How workers’ rights have undermined the Netherlands

The Resolution Foundation, a left-leaning think tank whose former executive director Torsten Bell is now a Labour MP, points out that the Netherlands’ recruitment rate is much lower than in the UK and that many more temporary workers are used.

As a result, significantly fewer people are changing jobs or taking up employment each year. This suggests that the economy is also losing some of its momentum due to the strict regulations.

The result is an unpleasantly divided labor market, says Marcel Klok, an economist at the Dutch bank ING, in which those with lower qualifications and wages often come off worse.

“It is seen as a dual labour market, where on the one hand you have permanent workers with a lot of protection, and on the other you have flexible workers with relatively little protection,” he says.

“There are people who feel forced into flexible contracts or even self-employment – people who are really just low-paid workers. They may be forced into it because they are cheaper and will only be hired if they are self-employed. This is widespread in the construction industry.

“But there are also people who become self-employed because they like flexible working hours and don’t want to have a boss. Many consultants do it because they think they can earn more money as self-employed people. We’ve had a very big increase in the number of life coaches – people who really want to be self-employed.”

The rise in self-employment has raised concerns about the future financing of Dutch pension funds, says Van der Velde, because this group of workers is not required to pay compulsory contributions.

“With a working population of around nine million people, an estimated 1.5 million are registered as self-employed,” he says.

“If the number of self-employed people continues to grow, it will be more difficult to maintain pension funds and social security systems in their current form.”

Since the pandemic, the Netherlands has seen a similar hiring boom to the UK, he adds, giving workers greater bargaining power to secure higher wages – and a permanent contract.

However, this was not the case when the labor market was weaker.

In the United Kingdom, recruitment rates are declining.