(disclaimer: I'm Dutch, where Sinterklaas is a real big thing)

We're working on it. I agree that Zwarte Piet (Black Peter) is indeed racist, although (mostly) not intentionally so.

I never gave the tradition a second thought either, until some years back I read the English Wikipedia on Zwarte Piet. I was a bit confused at first (happy childhood memories were suddenly badwrong) but then I read further into it and, yes it's racist (IMO).

One of the problems is that over here we're not really taught a lot about the whole minstrel/blackface traditions. The Dutch did do slavery, but unlike the US, we didn't bring them home (instead exploited them in Indonesia and South Africa), therefore the cultural impact of that is very different over here. The people with a history of that exploitation for a large part do not live here.

But when I did read about blackface/minstrel traditions, it's impossible to deny that yes, it's not just that his face is "black like soot" (an excuse we came up with in the second half of the 20th century--see we don't want Zwarte Piet to be a racist character), because also Zwarte Piet's costume is exactly like those blackface minstrels. Most Dutch people don't know that bit.

The difference today, however, is globalisation. For a bunch of decades already, people from all over the world came to live here. And some (perhaps a lot, even) of those people have that history (in their families, etc). Those people have lived here for a long time now, started families in NL, etc. And for them, to see that image of Zwarte Piet, it hurts. And they have just as much right to have an opinion about what should and should not be "Dutch culture". Just like others would have a real bad feeling if there was a festive holiday about people parading around swastikas and putting naughty children on trains (sorry for the Godwin, but I think it's a useful analogy in this case, and otherwise just ignore it).

The problem, however, is that I don't know what the right solution is either. It's a tradition that nearly everybody has extremely happy (and not racist) childhood memories about. It's hard (as a culture) to let that go.

You can't have Sinterklaas without Pieten, just like Santa needs his elven helpers. Sinterklaas is played as a really old man, slightly forgetful etc, he needs them, it's part of the play. But, say, if you paint Piet's face a different neutral colour (blue or yellow or whatever, kids don't care, we know this), he (or she, Piet has been multi-gender for quite a while--even though it's a male name, it's used as a title, like Smurfs) still wears that costume. But if you also change the costume, then Piet is no longer Piet, because those were their defining characteristics. At least that's how it seems right now.

So it's hard, no obvious solution. But the positive thing, what I'm seeing is, there is a growing awareness. There is also (loud) resistance, of course, but the cat is out of the bag now. We probably won't fix it next year. But maybe the year after that.

I really believe that, in a few years, we will figure out some variation on the Sinterklaas theme that is not hurtful to parts of the Dutch people. And the kids will love it regardless, so that's good.

edit/afterthought : Sinterklaas keeps his naughty/nice list in a physical book which he carries around everywhere he goes. Santa's mistake for going digital :-P