The Netherlands is slowly losing its competitiveness within the Eurozone when it comes to employment. The ING Economic Bureau warns about this in a new report. Bert Kolen, an economist at ING, points out that labor costs for each product delivered in the Netherlands have risen almost at the fastest pace among all euro countries since the euro was introduced. Productivity growth has been declining here for years, while wages have risen.
“Meanwhile, southern European countries, whose high wages and low productivity have long been a concern in the EU context, are starting to catch up,” the economist says.
“The question remains how bad this can get,” Colin admits. A greater number of Dutch companies than southern European companies indicate that their competitive position within the euro area is deteriorating and that exports have been growing less quickly since 2015 than in southern European countries. But some catch-up growth in the South was also appropriate.
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Export model under pressure
Cullen sees this as a sign that the Dutch export-led growth model may be under pressure. For this reason, he believes it is important to stimulate productivity growth.
“This is why it is important, among other things, to continue investing properly in research and development, but also in physical, digital and human capital, and to ensure that innovations can be widely used in the economy.”
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Cullen does not believe that strong moderation in wages compared to other euro countries is wise. The labor shortage here is actually greater than in other countries. Making the Netherlands less attractive in this regard would be counterproductive.
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