Lifting labour supply to tackle tightness in the Netherlands
The Dutch labour market is strong but very tight. The unprecedently fast recovery
from the pandemic, fast-changing skill demand, low hours worked, and the segmentation
of the labour market contribute to labour shortages, weighing on growth potential
and jeopardising the green and digital transitions. To tackle shortages, lifting labour
supply is a necessary complement to raising productivity, as labour-saving innovation
alone is unlikely to significantly reduce overall labour demand. Lowering the effective
tax rate on moving from part-time to full-time employment and streamlining income-dependent
benefits while improving access to childcare would both increase labour input and
reduce gender inequalities in career prospects, incomes, and social protection. Narrowing
regulatory gaps between regular and non-standard forms of employment further would
alleviate shortages by facilitating transitions between occupations. Better integrating
people with a migrant background and easing medium-skill labour migration in specific
occupations would help to fill vacancies, especially those related to the lowcarbon
transition. Scaling up the individualised training scheme while ensuring quality and
providing stronger incentives for co-financing by employers would boost the supply
of skills and promote growth in expanding industries. Rewarding teachers in schools
where shortages are significant and facilitating mobility between vocational and academic
tracks would improve equality in education and better prepare the future workforce.
Published on August 22, 2023
In series:OECD Economics Department Working Papersview more titles