of  EUR 
585.6 million to specific projects on strategic 
transport networks, and Horizon 2020, which 
allocated EU funding of EUR 5 330 million. 

23 

0.180.200.510.680.730.00.20.40.60.8SDG 7 Affordable and clean energySDG 3 Good health and well beingSDG 8 Decent work and economic growthSDG 9 Industry, innovation, infrastructureSDG 1 No poverty 
  
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: The Netherlands' progress on the 
2019-2020 CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (43) 
addressed  to  the  Netherlands  in  the  context 
of  the  European  Semester.  The  assessment 
takes  into  account  the  policy  action  taken  by  the 
Netherlands  to  date.  Overall,  70%  of  the  CSRs 
focusing  on  structural  issues  in  2019  and  2020 
have recorded at least “some progress”, while 30% 
recorded “limited” (see Graph A4.1). 

Source: European Commission 

(43)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2819%29&qi
d=1627675454457  

2020 CSRs: https://eur-

lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2020&andText0=recommendation&DD_M
ONTH=07  

2019 CSRs: https://eur-

lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2019&andText0=recommendation&DD_M
ONTH=07  

24 

Limited Progress30%Some Progress50%Substantial Progress20% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
   
 
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

Source: European Commission 

25 

NetherlandsAssessment in May 20222019 CSR1Some ProgressReduce the debt bias for households and the distortions in the housing market, including by supporting the development of the private rental sector.Limited ProgressEnsure that the second pillar of the pension system is more transparent, inter-generationally fairer and more resilient to shocks.Some ProgressImplement policies to increase household disposable income, including by strengthening the conditions that support wage growth, while respecting the role of social partners.Some ProgressAddress features of the tax system that may facilitate aggressive tax planning, in particular by means of outbound payments, notably by implementing the announced measures.Substantial Progress2019 CSR 2Limited ProgressReduce the incentives for the self-employed without employees, while promoting adequate social protection for the self-employed,Limited Progressand tackle bogus self-employment.Limited Progress Strengthen comprehensive life-long learning and upgrade skills notably of those at the margins of the labour market and the inactive.Some Progress2019 CSR 3Some ProgressWhile respecting the medium-term budgetary objective, use fiscal and structural policies to support an upward trend in investment.Not relevant anymoreFocus investment-related economic policy on research and development in particular in the private sector,Some Progresson renewable energy, energy efficiency and greenhouse gas emissions reduction strategiesSome Progressand on addressing transport bottlenecks.Some Progress2020 CSR1Some ProgressIn line with the general escape clause, take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. When economic conditions allow, pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment.Not relevant anymore Strengthentheresilienceofthehealthsystem,includingbytacklingtheexistingshortagesofhealthworkers and stepping up the deployment of relevant e‑Health tools.Some Progress2020 CSR2Some ProgressMitigate the employment and social impact of the crisis andSubstantial Progresspromote adequate social protection for the self-employed.Limited Progress2020 CSR 3Some ProgressFront-load mature public investment projects (to foster the economic recovery)Limited Progressand promote private investment to foster the economic recovery. Limited ProgressFocus investment on the green and digital transition, in particular on digital skills development,Some Progresssustainable infrastructure and clean and efficient production and use of energy Some Progressas well as mission-oriented research and innovation.Substantial Progress2020 CSR 4Some ProgressTakestepstofullyaddressfeaturesofthetaxsystemthatfacilitateaggressivetaxplanninginparticularonoutboundpayments,notablybyimplementingtheadoptedmeasuresandensuringitseffectiveness. Substantial ProgressEnsure effective supervision and enforcement of the anti-money laundering framework.Some Progress2021 CSR1Substantial ProgressIn2022,pursueasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilience Facility, and preserve nationally financed investment.Full ImplementationWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscal positions and ensuring fiscal sustainability in the medium term.Substantial ProgressAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigital transition.Some ProgressGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthandsocialprotectionsystemsforall.Substantial Progress 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform  the  EU  into  a  modern,  resource-
efficient  and  competitive  economy  where 
there  are  no  net  emissions  of  greenhouse 
gases in 2050 and where economic growth is 
decoupled from resource use. This annex offers 
the  most  significant  and 
a  snapshot  of 
economically 
the 
Netherlands  in  the  respective  building  blocks  of 
the  European  Green  Deal.  It  is  complemented  by 
Annex 6 on the employment and social  impact of 
the  green  transition  and  Annex  7  on  circular 
economy aspects of the Green Deal.  

relevant  developments 

in 

intensity  has 
Greenhouse  gas  emission 
dropped  substantially  in  recent  years  in  the 
Netherlands,  but  further  efforts  are  needed. 
Between  1990  and  2019  (2020),  economy-wide 
greenhouse  gas  (GHG)  emissions  (excluding  land 
use) in the Netherlands fell by 14% (23%), which 
is less than the EU average. Although its economy 
has  an  emission  intensity  similar  to  the  EU 
average,  emissions  per  capita  are  above  the  EU 
average.  The  Dutch  Climate  Act  set  an  economy-
wide  target  of  reducing  GHG  emissions  to  48% 
below  1990  levels  by  2030.  The  Netherlands  has 
largely  overachieved  its  2020  target  of  reducing 
emissions  in  sectors  not  covered  by  the  EU 
Emissions  Trading  System  by  -16%  compared  to 
2005.  In  its  National  Energy  and  Climate  Plan,  it 
intends  to  achieve  the  same  reductions  as  its 
current  effort  sharing  target  for  2030  of  -36%. 
The proposed new Effort Sharing Regulation target 
for  the  Netherlands  is  a  reduction  of  48%.  Under 
current 
the 
Netherlands 
is  projected  to  see  higher  net 
emissions by 2030. 

land  management 

practices, 

26 

Graph A5.1: Fiscal aspects of the green transition 

(1) Taxation and government expenditure on environmental 
protection. 
Source: Eurostat 

Both environmental taxation and government 
expenditure  on  environmental  protection  in 
the  Netherlands  are  above  the  EU  average. 
Dutch  tax  revenues,  both  as  a  share  of  total  tax 
revenues  and  a  share  of  GDP,  are  above  the  EU 
average. Energy taxes largely drive the total,  with 
a  considerable  share  also  being  attributed  to 
transport  taxes.  A  small  percentage  also  goes  to 
taxes  on  pollution.  At  the  same  time,  the  Dutch 
government  spends  a  higher  share  of 
its 
expenditure  on  environmental  protection  than  the 
EU  overall.  Fossil  fuel  subsidies  have  shown  a 
steady decline since 2016. Budgetary exposure to 
climate  hazards  (i.e.  the  climate  risk  to  public 
sector  finances  due  to  uninsured  assets) 
is 
considered  low/moderate,  with  the  exception  of 
flooding.  For  more  indicators  on  taxation,  see 
Annex 18. 

in 

gas 

gross 

energy 

The Netherlands has a relatively low share of 
renewable 
inland 
consumption  (11%).  Fossil  energy  carriers  still 
constitute  the  majority  of  the  energy  mix  with 
39% oil and petroleum and 44% natural gas. With 
domestic 
reduced 
production 
significantly, the Netherlands is moving from being 
a large exporter to a large importer of natural gas. 
As a result, it required statistical transfers to meet 
its  2020  renewable  energy  target,  and  still 
requires  significant 
its 
renewable  energy  contribution  to  the  EU  2030 
target of 27% of gross final energy consumption. 

investment 

reach 

being 

to 

0.02.04.06.08.010.0Environmental taxes (%of GDP)Environmental taxes (%of total taxation)Government expenditureon environmentalprotection (% of totalexpenditure)NL (2020)EU27 (2020) 
 
 
   
 
 
Graph A5.2: Thematic – Energy  
Share in energy mix (solids, oil, gas, nuclear, 
renewables) 

Graph A5.3: Thematic - Biodiversity 
Terrestrial protected areas and organic farming 

(1) The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat 

(1) For terrestrial protected areas data for 2018, and data for 
the EU average (2016, 2017) is lacking. The change in 
terrestrial protected areas between 2017 and 2019 is partly 
due to a change in national methodology of protected areas 
definition. 
Source: EEA and Eurostat 

for 

the 

assessments 

to  58.85%  and 

Biodiversity  protection  presents  significant 
challenges, with more than three quarters of 
the  protected  habitats  and  species  having 
unfavourable  conservation  status.  The  share 
of 
habitats  with  good 
conservation  status  has  increased,  notably  those 
not  affected  by  nitrogen.  At  the  same  time,  the 
share of habitats with bad conservation status has 
increased 
share  of 
assessments  for  species  with  bad  conservation 
status  has  decreased  to  38.75%.  The  main 
pressures are agriculture, human-induced changes 
in  the  water  regime  and  natural  processes.  One 
main reason for the deterioration of habitats is the 
continued  high  pressure  from  agriculture  and  the 
changes 
to 
protected  species,  the  share  of  assessments  in 
good  conservation  status  in  2018  was  26.25%, 
more  than  the  22.78%  reported  under  the 
previous  reporting  period  (2007-2012).  Of  the 
forest  habitats  protected  under  the  EU  nature 
directives,  none  show  a  favourable  conservation 
status.  On  birds,  58%  of  the  breeding  species 
showed  short-term  rising  or  stable  population 
trends (62% for key wintering species).  

in  water  regime 

(drainage).  As 

The main challenges are water quality, which 
is  greatly  affected  by  nitrogen  deposition, 
and  air  pollution  due  to  nitrates  and 
ammonia.  Land  use  and  highly 
intensive 
agriculture  affect  nature  and  biodiversity.  Air 
quality in the Netherlands continues to give cause 
for  serious  concern,  with (44)  78  %  of  surface 
water  bodies  affected,  but  also  by  dams,  barriers 
and  locks.  Nitrogen deposition  stems  mainly  from 
agriculture  and  traffic  and  specific  measures  still 
need  to  be  discussed.  The  Netherlands  needs  to 
substantially 
nitrate  action 
programme with measures that match the severity 
and  urgency  of  the  situation,  in  line  with  the 
obligations  under  the  Nitrates  Directive.  It  also 
needs to ensure that it achieves the objectives of 
the  Water  Framework  Directive, Natura  2000  and 
air quality legislation. 

strengthen 

its 

In 
the 
terms  of  sustainable  mobility, 
Netherlands  has  a  very  dynamic  deployment 
of zero-emission vehicles and a high share of 
electrification in its railway network.  

(44)  European Environment Agency. Air Quality in Europe – 2021 
Report. For details on the underpinning methodology, see 
page 106. 

27 

0102030405060708090100200520102015201820192020Solid fossil fuels, peat and oil shaleOilGasNuclearRenewables0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
  
   
                                                 
Graph A5.4: Thematic - Mobility 
Share of zero emission vehicles (% of new 
registrations) 

(1) Zero emission vehicles include battery and fuel cell electric 
vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory 

28 

0.05.010.015.020.025.0201620172018201920202021% of new registrationsNLEU27 
   
 
Table A5.1: Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications.    
Source: Eurostat, JRC, European Commission, EEA, EAFO 

29 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)128.1-24%-29%-36%-7-7-48%-19-19200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%2%6%7%7%9%14%27%Energy efficiency: primary energy consumption (1)Mtoe70.165.165.064.363.558.446.6Energy efficiency: final energy consumption (1)Mtoe54.149.850.250.649.745.543.9201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP3.33.43.33.33.43.22.42.42.2Environmental taxes (% of total taxation)% of taxation (3)9.08.78.68.68.68.06.05.95.6Government expenditure on environmental protection% of total exp.3.023.183.193.263.253.061.661.701.61Investment in environmental protection% of GDP (4) 0.690.490.500.51--0.420.380.41Fossil fuel subsidiesEUR2020bn0.550.820.810.780.75-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100888890878676797669GHG emissions intensity of the economykg/EUR'100.330.320.300.290.270.260.320.310.30Energy intensity of the economykgoe/EUR'100.110.110.110.110.100.100.120.110.11Final energy consumption (FEC)2015=100100.0102.1102.9103.8101.993.4103.5102.994.6FEC in residential building sector2015=100100.0103.1100.8101.099.197.5101.9101.3101.3FEC in services building sector2015=100100.0100.6102.9102.6100.596.0102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)0.740.700.670.650.600.560.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.614545578638551-863762-Years of life lost due to air pollution by NO2per 100.000 inh.118879510162-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-15.215.4-26.226.1-25.725.7Marine protected areas% of total-25.6--25.6--10.7-Organic farming% of total utilised agricultural area2.73.03.33.53.84.08.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'101.020.990.960.960.940.880.890.870.83Share of zero emission vehicles (8)% in new registrations0.71.11.95.413.920.51.01.95.45655558812Share of electrified railways%75.975.775.670.775.6-55.656.0-30.231.331.932.432.8-28.928.8-YearNLEUShare of smart meters in total metering points (9) - electricity% of total201846.535.8Share of smart meters in total metering points (9) - gas% of total201846.613.1ICT used for environmental sustainability (10)%202163.665.9Progress to policy targetsNational contribution to 2030 EU targetNETHERLANDSEU'Fit for 55'DistanceDistanceDigitalFiscal and financialindicators1.9 out of 4 (increase from historical level of 1). This is a low/medium risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-201898.960.318.4MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver) 
 
  
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension. While  measures  in this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the transition.  

The  Netherlands  has  planned  substantial 
green investments, considerable potential for 
job  creation,  while  energy-intensive  sectors 
remain fairly large. Social dimension challenges 
of access to transport and energy are less likely to 
be an issue. 

technically 

availability 

sufficiently 

of 
especially 

The  Netherlands  laid  down  an  ambitious 
package  of  green  transition  measures  in  its 
national  energy  and  climate  plan  (NECP),  to 
achieve a sustainable future for the country. 
qualified 
The 
professionals, 
skilled 
workers,  is  essential,  with  digital  skills  being 
increasingly  needed  across  the  economy.  The 
European Social Fund Plus (ESF+) will help workers 
and job seekers find and keep employment, also in 
light of the green and digital  transitions. The Just 
Transition  Fund  (EUR  623.1  million)  will  help 
mitigate the social  impact  of  the  transition in the 
most  affected  regions  through  up-  and  reskilling 
and increasing cross-sector mobility. Following the 
NECP,  agreements  have  been  made  to  draw  up 
sectoral  education  and  labour  market  agendas1. 
These  include  initiatives  to  strengthen  labour 
market  and  training  policies  that  should  actively 
in  sustainable 
guide  workers 
technologies across sectors and stimulate lifelong 
learning.  On  energy  poverty,  the  Netherlands 
reports  the  number  of  households  affected,  but 
does not provide any specific measures beyond its 
existing and comprehensive anti-poverty policies. 

towards 

jobs 

the 

dimension, 

employment 

the 
On 
economy’s  carbon  footprint  has  slightly 
decreased,  and  although  energy-intensive 
sectors  remain  fairly 
large,  the  green 
economy  could  be  further  expanded  as  it 
provides  considerable  potential  for 
job 
creation.  The  GHG  emissions  intensity  of  the 
Dutch economy decreased by 20% between 2015 
and  2020  (in  terms  of  gross  value  added)  and  is 
now 10% below the EU average, while the average 
carbon  footprint  per  worker  at  15.88  tonnes  of 
GHG  emissions  is  higher  than  the  EU  average 

(13.61 tonnes in the EU, see Graph A6.1). While no 
declining  sectors  have  been  identified (45),  the 
Dutch  energy-intensive  industry  (EII),  including 
natural gas extraction, shipping and chemicals (46), 
provides  jobs  for  1.3%  of  the  total  employed 
workforce,  for  which  up-  and  reskilling  could  be 
particularly 
(see  Annex  15).  The 
environmental  goods  and services  sector provides 
jobs  to  about  1.5%  of  the  employed  population 
(2.2% in the EU) (47), and wind and solar energy as 
well  as  energy  efficiency  improvements  offer 
further opportunities for green jobs (48).  

important 

On  the  social  dimension  of  the  green 
transition,  ensuring  access  to  transport  and 
energy  appears  less  of  a  challenge  in  the 
Netherlands  overall.  A  relatively  low  but  stable 
share  of  the  rural  population  is  at  risk  of  poverty 
(10.8%  versus  18.7%  in  the  EU  in  2020) (49).  The 
share  of  the  population  unable  to  keep  their 
homes  adequately  warm  decreased  from  2.9%  in 
2015  to  2.4%  in  2020,  which  is  below  the  EU 
average  (8%).  Lower-income  groups  are  affected 
most (see Graph A6.2). Consumption patterns vary 
the  average  carbon 
across 
footprint  of  the  top  10%  emitters  is  about  four 
times higher than that of the bottom 50% of the 
population (5.3 times in the EU).  

the  population: 

Tax  systems  are  key  to  ensuring  a  fair 
transition towards climate neutrality (50). The 
Netherlands’  revenues  from  total  environmental 
taxes  have  remained  fairly  constant  over  time 
(2015  to  2020),  amounting  to  around  3.3%  of 
GDP in 2020 (above the EU average of 2.2%). The 

(45)  SWD(2021) 275 final. 

(46)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D). 

(47)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(48)  Asikainen, T., Bitat, A., Bol, E., Czako, V., Marmier, A., Muench, 
S., Murauskaite-Bull, I., Scapolo, F. and Stoermer, E (2021)., 
The future of jobs is green, EUR 30867 EN, Publications 
Office of the European Union, Luxembourg. 

(49)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

(50)  COM(2021) 801 final. 

30 

 
 
                                                 
 
tax  wedge  for  low-income  earners (51)  decreased 
from 26.9% to 23.9% from 2015 to 2019 (22% in 
2021), compared to 31.9% in the EU in 2021 (see 
Annex 18). Redistributive measures accompanying 
environmental  taxation  have  the  potential  to 
positively  affect  the  disposable  income  of  lower 
income households (52).  

Graph A6.1: Fair green transition challenges 

(1) Numbers are the normalised indicator performance 
signifying factors relative to the EU 27 average. 
(2) Carbon inequality: average emissions per capita top 10% 
vs bottom 50% (2019).  
Source: Eurostat, World Inequality Database 

Graph A6.2: Energy poverty by income decile 

(1) HH050: Ability to keep home adequately warm. 
(2) HY020: Total disposable household income. 
Source: Eurostat EU-SILC survey (2020) 

(51)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

(52)  SWD(2021) 641 final PART 3/3. 

31 

0.000.200.400.600.801.001.201.401.60GHG tonnes per Euroof gross added value(MS/EU)GHG tonnes perworker (MS/EU)Employment share inenergy-intensiveindustries (MS/EU)Share of population inrural areas at risk ofpoverty (MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)NetherlandsEU 2020Netherlands 20150%5%10%15%20%25%12345678910Unable to keep home adequately warm (per income decile)Income decileNetherlandsEuropean Union 
   
 
   
                                                 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

while 

minimizing 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
clean 
creating  markets 
industry 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe.  

for 

by 

The  Netherlands  leads  the  EU  first  place  in 
circular secondary material usage. With 28.5% 
use rate in 2016 and 30.9% in 2020, the country 
stands  way  above  the  EU  average  of  12.8%.  The 
programme ‘A circular economy in the Netherlands 
by 2050’ is one of the most far-reaching in the EU. 
Green  public  procurement  already  exceeds 
Commission  recommendations.  The  country  has 
several circular procurement practices in place and 
the ‘green deal’ programme includes a number of 
pilots  and  guidance  for  functional  specifications. 
Overall,  The  Netherlands  is  a  frontrunner  in  the 
circular economy policy framework. 

The  Netherlands  is  the  best  performer  in 
terms  of  resource  productivity  and  is  well 
above  the  EU  average.  Resource  productivity 
expresses  how  efficiently  the  economy  uses 

material  resources  to  produce  wealth.  Improving 
this can help to minimise negative impacts on the 
environment  and  reduce  dependency  on  volatile 
raw material markets. Resource productivity in the 
Netherlands is 5 purchasing power standards (PPS) 
generated  per  kg  of  material  consumed  in  2020, 
while  the  EU  average  is  2.2  PPS  per  kg.  The 
country uses innovative public-private partnerships 
(Green Deals). Small businesses are also becoming 
increasingly circular. 

The Netherlands’ economic growth is not yet 
decoupled  from  the  generation  of  waste. 
Total waste generation remains at high levels (8.4 
kg per person in 2018, whereas 8.3 kg per person 
in  2016),  above  the  annual  EU  average  of  5.2  kg 
per  person.  The  Dutch  municipal  waste  recycling 
rate is around 57%, well above the EU average of 
around  48%,  and  above  the  2020  and  2025  EU 
targets  of  50%  and  55%  respectively.  Recycling 
remains the main form  of treatment of municipal 
waste,  while  landfilling,  at  3%,  is  well  below  the 
EU average as a result of landfill taxes and bans. 
This  comparatively  high  value 
illustrates  the 
advanced  level  of  waste  management  in  the 
Netherlands.  However, 
to  waste 
generation  and  management,  the  Netherlands’ 
overall  performance  is  good  taking  into  account 
the  indicator  for  recycling  and  circular  material 
use. In any case, waste prevention and re-use are 
the  most  preferred  options  and  top  the  waste 

relation 

in 

Graph A7.1: Economic importance and expansion of the circular economy - 
employment and value added in the circular economy sectors 

Source: Eurostat 

32 

1.17%1.18%1.19%1.18%0.75%0.79%0.84%0.86%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%2015201620172018Persons employed in the circular economy, NL (% of total employment)Value added at factor cost, NL (% of GDP )Persons employed in the circular economy, EU27 (% of total employment)Value added at factor cost, EU27 (% of GDP ) 
 
 
 
 
 
  
Table A7.1: Selected resource efficiency indicators 

Source: Eurostat 

hierarchy.  

its 

relates 

position 

Further  measures  can  help  the  Netherlands 
in 
maintain 
leading 
environmental  technology.  This 
in 
particular to sustainable product design, resource-
efficient  production  processes,  digital  solutions, 
industrial symbiosis, remanufacturing in key value 
chains, alternatives to the unsustainable extraction 
of  raw  materials,  and  new  circular  business 
models.  There  is  also  scope  to  shift  reusable  and 
recyclable waste away from incineration, including 
through  economic  tools,  to  ensure  that  the  post-
2020  recycling  targets,  in  particular  on  plastics, 
are  met.  This  will  require  action  to  reduce  the 
incineration of municipal waste. 

33 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)3.33.74.14.24.65.02.2Material Intensity (kg/EUR)0.30.30.20.20.20.20.4Circular Material Use Rate (%)25.828.529.728.930.030.912.8Material footprint (Tones/capita)7.97.97.37.47.4-14.6Waste Waste generation (kg/capita, total waste)-8281-8429--5234Landfilling (% of total waste treated)-2.2-3.1--38.5Recycling rate (% of municipal waste)51.853.554.655.956.956.847.8Hazardous waste (% of municipal waste)-3.6-3.6--4.3CompetitivenessGross value added in environmental goods and services sector (% of GDP)2.12.22.32.22.32.42.3Private investment in circular economy (% of GDP)0.10.10.10.2--0.1Key indicators - Netherlands 
 
 
  
 
the EU average. The share of SMEs with at least a 
basic level of digital intensity as well as the use of 
Artificial  Intelligence  and  big  data  by  businesses 
are  also  above  the  EU  average.  However, the  use 
of  AI  by  businesses  lags  behind  the  use  of  cloud 
and big data. 

The  Netherlands  is  a  frontrunner  for  the 
provision  of  digital  public  services.  The 
country  performs  above  the  EU  average  for 
delivering  digital  public  services  to  both  citizens 
and businesses with some of the highest scores in 
the EU for both indicators. 

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  cardinal  points (53).  This  annex 
describes the Netherlands' DESI performance.  

integration  of  digital 

While  the  Netherlands  generally  performs 
well as a digitally advanced country, the low 
share of ICT graduates is a concern as it may 
impair the  Netherlands’  ability to  accelerate 
its  digital  transition.  The  Netherlands  has  the 
highest  share  of  individuals  with  at  least  basic 
digital  skills  in  the  European  Union.  However,  the 
share of ICT graduates continues to lag behind the 
EU average (3.1% compared to 3.9% according to 
the  latest  available  data)  and  the  share  of 
enterprises with hard to fill ICT vacancies remains 
high  (71.3%  compared  55.4%  at  EU  average  in 
2020).  This  lack  of  digital  ICT  personnel  could 
harm  further  progress 
in  the  Dutch  digital 
transition.  Additionally,  the  share  of  female  ICT 
specialists is also below the EU average (18% vs. 
19%).  

Netherlands 

performs  well 

The 
in 
connectivity with a high level of 5G and Very 
High-Capacity  Network  (VHCN)  coverage.  The 
country continues to score well-above EU average 
in these connectivity dimensions. Nevertheless, the 
uptake  of  at  least  100  Mbps  speeds  is  below  its 
potential,  despite  the  available  coverage,  as 
households  stick  to  lower  speeds  and  broadband 
prices  remain  higher  than  the  EU  average.  Mobile 
broadband  uptake  on  the  other  hand  appears  to 
not  be  affected  and  reached  94%  in  2021. 
However,  despite  the  high  5G  coverage,  there  is 
significant  room  for  improvement  in  the  quality, 
dependability,  and  capacity  of  the  Dutch  5G 
network.  The  expansion  of  spectrum  options 
beyond  the  current  system  of  dynamic  spectrum 
sharing  –  in  particular,  the  launch  of  the  3.6  GHz 
band auction – is crucial in this regard. 

are 

businesses 

Dutch 
successfully 
integrating  new  digital  technologies,  scoring 
above  average  in  all  key  metrics,  but  more 
work 
is  needed  to  reach  the  EU  top 
performance  for  all  advanced  technologies. 
The share of enterprises using cloud is high above 

(53)  2030 Digital Compass: the European Way for the Digital 

Decade Communication, COM (2021) 118 final.  

34 

 
 
                                                 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

(1) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities.  
Source: Digital Economy and Society Index 

35 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA79%54%79%% individuals202120212021ICT specialists5.6%5.9%6.7%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists17%18%18%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage89%90%91%70%100%% households201920202021202120215G coverage (1)NA80%97%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA75%55%86%% SMEs202120212021Big data22%27%27%14%31%% enterprises20182020202020202020CloudNANA60%34%69%% enterprises202120212021Artificial IntelligenceNANA13%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA8575100Score (0 to 100)202120212021Digital public services for businessesNANA8882100Score (0 to 100)202120212021Netherlands 
 
  
 
correspond  to  the  size  and  ambition  of  the  Dutch 
economy  to  accelerate  in  the  digital  and  green 
transitions.  

ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  on 
the  performance  of  the  Dutch  research  and 
innovation  system.  According  to  the  2021 
edition of the European Innovation Scoreboard (54), 
the  Netherlands  belongs  to  the  group  of  strong 
innovation  performers  and  scores  well  above  the 
EU  average.  However,  its  innovation  performance 
decreased  slightly  compared  to  previous  years, 
when it was in the group of innovation leaders.  

The  Netherlands  announced  major  R&D 
investment  initiatives  in  2020  and  2021. 
Their aim is to bring Dutch R&D investments closer 
to  those  of  other  Member  States  with  similar 
levels  of  economic  development.  Total  R&D 
intensity  reached  2.29%  in  2020,  below  the  EU 
average of 2.32% and below the national target of 
2.5%,  initially  set  for  2020.  While  public  R&D 
intensity remains below the EU average at 0.75% 
of GDP in 2020, against an EU average of 0.78% 
of  GDP,  and  has  decreased  over  time,  business 
R&D  expenditure  has  increased  to  reach  the  EU 
average.  Through  the  EUR  20  billion  National 
Growth  Fund  as  well  as  a  forthcoming  EUR  5 
billion R&D fund, the Netherlands is raising public 
R&D  expenditure  which  also  aims  to  stimulate 
(directly  and  indirectly)  private  R&D  to  boost 
further  innovation.  The  innovation  support  could 
benefit  from  more  focus  on  sustainability  and 
reaching  a  wider  range  of  companies.  A  potential 
policy 
investment  while 
tackling  persisting  or  emerging  challenges  to 
society  could  come  from  the  mission-oriented 
innovation  policy.  This  ambitious  policy  initiative 
links  sectoral  and  technological  challenges  with 
the  societal  challenge  approach  by  bringing 
together  public  and  private  stakeholders 
to 
develop  shared  knowledge  agendas,  vision  and 
implementation.  

lever  to  boost  R&D 

in 

The  Netherlands  performs  below  the  EU 
average  when  it  comes  to  new  graduates  in 
science, engineering and ICT. New graduates in 
the  Netherlands 
science  and  engineering 
amounted  to  11.3%  for  2019  when  the  EU 
average  was  16.3% 
(see  statistics  below). 
Similarly, the number of graduates in computing is 
below  the  EU  average  and  has  remained  stable 
over the years while demand for ICT professionals 
has shot up. This shortage of qualified personnel is 
still  a  significant  challenge  and  does  not 

(54)  2021 European Innovation Scoreboard, Country profile: the 

Netherlands 
https://ec.europa.eu/docsroom/documents/45927.  

36 

 
 
                                                 
 
Table A9.1: Key research, development and innovation indicators 

(*) Compound annual growth 2013-2020. 
(**) Compound annual growth 2013-2019.  
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe.  
Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit 

37 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP):2.152.142.182.290,8(*)2.32Public expenditure on R&D as % of GDP:0.770.720.730.750(*)0.78Business enterprise expenditure on R&D (BERD) as % of GDP:1.381.421.461.541,3(*)1.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 16.115.415::-0.99.9PCT patent applications per billion GDP (in PPS)5.75.84.9::-1,7 3.5Public-private scientific co-publications as % of total publications11.111.712.412.211.40.39.05New graduates in science & engineering per thousand pop. aged 25-349.2:10.811.3:6.116.3Total public sector support for BERD as % of GDP:0.2440.2510.254: -0,7(**)0.196R&D tax incentives: foregone revenues as % of GDP0.1350.1350.1380.145:0.90.1Share of environment-related patents in total patent applications filed under PCT (%) 11,910,0  9,9 : : -2,2 12,8Venture Capital (market statistics) as % of GDP0.040.030.050.060.0810.20.054Employment in fast-growing enterprises in 50% most innovative sectors5.24.846.66.93.25.52020The Netherlands2010201520182019Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
   
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

productivity especially in services (58). Dutch SMEs’ 
access to bank finance remains consistently below 
EU averages (59). 

The  Dutch  economy  is  affected  by  acute 
labour  shortages  and  is  dependent  on  raw 
material  imports.  Labour  shortages  are  one  of 
the  key  concerns  of  companies.  On  average  in 
2021,  23%  of  companies  in  the  Netherlands 
reported  constraints  due  to  labour  shortages 
versus  17%  in  the  EU.  Towards  the  end  of  the 
year,  shortages  worsened  further,  with  over  35% 
of  all  companies  reporting  constraints  due  to 
labour  shortages.  The  Dutch  economy  is  more 
dependent  than  other  Member  States  on  critical 
raw materials (import concentration index of 0.19 
versus 0.17 in the EU).  

is  ensured, 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence  over  the  long  run (55).  A  major 
source  of  productivity  for  the  EU  economy  is  a 
well-functioning  Single  Market,  where  fair  and 
effective  competition  and  a  business-friendly 
environment 
in  which  small  and 
medium  enterprises  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
State’s  capacity  to  deliver  on  Europe’s  green  and 
digital transformation. 

While  the  Netherlands  is  a  top  performer  in 
the EU in terms of productivity levels, it lags 
peers in terms of productivity growth. Labour 
productivity,  measured  by  real  GDP  per  hour 
worked,  grew  by  only  0.4%  on  average  between 
2000  and  2018,  less  than  half  of  the  euro  area 
and  G7  average (56).  At  the  same  time,  the  Dutch 
economy  has  become  more  and  more  labour 
intensive,  and  several  developments  can  explain 
this outcome. More than 60% of real GDP growth 
in  the  Netherlands  in  recent  years  comes  from 
growth  in  labour  input  (total  hours  worked  by  all 
persons  involved).  Flexible  working  arrangements 
have  bolstered  this  trend,  in  particular  in  the 
service 
lower  overall 
productivity (57).  The  contribution  of  capital,  both 
ICT and non-ICT, to GDP growth, which has higher 
productivity growth potential, has been decreasing 
over time, from 43% before 2015 to 15% in 2018.  

sectors,  which  has 

in 

trade 

The  Netherlands  has  a  generally  friendly 
business  environment  but  there  are  some 
areas  of  concern.  The  country  performs  above 
average  in  terms  of  single  market  indicators, 
especially 
integration  and  market 
openness.  Nonetheless,  a  number  of  big 
companies  have  moved  their  headquarters  out  of 
the  country  in  recent  years.  A  recent  court  ruling 
on  climate  issues  has  had  an  impact  on  the 
predictability  of  the  business  environment  and 
business  investment.  Business  dynamism  in  the 
Netherlands  has  been  declining  steadily  since  at 
impact  on 
least  2006,  with  a  significant 

(55)  Annual Sustainable Growth Survey 2022. 

(58)  CPB, ‘The Contribution of Business Dynamics to Productivity 

(56)  Productivity in the Netherlands, IMF, 2020. 

Growth in the Netherlands’, August 2021. 

(57)  JRC, ‘Productivity in Europe’, Factsheet – Netherlands, 2020. 

(59)  EIF composite index for loans and the SAFE survey.  

38 

 
 
                                                 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators (1 of 2) 

(*) latest available 
Source:  See above in the table the respective source for each indicator in the column “Description”. 

39 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]65.8362.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]14.8419.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]19.317.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]134.281.599.8104.493.942.9%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]226987214%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]191119181090%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]8.6%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.190.180.190.180.2-5%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]30.1019.5017.5015.00101%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]3.64.53.63.39.1%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]0.20.30.40.3-33%0.4%HEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependenciesInvestment dynamics 
 
 
  
 
Table A10.2: Key Single Market and Industry Indicators (2 of 2) 

(*) latest available 
Source: See above in the table the respective source for each indicator in the column “Description”. 

40 

Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.211.201.151.171.201%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])0   1-100.0%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]28.145%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageBelow averageAbove averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageBelow averageBelow averageOn averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]6556%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]53.263.460.664.7-17.8%70.1 (2020)Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]121.2126.1111.8106.20.141105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]22.72533.1n.a.n.a.-31%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.330.280.210.2915.0%0.56 (2020)EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.330.170.380.43-21.9%0.18 (2020)% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]16.528.218.42.716.40.9%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]67666372-6.9%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]747571706%70.8%Business demographyAccess to financeBUSINESS ENVIRONMENT - SMEsPublic procurement SINGLE MARKETCompliance - cooperation EC and MS 
 
  
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  building  the 
resilience needed for the sustainable development 
of the European economy.  

Public  administration  in  the  Netherlands  is 
among  the  most  effective  in  the  EU (60).  The 
country  is  among  the  EU’s  best  performers  in 
terms  of  digital  public  administration,  with  a 
medium-high  level  of  digitalisation  (NL:  85%,  EU: 
71%).  It  offers  94%  of  services  digitally  (EU: 
81%) (61).  The  share  of  e-government  users  has 
increased  throughout  the  COVID-19  pandemic, 
reaching 92%.  

The Netherlands has a well-functioning fiscal 
framework and ranks around the EU average 
on public procurement. The quality of budgetary 
planning and the strength of fiscal rules have been 
consistently  above  the  EU  average  for  the  past 
for 
four  years.  There 
improvement  in  public  procurement  given  the 
relatively  low  use  of  centralised procurement  and 
the low scores in indicators measuring data quality 
in procurement (Graph A11.1).  

is  however, 

room 

The  Netherlands 
is  well  above  the  EU 
average  on  evidence-based  policy  making 
(NL: 2.07, EU: 1.67). It is among the EU countries 
resorting  most 
stakeholder 
frequently 
consultation  and  ex-post  evaluation  of  legislation. 
However,  businesses  consistently  identified  fast 
changing  legislation  as  a  problem  encountered 
when doing business nationally (41% in both 2017 
and 2019) (62).  

to 

Graph A11.1: Performance on the single market 
public procurement indicator 

(1) The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator.  
Source: Single Market Scoreboard, 2020 data. 

justice  system  performs  efficiently 
The 
length  of  proceedings  at  first 
overall.  The 
is  short,  in  particular  for  civil  and 
instance 
commercial  cases,  while 
the  efficiency  of 
administrative justice has somewhat decreased at 
first  instance.  The  overall  quality  of  the  justice 
system is good, although the level of digitalisation 
could  be  further 
the 
government  envisages  increased  funding  for  the 
legal  aid  system,  given  certain  concerns  over  the 
adequacy  of  its  funding (63).  As  regards  judicial 
independence, no systemic deficiencies have been 
reported (64). 

improved.  For  2022, 

(60)  Worldwide Governance Indicators, 2020. The Netherlands 

scores 1.9 on a scale from -2.5 to 2.5. 

(61)  eGovernment Benchmark 2021, European Commission.  

(62)  European Commission, Flash Eurobarometer 482, 2019: 
https://europa.eu/eurobarometer/surveys/detail/2248.  

(63)  See also the Commission’s 2021 Rule of Law Report Country 
Chapter on the rule of law situation in the Netherlands.  

(64)  For more detailed analysis of the performance of the justice 

system in the Netherlands, see the 2022 EU Justice 
Scoreboard (forthcoming) and the country chapter for the 
Netherlands of the Commission’s 2022 Rule of Law Report 
(forthcoming).  

41 

 
 
                                                 
 
                                                 
 
Table A11.1: Public administration indicators - Netherlands 

(1) High values stand for good performance barring indicators # 7 and 8. (2) Measures the user centricity (including for cross-
border services) and transparency of digital public services as well as the existence of key enablers for the provision of those 
services. (3) Break in the series in 2021. Also, for indicator 5: break in the series in 2019. (4) Defined as the absolute value of the 
difference between the share of men and women in senior civil service positions.  
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12).  

42 

NL20172018201920202021EU27182.086.084.091.092.070.82nananana85.170.93nananana91.681.1470.570.570.570.5na56.8553.253.956.158.657.655.3626.926.425.924.937.418.6732.831.225.423.420.221.8826.227.327.226.326.721.390.850.850.850.85na0.72102.32.32.32.3na1.511-3.03.00.00.7na-0.7121.89nana2.07na1.7Index of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Educational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3)E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3) 
 
 
  
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in  the  European  Union.  The  implementation  of 
its  twenty  principles  on  equal  opportunities  and 
the 
labour  market,  fair  working 
to 
access 
conditions, 
inclusion, 
social  protection  and 
supported  by  the  2030  EU  headline  targets  on 
employment,  skills  and  poverty  reduction,  will 
strengthen  the  Union’s  drive  towards  a  digital, 
green  and  fair  transition.  This  annex  provides  an 
overview of the Netherlands' progress in achieving 
the  goals  under  the  European  Pillar  of  Social 
Rights. 

Table A12.1: Social scoreboard for the Netherlands 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: European Commission, Eurostat 

The  Dutch  labour  market  performs  well 
overall,  but  significant  challenges  remain  in 
terms  of  labour  market  segmentation  and 
the  unfavourable  employment  and  social 
situation  of  certain  groups.  The  employment 
rate  in  the  Netherlands  is  well  above  the  EU 

43 

average  (82.2%  versus  74.4%  in  Q4  2021). 
However,  the  high  level  of  both  non-standard 
flexible  and  temporary  contracts  and  the  number 
of  self-employed  without  employees,  which  have 
been  growing  strongly  over  the  last  decade, 
remain  a  concern  and  require  further  attention  in 
terms of challenges related to equal opportunities, 
fair  working  conditions  and  adequate  social 
protection.  The  COVID-19  pandemic  exacerbated 
risks  in  an  already  highly  segmented  labour 
market. People with flexible contracts (in particular 
young people, lower skilled, people with a migrant 
background  and/or  with  disabilities)  were  among 
the groups hit the hardest, together with the self-
employed  without  employees.  While  the  gender 
employment  gap  is  on  average  8.2  pps  in  2021, 
part-time  employment  remains  widespread,  in 
particular  among  women.  As  a  result,  the  gender 
pension  gap  in  the  Netherlands  is  one  of  the 
largest in the EU. Under the European Social Fund 
Plus (ESF+), the Netherlands will continue to invest 
in the active inclusion of vulnerable groups, among 
which  people  with  a  migrant  background.  ESF+ 
resources will be used to provide up and reskilling 
opportunities  to  workers  at  the  margins  of  the 
labour market and to prevent job losses.  

Increasing  labour  and  skill  shortages  and 
inequalities  in  terms  of  access  to  education, 
adult  learning  and  up-  and  reskilling  pose 
challenges,  also  in  view  of  the  green  and 
digital  transition.  Improving  the  labour  market 
in  an  unfavourable 
outcomes  of  groups 
employment  and/or  vulnerable  social  situation 
would  also  help  tackle  labour  shortages  and 
activate  the  untapped  labour  and  skills  potential. 
After  several  years  of  weak  growth,  adult 
participation  in  learning  over  the  past  four  weeks 
decreased  in  2020,  but  much  less  than  in  most 
countries  (by  0.7  pps  compared  to  2019),  and  at 
18.8%  it  was  still  more  than  double  the  EU 
average  (9.2%).  Following  a  break  in  time  series, 
the participation rate increased to 26.6% in 2021. 
However, outreach to those in a vulnerable labour 
market  situation  poses  a  challenge.  Continued 
investment in improving basic, technical and digital 
skills, 
cross-sector  mobility  and 
employability, as well as strengthening the quality 
and inclusiveness of education and training for all, 
is  key  for  the  Netherlands  to  contribute  to 
reaching the 2030 EU headline target on skills. 

increasing 

5.379.05.58.24.281.74.20.8106.916.015.836.825.48.367.60.2Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Individuals' level of digital skills (% of population 16-74) (2021)Dynamic labour markets and fair working conditionsSocial protection and inclusionAt risk of poverty or social exclusion for children (in %) (2020)Disability employment gap (ratio) (2020)Better than averageAt risk of poverty or social exclusion (in %) (2020)Employment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Best performersImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Housing cost overburden (% of population) (2020) 
 
 
 
  
 
 
 
While 
the  at-risk-of-poverty  or  social 
exclusion  rate  in  the  Netherlands  is  stable 
and  well  below  the  EU  average,  challenges 
remain  for  specific  groups,  such  as  people 
with  a  migrant  background  and  those  with 
disabilities.  In  2020,  36%  of  the  non-EU-born 
living in the Netherlands were at risk of poverty or 
social  exclusion,  22.5 pps  higher  than  among  the 
native-born.  For  people  with  a  non-EU  migrant 
background, the gap is driven by a more prevalent 
risk  of  poverty  (29.7%  versus  11.1%  for  the 
native-born), linked partly to a more unfavourable 
employment  situation,  by  a  higher  rate  of  severe 
material deprivation (8.9% versus 1.1%) as well as 
greater  prevalence  of  in-work  poverty  (14.9% 
versus  4.6%).  More  than  a  quarter  (29.3%)  of 
children  with  foreign-born  parents  were  at  risk  of 
poverty in 2020, which is over three times higher 
than for children with native born parents (9%). In 
addition, 24.9% of people with disabilities were at 
risk of poverty or social exclusion in 2020 (versus 
12%  of  those  without).  In-work  poverty  risks  are 
higher  for  people  on  flexible  and/or  temporary 
contracts as well as for the self-employed without 
employees.  Significant  challenges  in  terms  of 
access  to  adequate  social  protection  also  remain 
for the self-employed without employees. There is 
therefore scope for greater social policy action for 
the  Netherlands  to  contribute  to  reaching  the 
2030 EU headline target on poverty reduction.  

44 

 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

Area 

Education 

This  Annex  outlines  the  main  challenges  for 
the  Netherlands’  education  and  training 
system in light of the EU-level targets of the 
European 
Strategic 
Framework  and  other  contextual  indicators, 
based  on  the  analysis  from  the  2021 
Education and Training Monitor. The education 
and  training  system  of  the  Netherlands  performs 
well  in  terms  of  early  school  leaving  and  tertiary 
attainment but faces equity challenges. These are 
reflected in a long-term decline of basic skills and 
the  differences  in  performance  levels  between 
schools are increasing.  

Participation  in  early  childhood  education 
and  care  (ECEC)  from  age  3  is  below  the  EU 
average;  recent  investment  aims  to  improve 
quality and participation. From age 3, 90.5% of 
children  participate  in  ECEC,  which  is  below  both 
the EU average and the EU-level target for 2030. 
For  2020, 
extra 
investments  to  improve  the  quality  of  ECEC.  The 
aim  is  to  increase  the  number  of  participation 
hours, raise the qualification level of ECEC staff to 
tertiary  level,  and  evaluate  equal  educational 

government  made 

the 

opportunities. 

leavers 

from  education  and 

The  rate  of  early  school  leaving  is  in  line 
with  the  EU-level  target, but  there  has been 
a  decline  in  basic  skills  as  measured  by  the 
OECD  Programme  for  International  Student 
Assessment (PISA). The Netherlands has already 
achieved  the  EU-level  target  (less  than  9%)  for 
training. 
early 
However,  there  is  a  downward  trend  in  mean 
scores  across  the  board  over  the  long  term.  The 
proportion  of  underachievers  is  close  to  the  EU-
level target of 15% in mathematics but above it in 
science and especially in reading. The proportion of 
low  achievers  is  especially  high  (56%)  among 
pupils  born  abroad.  Native-born  pupils  with  a 
migrant  background  only  partially  catch  up. 
Differences  between  schools  have  the  strongest 
impact on pupils’ performance of all EU countries, 
reflecting ability-based tracking from an early age 
and  the  uneven  distribution  of  human  resources. 
Evidence  suggests 
the  pandemic  has 
that 
aggravated learning gaps. In response, in February 
2021 the government announced an extraordinary 
additional investment in education to compensate 

Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

(1) The 2018 EU average on PISA reading performance does not include ES; u = low reliability, : = not available; data are not yet 
available for the remaining EU-level targets under the European Education Area strategic framework, covering underachievement 
in digital skills, exposure of vocational educational training graduates to work based learning and participation of adults in 
learning. 
Source: Eurostat (UOE, LFS); OECD (PISA) 

45 

96%92.8%91.9%90.5%201992.8%2019Reading< 15%18.1% 20.4%24.1%201822.5%2018Mathematics< 15%16.7% 22.2%15.8%201822.9%2018Science< 15%18.5% 21.1%20.0%201822.3%2018< 9 %8.2%11.0%5.3%9.7%Men9.9%12.5%6.8%11.4%Women6.4%9.4%3.9% 7.9%Cities7.6%9.6%5.2% 8.7%Rural areas9.2%12.2%6.3%10.0%Native8.0%10.0%5.0%8.5%EU-born:u20.7%10.8% 21.4%Non EU-born11.2%23.4%7.5% 21.6%45%45.1%36.5%55.6%41.2%Men40.6%31.2%50.8%35.7%Women49.6%41.8%60.5%46.8%Cities51.9%46.2%61.6%51.4%Rural areas35.0%26.9%40.9%29.6%Native46.6%37.7%56.2%42.1%EU-born44.7%32.7%53.3%40.7%Non EU-born32.4%27.0%51.5%34.7%41.2% 38.3%37.4%201938.9%2019Tertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or overParticipation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birth20152021IndicatorTargetNetherlandsEU27NetherlandsEU27 
 
 
 
  
 
for the learning losses linked to the pandemic. 

Graph A13.1: Proportion of teachers with at least a 
master's degree, by schools' socio-economic 
profile, PISA 2018 

that  of  the  native  population  (56.2%)  and  is  also 
relatively high among the non EU born (51.5%; EU 
average:  34.7%).  The  employment  rate  of  recent 
tertiary  graduates  is  very  high,  at  95.2%  (EU 
average: 84.9%). 

Source: OECD (2019), PISA 2018 

The  shortage  of  teachers  is  increasingly 
challenging.  The  Netherlands  faces  a  growing 
shortage of teachers. 35% of all primary teachers 
are  aged  50  or  over,  and  only  one  in  three 
teachers  works  full-time.  Teacher  shortages  are 
the  highest  in  the  ‘Randstad’,  covering  the  four 
largest  cities  (Amsterdam,  Rotterdam,  The  Hague 
and  Utrecht)  and  their  surrounding  areas.  The 
distribution  of  qualified  teachers  varies  markedly 
by  region,  by  school  type  and  by  composition  of 
the school population. The difference in the share 
of teachers with at least masters’ degree between 
schools  with  advantaged  socio-economic  and 
disadvantaged  profiles  is  the  biggest  in  the  EU. 
Shortages  are  more  acute  in  schools  where  the 
majority of pupils have a migrant background. The 
government  took  a  series  of  measures,  including 
raising 
teacher 
shortages. The impact of these measures remains 
to be seen.  

teacher  salaries, 

reduce 

to 

and 

attainment 

Tertiary 
graduate 
employment  rates  are  well  above  the  EU 
average.  55.6%  of  the  population  aged  25-34 
holds  a 
(EU:  41.2%).  The 
attainment  rate  among  the  EU-born  population 
from  outside  the  Netherlands  (53.3%)  is  close  to 

tertiary  degree 

46 

10%20%30%40%50%60%EUNLOverall proportion of teachers with at least a master's degreeTop quarterBottom quarter 
  
 
Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 (AWG 
reference scenario) 

Source: European Commission/EPC (2021) 

The  Netherlands  has  a  strong  primary  care 
system,  but  faces  a  shortage  of  certain 
health workers. General practices often struggle 
to  find  a  replacement  after  retirement.  While  the 
number  of  nurses  per  resident  is  above  the  EU 
average,  the  nursing  workforce  is  overburdened 
for  example  in  hospitals.  Although  health  care 
service  provision  is  comparatively  well  developed, 
the Dutch system has been experiencing excessive 
waiting times in some outpatient departments and 
for some services (for instance, mental healthcare 
for children). Antimicrobial use is also much lower 
than the EU average. 

The  existing  shortages  of  health  workers 
were  already  part  of  the  country-specific 
recommendations  (CSRs)  in  2020.  The  second 
challenge,  which  was  part  of  the  2020  health 
CSRs,  concerns  the  deployment  of  e-health  tools. 
During  the  pandemic,  teleconsultations  helped 
maintain access to health services. 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in the Netherlands.  

Life  expectancy  in  the  Netherlands  is  higher 
than in the EU as a whole, but fell in 2020 by 
more  than  9  months  due  to  COVID-19.  As  of 
17  April  2022,  the  Netherlands  reported  1.27 
cumulative  COVID-19  deaths  per  1  000 
inhabitants and 461 confirmed cumulative COVID-
19  cases  per  1  000  inhabitants.  The  Netherlands 
has  one  of  the  lowest  mortality  rates  from 
treatable  causes  in  the  EU.  Most  people  report 
good health, but sizeable disparities exist between 
income groups. 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat database 

Health  spending  relative  to  GDP  and  per 
capita  in  the  Netherlands  was  above  the  EU 
average  in  2019.  Public  sources  cover  a  high 
share  of  health  expenditure,  resulting  in  a  low 
share  of  out-of-pocket  payments.  There  is  also  a 
large  voluntary  health  insurance  sector,  covering 
services  outside  the  benefit  package.  Public 
expenditure  on  health  as  a  share  of  GDP  is 
projected  to  be  slightly  below  the  EU  average  for 
2070 (65). 

(65)  The 2021 Ageing Report: Economic and Budgetary 

Projections for the EU Member States (2019-2070), 
European Commission (ECFIN) and Ageing Working Group 
(EPC). 

47 

80.580.980.981.81.380.481.681.781.881.982.281.4201520162017201820192020EUNetherlands6.65.70.90.802468EUNetherlands% of GDP20192070increase 
 
  
                                                 
  
 
Table A14.1: Key health indicators 

Doctors’ density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK (professionally 
active). Nurses’ density data refer to practising nurses in all countries (data from 2014 for FI) except IE, FR, PT, SK (professionally 
active) and EL (nurses working in hospitals only). 
More information: https://ec.europa.eu/health/state-health-eu/country-health-profiles_en  
Source: Eurostat Database; except: * Eurostat Database and OECD, ** ECDC. 

48 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)68.965.064.661.392.1 (2017)Cancer mortality per 100 000 population285.1276.7269.7266.6252.5 (2017)Current expenditure on health, % GDP 10.310.110.010.29.9 (2019)Public share of health expenditure, % of current health expenditure81.281.782.182.679.5 (2018)Spending on prevention, % of current health expenditure 3.53.33.23.32.8 (2018)Acute care beds per 100 000 population290.0277.8274.1261.7387.4 (2019)Doctors per 1 000 population *3.53.63.73.73.8 (2018)Nurses per 1 000 population *10.710.911.210.78.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **9.38.98.98.77.814.5 (2020) 
 
  
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Graph A15.2: Territories most affected by the 
climate transition in the Netherlands 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments in a Member States. Taking into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions.  

Graph A15.1: GDP per head (2010) and GDP growth 
(2010-2019) 

Source: European Commission 

Source: European Commission 

The  relatively  small  differences  in  GDP  per 
head  are  also  reflected  in  small  labour 
productivity gaps. North Holland and Utrecht are 
the  most  productive  (132%  and  122%  of  the  EU 
average respectively), while Friesland and Drenthe 
are the least productive (85% and 87% of the EU 
average  respectively).  Average  real  productivity 
growth  between  2010  and  2019  ranged  from  –
1.3% in Groningen to 1.5% in North Holland.  

The  transition  to  a  carbon-neutral  economy 
affects  regions  in  a  differentiated  way. 
Regions  with  clusters  of  emission-intensive 
industries 
in  the  Netherlands  face  particular 
challenges  to  reduce  greenhouse  gas  emissions, 
sustainably  transform  their  industries,  develop 
alternative  sustainable  economic  activities  and 
provide  for  re-  and  upskilling  of  workers.  These 
areas  are  Delfzijl/Eemshaven  in  the  province  of 
Groningen, 
area 
(Amsterdam/Ijmond),  Rotterdam  and  West-North 
Brabant,  Zeeuws-Vlaanderen  and  other  areas  in 
Zeeland,  and  South  Limburg.  Climate  transition 
affects  Groningen 
the 
combined  effects  of  the  end  of  natural  gas 
extraction  and  the  emission  reduction  challenges 
in industry. 

in  particular  due 

the  North-Sea 

channel 

to 

in 

relatively 

limited  differences 

Regional  disparities  are  very  low  in  the 
Netherlands  and  have been  very  stable  over 
the  last  decade.  The  province  of  North  Holland, 
where  the  capital  Amsterdam is  situated,  had  the 
highest GDP per head (170% of the EU average) in 
2019.  Three  provinces  -  Drenthe,  Friesland  and 
Flevoland  -  have  a  GDP  slightly  below  the  EU 
average  (87%,  88%  and  96%  respectively).  This 
smaller  variation  in  regional  disparities  is  also 
in 
reflected 
regional household disposable income averages in 
2019.  These  vary  from  108%  of  the  national 
average  in  Utrecht  to  82%  in  Groningen.  North 
Holland also had the highest GDP per head growth 
(1.8%)  between  2010  and  2019,  while  the  only 
region  with  a  shrinking  GDP  is  Groningen  (-0.75). 
This  negative  GDP  per  head  growth  is  primarily 
due to the reduction in gas extraction that is set to 
end  in  2022.  However,  growth  in  Groningen 
excluding  natural  gas  extraction  was  1.1%  in 
2019.  This 
in 
economic performance excluding gas extraction at 
regional 
level  compared  to  the  rest  of  the 
economy.  Three  other  regions  -  Zeeland,  North 
Brabant  and  Limburg  -  achieved  a  similar  growth 
rate  as  North  Holland.  The  two  regions  with  the 
lowest  GDP  per  head,  Drenthe  and  Friesland  also 
have fairly low growth rates: 0.02% and 0.38%. 

implies  a  smaller  difference 

49 

 
 
 
 
 
Graph A15.3: Innovation performance in the 
Netherlands 

(1) Regional performance groups, 2021 in the Netherlands  
Source: European Commission 

among  which  Zeeland,  Greater  Amsterdam  and 
some areas in Brabant, struggle with an extremely 
tight labour market. 

All  Dutch  regions  were  affected  by  the 
COVID-19  pandemic.  Mortality  since  week  9  of 
2020 
increased  by  between  5%  and  19% 
compared to average mortality in the same weeks 
of  2015-2019.  The  impact  of  the  pandemic 
impacted  regions  differently  in  line  with  the 
asymmetric  impact  of  the  crisis  and  different 
regional  economies.  North  Holland  was  badly 
affected  by  the  pandemic  given  the  presence  of 
the  Schiphol  airport  and  the  importance  of  the 
hotel and catering industry in the region. 

is  high 

in  the 
Innovation  performance 
Netherlands  with  some  regional  differences. 
While  most  provinces  are  strong  innovators  or 
leaders, Drenthe, Friesland and Zeeland qualify as 
latter  three  score 
moderate 
slightly  below  the  EU  average  in  the  Regional 
Innovation  Index  (2021).  The  innovation  leaders 
North  Holland,  Utrecht  and  North  Brabant  score 
between  4.1pp  and  5.7pp  above  the  national 
average suggesting moderate regional differences. 

innovators.  The 

The  Netherlands  has  a  high 
level  of 
in  2020)  and  a  low 
employment  (80% 
unemployment  rate  (3.8%  in  2020)  with 
modest regional differences. Employment rates 
range  from  74.5%  in  Groningen  to  82.6%  in 
Utrecht.  The  unemployment  rate  is  the  highest  in 
Groningen  at  5.2%  followed  by  South  Holland  at 
4.4%.  The  lowest  rate  is  in  Zeeland  at  2.6%. 
Groningen has the highest share of the population 
at  risk  of  poverty  and  social  exclusion  at  22%.  In 
contrast  to  the  upward  trend  in  2015-2019  and 
linked  to  the  pandemic,  the  employment  rate 
in  2020.  The 
dropped 
unemployment  rate  showed  a  similar 
trend 
reversal  in  2020  in  most  regions.  These  effects 
were  cushioned  by  measures  deployed  by  the 
Dutch authorities to mitigate the consequences of 
the covid-19 pandemic. 

in  most 

regions 

Labour  shortages  are  growing 
the 
Netherlands  with  the  most  recent  figures 
(CBS,  2021)  showing  a  record  high  increase 
in  the  number  of  vacancies.  Labour  market 
tightness affects the entire country. Some regions, 

in 

50 

 
 
Table A15.1: Selected indicators at regional level – The Netherlands 

Source: Eurostat, *EDGAR Database 

51 

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)Real productivity growthGDP per head growthEmployment rateUnemployment rateAt-risk-of-poverty or social exclusionInnovation performanceEU27=100, 2019EU27=100, 2018Avg % change on preceding year, 2010-2019Avg % change on preceding year, 2010-2019% of pop. aged 20-64, 2020% of active population, 2020% of active population, 2020RIS regional performance groupEuropean Union1001001.001.3972.37.1Nederland1281100.670.9980.03.816.30Groningen116111-1.44-0.7574.55.221.70Strong innovatorFriesland (NL)8885-0.530.3880.13.916.70Moderate innovator +Drenthe8787-0.330.0278.43.715.00Moderate innovator +Overijssel108920.050.9680.63.515.10Strong innovatorGelderland108970.360.7980.23.514.90Strong innovator +Flevoland961020.730.9881.33.915.00Strong innovatorUtrecht1581220.880.8682.63.514.20Leader innovator -Noord-Holland1701321.621.7980.63.918.10Leader innovator -Zuid-Holland1261130.470.2479.04.418.30Strong innovator +Zeeland103990.811.5881.02.614.60Moderate innovator +Noord-Brabant1301070.961.5681.93.513.90Leader innovator -Limburg (NL)1131010.821.5575.93.515.00Strong innovator + 
 
 
 
  
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

intention  to  build  up  a  countercyclical  capital 
buffer  that  would  increase  banks’  resilience  to 
shocks.  

This  Annex  provides  an  overview  of  key 
developments  in  the  financial  sector  of  the 
Netherlands.  The  financial  sector  appears  well 
capitalised  and  moderately  profitable.  Banks’ 
assets  increased  in  2021  and  their  profitability 
recovered.  Solvency 
is  good,  with  a  capital 
adequacy ratio of 22.7% in Q3-2021 (vs 19.3% in 
the  EU).  Credit  quality  is  strong,  with  a  steadily 
decreasing  non-performing  loans  ratio  of  1.5%  in 
Q3 2021 (versus. 2.1% in the EU). Return on equity 
of 8.9% is the highest achieved in the last 5 years 
and better than levels registered compared to the 
EU-27  average  (7.1%  on  average).  Dutch  banks 
have recently seen an increase in credit growth to 
non-financial  corporations,  but  they  need  to 
manage the risk of persistently low interest rates, 
a  sudden  rise  in  inflation,  and  climate  transition. 
Other challenges arise from soaring housing prices 
as  well  as  from  a  commercial  real  estate  market 
that  has  been  badly  affected  by  the  pandemic. 
Risks related to money laundering and cybercrime 
also pose threats to financial institutions. 

loose 

indebtedness,  and 

policy  measures. 

The  residential  real  estate  market  exhibits 
high  risks  that  are  partially  mitigated  by 
macroprudential 
The 
identified 
European  Systemic  Risk  Board  has 
several key vulnerabilities (66): signs of house price 
overvaluation,  elevated  house  price  growth,  high 
lending 
household 
standards.  Over  the  past  5  years,  Dutch  housing 
prices  have  risen  by  an  average  of  8%  per  year, 
recording  a  15.2%  increase  on  average  in  2021. 
This  reduces  the  affordability  of  owner-occupied 
homes  and  results 
in  higher  risk-taking  by 
homebuyers.  In  addition,  interest-only  borrowing 
has  become  more  attractive  again.  Because  the 
current  risk  weighting  of  mortgage  loans  takes 
insufficient  account  of  the  systemic  risk  of  a 
housing market correction, as of 1 January 2022, 
under  Article  458  of  the  Capital  Requirements 
Regulation (67),  the  Dutch  National  Bank  has 
introduced  a  floor  for  the  risk  weighting  of 
its 
mortgage 

loans.  Moreover, 

it  announced 

(66)  ESRB, Vulnerabilities in the residential real estate sectors of 

the EEA countries, February 2022, 
https://www.esrb.europa.eu/news/pr/date/2022/html/esrb.pr2
20211~9393d5e991.en.html. 

(67)  Regulation (EU) No 575/2013 of the European Parliament 

and of the Council of 26 June 2013 (the Capital 
Requirements Regulation – CRR) on prudential requirements 
for credit institutions and investment firms and amending 
Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 

52 

 
 
 
                                                 
 
 
Table A16.1: Financial soundness indicators 

(1) Last data: Q3 2021. 
Source: ECB, Eurostat, Refinitiv. 

53 

20172018201920202021Total assets of the banking sector (% of GDP)322.0299.9297.0317.5310.6Share (total assets) of the five largest bank (%)83.884.784.784.3-Share (total assets) of domestic credit institutions (%)192.693.393.793.993.9Financial soundness indicators:1- non-performing loans (% of total loans)2.11.91.81.91.5- capital adequacy ratio (%)22.122.422.923.222.7- return on equity (%)8.88.17.73.08.9NFC credit growth (year-on-year % change)-0.7-0.3-1.01.67.0HH credit growth (year-on-year % change)0.00.20.2-0.81.3Cost-to-income ratio (%)157.359.858.158.255.4Loan-to-deposit ratio (%)1117.7117.5119.4104.499.3Central bank liquidity as % of liabilities1.51.41.46.87.6Private sector debt (% of GDP)249.6243.6232.3233.7-Long-term interest rate spread versus Bund (basis points)20.417.918.313.34.4Market funding ratio (%)52.150.350.042.6-Green bond issuance (bn EUR)8.88.921.818.625.9 
 
 
  
 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 
ANNEX 17: MACROECONOMIC IMBALANCE PROCEDURE ASSESSMENT MATRIX 

place,  the  overall  level  is  expected  to  remain 
above the prudential threshold.  

the  private 

rental  market 

Policy  progress  has  been  limited.  Notably, 
despite  a  gradual  reduction  in  the  mortgage 
interest  deductibility  rate  until  2023,  a  generous 
tax  subsidy  on  owner-occupied  housing  will 
remain. In addition, there is a shortfall in housing 
supply, 
remains 
underdeveloped  and  macroprudential  regulation 
continues  to  be  relatively  lenient.  Regarding  the 
elevated  current  account  surplus,  incentives  for 
firms  to  retain  earnings  have  only  been  partially 
addressed and high mandatory household savings 
through  the  pension  system  will  remain  in  place 
despite  the  second  pillar  pension  reform  that  will 
enter into force in 2027. Simulations show that a 
full  implementation  of  the  expansionary  spending 
plans  could  dampen  the  current  account  surplus 
over the coming years. 

For  those  reasons,  and  more  generally  on  the 
basis  of  the  elements  of  the  in-depth  review 
undertaken  for  the  Netherlands  under  Regulation 
(EU)  No  1176/2011  on  the  prevention  and 
correction  of  macroeconomic 
imbalances  as 
summarised in the Staff Working Document (SWD 
(2022)636 
has 
considered  in  its  Communication  “European 
Semester 
Package” 
(COM(2022)600  final)  that  the  Netherlands 
to  experience  macroeconomic 
continues 
imbalances. 

the  Commission 

Spring 

2022 

final), 

– 

The  Macroeconomic 
Imbalance  Procedure 
matrix presents the main elements of the in-
depth review undertaken for the Netherlands 
in  accordance  with  Article  5  of  Regulation 
(EU)  No  1176/2011  on  the  prevention  and 
correction  of  macroeconomic  imbalances,  as 
summarized  in  the  Staff  Working  Document 
(SWD(2022)636) (68). 
States 
selected  in  the  2022  Alert  Mechanism  Report  it 
presents, separately for each source of imbalance 
and adjustment issue, the main findings regarding 
the  gravity  and  the  evolution  of  the  identified 
challenges, as well as policy response and gaps. 

For  Member 

in  goods 

The  Netherlands 
is  facing  vulnerabilities 
relating  to  high  private  debt  level  and  large 
current  account  surplus.  The  Netherlands  has 
persistently  recorded  current  account  surpluses 
and  private  debt  levels  that  are  large  both  by 
international  standards  and  fundamentals.  The 
current  account  surplus  largely  stems  from  a 
trade.  From  a  sectoral 
surplus 
perspective,  high  savings  and 
low  domestic 
investments  of  non-financial  corporations  (NFC) 
are  the  main  structural  drivers  of  the  continued 
high  current  account  surplus,  which  rebounded  to 
9.5%  of  GDP  in  2021.  Private  debt  levels  remain 
high,  standing  at  229%  of  GDP,  due  to  both  high 
NFC  debt  and  high  household  debt.  The  latter  is 
especially  problematic  as  it  makes  households 
vulnerable  to  economic  shocks,  given  that  house 
prices  seem  to  be  overvalued  and  strong  house 
price 
the  past  years  have 
contributed to rising nominal mortgage debt. 

increases  over 

debt-financed 

Going  forward,  the  current  account  surplus 
and  private  debt  will  likely  remain  high. 
Household debt is expected to remain elevated on 
the  basis  of  strong  house  price  growth  and  the 
various  distortions  in  the  housing  market  that 
favour 
ownership. 
Expansionary  spending  plans  by  the  government 
could dampen the current account surplus to some 
degree  towards  the  end  of  the  government’s 
mandate.  A  worsening  of  the  terms  of  trade  and 
the  relocation  of  Shell  to  the  UK  is  expected  to 
reduce  the  savings  surplus  in  the  Netherlands 
somewhat  compared  to  2021.  However,  as  the 
main  drivers  underpinning  the  surplus  remain  in 

home 

(68)  European Commission (2022), COMMISSION STAFF 

WORKING DOCUMENT In-Depth Review for Netherlands in 
accordance with Article 5 of Regulation (EU) No 1176/2011 
on the prevention and correction of macroeconomic 
imbalances. 

54 

 
 
                                                 
 
Table A17.1: Assessment of Macroeconomic Imbalances matrix 

Source: European Commission 

55 

 Gravity of the challenge Evolution and prospects Policy response Imbalances (unsustainable trends, vulnerabilities and associated risks) Current account balance  The Netherlands has been running a current account surplus over the last three decades, it remains one of the highest in the euro area and is well above levels warranted by fundamentals (3.2% of GDP in 2021, according to Commission current account ‘norm’ estimates). Between 2017 and 2021, it averaged almost 10% of GDP per year. From a sectoral perspective, this reflects a persistent gap between savings and investment, with possible misallocation of resources, and has relevance for the euro area as a whole. A breakdown by institutional sector points to non-financial corporations as the largest contributor due to the large presence of multinationals, leading to a savings surplus of the corporate sector of 6.3% of GDP in 2021. Household savings are supported by substantial mandatory pension savings. The government sector also recorded headline savings surpluses before the pandemic. Overall, the current account surplus increased in 2021 to 9.5% of GDP after a decrease in 2020.  In terms of sectoral contributions, in 2021, curtailed consumption and precautionary savings following the COVID-19 crisis boosted the household surplus, which only decreased slightly from 6.3% of GDP in 2020 to 5.8% in 2021. A more pronounced drop in household net savings is forecast for 2022. The corporate surplus increased sharply in 2021, to 6.3% from 4.8%, in part due to rising oil prices and the resulting earnings of Shell. Due to the company’s relocation to the UK, the company’s net savings will no longer contribute to the NFC sector’s net savings. The government’s net borrowing was at 2.5% of GDP in 2021 and is forecast to stay at a similar level in 2022.  The current account surplus is expected to decrease to 8.8% of GDP in 2022 and remain roughly at the same level in 2023 as structural drivers remain in place.  In 2021, the government has maintained an expansionary fiscal stance to support households and businesses in view of the continued impact of the COVID-19 crisis. Additional spending of EUR 79 billion is planned over the following three years, pointing to a continued expansionary fiscal stance, although a substantial portion of the expenditure is backloaded towards the end of the government’s legislative term. Deficits for 2022 and 2023 are forecast at 2.7% and 2.1% of GDP. The second pillar pension reform that will enter into force in 2027 improves flexibility and intergenerational fairness, but will not substantially affect the system’s high mandatory savings, one of the main structural drivers of the household sector’s savings surplus. Incentives for firms to retain earnings have only been partially addressed in past years. Private debt   Private debt in the Netherlands stood at 229% of GDP in 2021, one of the highest values in the EU and well above the fundamental and prudential benchmarks. Household debt, at 99.5% of GDP in 2021 and largely composed of mortgage debt, exceeds the fundamental benchmark by more than 25 %-points of GDP and the euro area average by some 50 %-points. The illiquidity of assets and high debt levels could make households vulnerable to house price corrections. Non-financial corporate (NFC) debt stood at 129.5% of GDP in 2021 exceeding the prudential threshold by 35 %-points and the fundamental benchmark by 15 %-points. It is largely driven by intra-group debt of multinationals and hence presents lower risk than the headline number suggests.  Household debt decreased slightly over 2021. Nominal mortgage growth came in at 4.1%. Despite the small decrease over 2021, total nominal household debt is expected to continue growing in nominal terms driven by house price growth and relatively lax macroprudential regulation.  Corporate debt as a percentage of GDP decreased slightly in 2021. Fiscal support measures have met a significant part of firms’ liquidity needs.  Mortgage credit is likely to keep growing amid rising house prices. Denominator effects are however expected to keep private debt as a percentage of GDP relatively stable in the next few years. The maximum rate at which mortgage interest can be deducted from taxable income will continue to decrease until 2023. However, a substantial subsidy on debt-financed homeownership will remain. Relatively lenient macroprudential regulation fuels household debt. Despite recommendations to the contrary by the European Systemic Risk Board (ESRB), the high loan-to-value ratio is likely to remain in place. Capital-based measures regarding risk-weights for mortgages have been tightened in January 2022 and may discourage mortgage lending by banks to some degree.   Housing Sector House prices in the Netherlands have grown continuously in nominal and real terms since 2014. Between 2017 and 2020, they grew by almost 8% on average in nominal terms and by about 6% in real terms. Nominal growth over 2021 reached 15% on average. There are clear and increasing signs of overvaluation, with the overall valuation gap at 23% in 2021.  Price growth is driven by tax incentives for (debt-financed) home ownership combined with structurally insufficient housing supply.  House prices accelerated in 2021. In December 2021, house prices were about 20% above their level of the same month in 2020. According to Commission estimates, the average valuation gap has more than doubled over 2021. Pent-up household savings and new incentives towards home ownership combined with long-standing structural factors favouring home ownership and low interest rates drove the surge.  As structural drivers remain in place, prices are expected to keep increasing over the next year, although at a lower rate than in 2021.  The authorities have implemented changes to the transfer tax on house purchases. The tax (which stood at 2%) was abolished for first-time house buyers and raised for buy-to-let investors. This measure increases the bias towards owner-occupancy and could further undermine the private rental market. Mortgage interest deductibility (see above) is another incentive favouring home ownership. The target for construction of new houses will be increased significantly, which could help ease demand pressures. However, obstacles to increase supply remain.    
 
  
 
to 

dividend  payments  made  from  and 
the 
Netherlands  remain  very  high  –  45.2%  of  Dutch 
GDP in 2020, compared with an average of 10.5% 
of  EU  GDP  in  2019  (last  available  year)  –  albeit 
decreasing  from  63.1%  in  2018  and  57.0%  in 
2019.  However,  recently  implemented  reforms, 
notably  the  introduction  in  January  2021  of  a 
conditional withholding tax on interest and royalty 
payments (and as of 1 January 2024 on dividend 
payments) made to low tax juridictions ad to non-
cooperative  jurisdictions  for  tax  matters,  reduce 
the  risks  of  the  Dutch  tax  system  being  used  for 
aggressive  tax  planning.  This  is  not  yet  visible  in 
the figures. 

doing  well 

The  Netherlands 
on 
is 
digitalisation  of  the  tax  administration, 
which can help reduce tax arrears as well as 
cut  compliance  costs.  While  outstanding  tax 
arrears increased by 1 percentage point to 6.1% of 
total tax revenues in 2019, they remain low in the 
Netherlands, significantly below the EU27 (simple) 
average  of  31.8%.  However,  that  average  is 
inflated  by  very  large  values  in  a  few  Member 
States. The Annual Report on Taxation 2021 shows 
that  the  Netherlands  scores  highly  on  filing  tax 
returns online (69).  Between  2018  and  2019,  the 
VAT gap (an indicator of the effectiveness of VAT 
enforcement  and  compliance)  decreased  by  1.1 
percentage point, to 4.4% in the Netherlands, well 
below the EU-wide gap of 10.5%.  

ANNEX 18: TAXATION 
ANNEX 18: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  the  Netherlands’  tax  system.  It 
includes  information  on  the  tax  structure,  i.e.  the 
types  of  tax  that  the  Netherlands  derives  most 
revenue from, the tax burden for workers, and the 
progressivity  and  redistributive  effect  of  the  tax 
information  on  tax 
system. 
collection  and  compliance  on 
risks  of 
tax  planning  activity,  which  still 
aggressive 
appears high according to the current data. 

It  also  provides 

the 

The Netherlands is among the countries with 
the  highest  tax  revenues  in  relation  to  GDP 
worldwide,  and  relies  heavily  on  labour 
taxes.  The  ratio  of  total  tax  revenues  to  GDP 
remained slightly below the EU aggregate in 2020, 
despite a relatively strong increase between 2010 
and 2020 (up 11.8%, which was almost twice the 
increase compared to the EU aggregate, i.e. 6.1%, 
during  the  same period). The  main  sources  of  tax 
revenues  in  the  Netherlands  in  2020  were  labour 
taxes  (20.6%  of  GDP)  and  consumption  taxes 
(11.7% of GDP), for which the values were close to 
the  EU  aggregate.  Revenues  from  environmental 
taxes  as  a  percentage  of  GDP  were  among  the 
highest  in  all  Member  States.  Revenues  from 
property taxes were slightly below the EU average, 
as  were  revenues  from  recurrent  property  taxes, 
which  are  particularly  conducive 
to  growth. 
Increased  use  of  recurrent  property  taxes  could 
also  be  beneficial  given  the  housing  market 
the  Netherlands  and 
imbalances 
generous  mortgage 
interest  tax  relief,  which 
encourages the build-up of household debt. 

faced  by 

The Netherlands’ labour tax burden is low for 
different  wage  levels.  Its  tax  wedge  in  2020 
was  considerably  lower  than  the  EU  average  at 
various income levels, i.e. for single  people at the 
average wage (100%) as well as at 50%, 67% and 
167%  of  the  average  wage.  Second  earners 
earning 67% of the average wage, whose spouse 
earns the average wage, also faced a considerably 
lower  tax  wedge  than  the  EU  average.  The 
difference  between  their  tax  wedge  and  that  of 
single  people  at  the  same  wage  level  was  also 
lower than the EU average. The tax-benefit system 
helped reduce inequality as measured by the GINI 
coefficient by slightly more than the EU average in 
2020. 

Data  suggest  that  the  Dutch  tax  system  is 
being  used  for  aggressive  tax  planning 
purposes,  but  reforms  have  recently  been 
introduced.  The  flows  of  interest,  royalty  and 

(69)  European Commission, Directorate-General for Taxation and 
Customs Union, Annual Report on Taxation 2021 : review of 
taxation policies in the EU Member States, Publications 
Office, 2021, https://data.europa.eu/doi/10.2778/294944, 
See Section 2.1.4 Improving tax for further details. 

56 

 
 
                                                 
 
Table A18.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD). 
(*) EU-27 simple average, as no aggregated EU-27 value. 
Source: European Commission and OECD 

Graph A18.1: Tax wedge indicators 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer). 
(1) The second earner average tax wedge measures how much extra personal income tax plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en. 
(*) EU-27 simple average, as no aggregated EU-27 value 
Source: European Commission 

57 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)35.538.839.339.737.940.139.940.1Labour taxes (as % of GDP)19.519.819.520.620.020.720.721.5Consumption taxes (as % of GDP)11.011.411.811.710.811.111.110.8Capital taxes (as % of GDP)5.07.67.97.37.18.28.17.9Total property taxes (as % of GDP)1.31.71.61.81.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.60.90.80.91.11.21.21.2Environmental taxes as % of GDP3.53.33.43.22.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)28.324.723.923.222.033.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)38.137.836.936.135.341.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)23.123.723.719.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)10.010.310.19.48.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)5.16.131.931.8VAT Gap (% of VTTL)5.54.411.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)63.157.045.210.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)61.262.941.947.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskNetherlandsEU-2722.027.635.340.728.5At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)NLEU-27 (*) 
 
 
  
 
  
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 19: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A19.1: Key economic and financial indicators 

(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.  
Source: Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022) 

58 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)2.80.01.82.0-3.85.03.31.6Potential growth (y-o-y)1.80.91.11.81.41.41.41.3Private consumption (y-o-y)0.8-0.41.10.9-6.63.54.61.9Public consumption (y-o-y)3.01.40.72.81.05.51.81.8Gross fixed capital formation (y-o-y)6.2-4.13.66.2-4.13.52.92.8Exports of goods and services (y-o-y)6.62.0.2.0-4.86.63.93.5Imports of goods and services (y-o-y) 6.81.14.73.2-5.55.14.14.3Contribution to GDP growth:Domestic demand (y-o-y)2.4-0.71.42.3-3.53.73.01.9Inventories (y-o-y)0.00.00.10.3-0.3-0.30.00.0Net exports (y-o-y)0.40.80.2-0.70.01.70.3-0.4Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.40.20.71.00.70.60.40.4Capital accumulation (y-o-y)0.70.50.40.70.50.60.60.6Total factor productivity (y-o-y)0.70.30.10.10.10.20.30.3Output gap-0.5-1.3-1.11.4-3.9-0.70.90.8Unemployment rate6.05.87.14.44.94.24.04.2GDP deflator (y-o-y)2.01.01.13.02.32.43.83.3Harmonised index of consumer prices (HICP, y-o-y)1.51.91.02.71.12.87.42.7Nominal compensation per employee (y-o-y)2.12.21.32.94.72.13.13.7Labour productivity (real, hours worked, y-o-y)1.60.20.4-0.2-1.12.5..Unit labour costs (ULC, whole economy, y-o-y)0.42.30.52.98.3-1.01.93.2Real unit labour costs (y-o-y)-1.51.3-0.5-0.15.9-3.4-1.80.0Real effective exchange rate (ULC, y-o-y)-0.30.3-0.1-0.2....Real effective exchange rate (HICP, y-o-y)-0.5-0.80.40.41.80.1..Net savings rate of households (net saving as percentage of net disposable income)3.06.910.011.417.817.3..Private credit flow, consolidated (% of GDP)12.17.64.6-0.1-1.310.7..Private sector debt, consolidated (% of GDP)229.9244.6257.0232.3233.7229.0..of which household debt, consolidated (% of GDP)107.9116.6109.999.6103.099.5..of which non-financial corporate debt, consolidated (% of GDP)122.0128.0147.1132.7130.7129.5..Gross non-performing debt (% of total debt instruments and total loans and advances) (2).2.42.31.71.7...Corporations, net lending (+) or net borrowing (-) (% of GDP)9.29.06.55.04.86.37.36.8Corporations, gross operating surplus (% of GDP)27.327.727.226.126.426.626.826.5Households, net lending (+) or net borrowing (-) (% of GDP)-2.41.43.32.66.35.84.34.0Deflated house price index (y-o-y)2.4-3.7.4.66.0...Residential investment (% of GDP)6.04.83.95.15.35.4..Current account balance (% of GDP), balance of payments7.77.29.09.47.09.58.88.7Trade balance (% of GDP), balance of payments8.58.410.09.810.411.0..Terms of trade of goods and services (y-o-y)-0.1-0.50.30.61.0-1.6-2.60.7Capital account balance (% of GDP)-0.4-0.3-0.10.00.00.1..Net international investment position (% of GDP)-5.510.354.189.9113.993.8..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-64.3-73.2-39.4-1.89.222.2..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)326.3387.0398.8353.7363.4335.5..Export performance vs. advanced countries (% change over 5 years)6.9-0.1-4.3-1.87.9...Export market share, goods and services (y-o-y)-1.5-2.70.5-1.25.4-3.1-0.7-0.7Net FDI flows (% of GDP)4.65.86.94.7-4.610.7..General government balance (% of GDP)-0.6-3.8-0.81.7-3.7-2.5-2.7-2.1Structural budget balance (% of GDP)..-0.30.7-1.3-2.0-3.2-2.5General government gross debt (% of GDP)47.159.761.948.554.352.151.450.9forecast 
 
 
 
 
  
 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 20: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  The  Netherlands  over  the  short, 
medium  and  long  term.  It  follows  the  same 
multi-dimensional  approach  as  the  2021  Fiscal 
Sustainability  Report, updated  on the basis  of the 
Commission 2022 spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 

‘adverse interest-growth rate’ scenario assumes a 
in  the 
less  favourable  snowball  effect  than 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 

in  ageing-related 

change 

Table A20.1: Debt sustainability analysis for the Netherlands 

Source: European Commission 

59 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)48.554.352.151.450.951.051.452.053.354.756.458.460.763.2Change in debt-3.95.8-2.3-0.6-0.50.10.40.71.21.41.72.12.32.4of whichPrimary deficit-2.53.02.02.31.71.92.12.32.72.93.13.33.63.8Snowball effect-1.81.5-3.3-3.1-2.0-1.8-1.7-1.7-1.5-1.5-1.4-1.3-1.3-1.4Stock-flow adjustment0.31.3-1.00.2-0.20.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)7.614.010.611.010.210.610.911.312.012.513.113.814.515.2S1S2Overall index (pps. of GDP)1.96.2of whichInitial budgetary position1.22.4Debt requirement-0.7Ageing costs1.53.8of whichPensions0.61.1Health care0.30.7Long-term care0.82.3Others-0.1-0.2                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators25303540455055606570752019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p9025354555657520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
   
 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
classification 
fiscal 
(Table A20.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

the  sustainability  gap  indicator  S1  signals  that  a 
consolidation  effort  of  1.9  pps.  of  GDP  would  be 
needed  to  bring  the  debt  ratio  to  60%  of  GDP  in 
15 years’ time (Table 2). Overall,  the medium risk 
reflects the unfavourable initial budgetary position 
and the projected increase in ageing costs. 

Long-term  risks  to  fiscal  sustainability  are 
high.  The  sustainability  gap  indicator  S2  (at  6.2 
pps.  of  GDP)  points  to  high  risks,  while  the  DSA 
points  to  significant  vulnerabilities,  leading  to  the 
overall  high  risk  assessment.  The  S2  indicator 
suggests that, to stabilise debt over the long term, 
it  will  be  necessary 
to  address  budgetary 
pressures  from  population  ageing,  especially 
related  to  long-term  care  and  public  pension 
expenditure (Table 2).   

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A20.2). 

risks 

to 

two  elements  of 

Medium-term  risks  to  fiscal  sustainability 
are  medium.  The 
the 
Commission’s  medium-term  analysis  lead  to  this 
conclusion.  First,  the  debt  sustainability  analysis 
(DSA) shows that government debt is projected to 
rise  from  about  51%  of  GDP  in  2022  to  around 
63% of GDP in 2032 in the baseline (Table 1). This 
debt  path  is  also  sensitive  to  possible  shocks  to 
fiscal,  macroeconomic  and  financial  variables,  as 
illustrated  by  alternative  scenarios  and  stochastic 
simulations  (Tables  A20.1  and  A20.2).  Moreover, 

Table A20.2: Heat map of fiscal sustainability risks for the Netherlands 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source: European Commission (for further details on the Commission's multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

60 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMLOWMEDIUMMEDIUMMEDIUMLOWDebt level (2032), % GDP6349666763Debt peak year20322021203220322032Fiscal consolidation space100%85%100%100%100%Probability of debt ratio exceeding in 2026 its 2021 level48%Difference between 90th and 10th percentiles (pps. GDP)26Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallHIGHHIGHDeterministic scenariosStochastic projectionsLOWMEDIUMMEDIUMMEDIUM