2021 OECD ECONOMIC SURVEY OF THE NETHERLANDS Building a stronger recovery The Hague, 16 June 2021
@OECDeconomy @OECD
https://www.oecd.org/economy/netherlands-economic-snapshot/
Main messages The Netherlands has weathered the COVID crisis well thanks to widespread digitalisation and generous policy support. Going forward it should: • Provide better targeted fiscal support until the economic recovery is well underway. • Adjust labour and housing market policies to reduce inequalities. • Invest in the green and digital transition to promote prosperity and well-being.
SUPPORTING THE ECONOMY THROUGH COVID-19
The economy weathered the crisis relatively well Real GDP, Index Q1 2019 = 100 110
Netherlands
Netherlands November 2019 projection
OECD
Euro Area
110
105
105
100
100
95
95
90
90
85
85
80 2019Q1
80
2019Q3
2020Q1
2020Q3
2021Q1
2021Q3
2022Q1
2022Q3
Note: The pre-crisis growth path is based on the November 2019 OECD Economic Outlook projection, with linear extrapolation for 2022 based on trend growth in 2021. Source: OECD Economic Outlook 106 and 109 databases.
The recovery is underway Annual growth rates, % unless specified 2020
2021
2022
Gross domestic product
-3.7
2.7
3.7
Private consumption
-6.4
-0.4
6.1
0.6
2.1
1.4
Gross fixed capital formation
-3.6
6.3
3.8
Exports
-4.3
4.7
3.8
Imports
-4.3
4.0
4.2
Unemployment rate (%)
3.8
4.1
4.7
Consumer price index
1.1
1.8
1.5
Current account balance (% of GDP)
7.8
8.8
8.9
General government fiscal balance (% of GDP)
-4.3
-6.1
-2.5
General government gross debt (% of GDP)
54.5
58.5
58.8
Government consumption
Source: OECD Economic Outlook: Statistics and Projections (database).
Exports have rebounded Exports of goods and services (contribution to GDP growth) % pts
% pts 8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
2019Q1
2019Q3
2020Q1
2020Q3
2021Q1
2021Q3
Source: OECD (2021), OECD Economic Outlook: Statistics and Projections (database)
2022Q1
2022Q3
Unemployment rose, in particular for the young Unemployment by age groups % of labour force 14 15 to 24 12
25 to 44
% of labour force 14 Total 15 to 74 12
45 to 74
Source: CBS (2021), Monthly labour participation and unemployment (database); CPB (2020), Economic Outlook – November 2020.
Mar-21
Feb-21
Jan-21
Dec-20
Nov-20
Oct-20
Sep-20
Aug-20
Jul-20
0
Jun-20
0
May-20
2 Apr-20
2 Mar-20
4
Feb-20
4
Jan-20
6
Dec-19
6
Nov-19
8
Oct-19
8
Sep-19
10
Aug-19
10
Policy measures eased economic strain Bankruptcies, Index Q4 2019= 100 110
110
100
100
90
90
80
80
70
70
60
60
50
50
Source: CBS
Ageing will put pressure on public spending Illustrative public debt trajectories, general government
% of GDP 160
Labour market reforms
140
% of GDP 160 140
Longer working lives
120
Labour market reforms + longer working lives
120
100
Baseline (General government debt)
100
Note: For more information on the OECD Economics Department Long-term Model see survey. Source: Simulations based on the OECD Economics Department Long-term Model.
2050
2048
2046
2044
2042
2040
2038
2036
2034
2032
2030
2028
2026
2024
2022
2020
2018
0
2016
0
2014
20 2012
20 2010
40
2008
40
2006
60
2004
60
2002
80
2000
80
Spending pressures are less severe than in most OECD countries Additional spending pressures from 2021 to 2060, by spending category % pts of potential GDP 20 Health expenditure
Pension expenditure
% pts of potential GDP 20 Others 15
10
10
5
5
0
0
-5
-5
GRC PRT LVA ISR LTU GBR CAN NZL EST NLD AUS DEU IRL CHE HUN USA ITA DNK FIN ESP SWE ISL FRA NOR SVN KOR CZE LUX BEL JPN AUT POL SVK
15
Note: Spending pressures are defined as revenue increases needed to maintain a constant debt to GDP ratio. Source: Simulations using the OECD Economics Department Long-term Model.
Recommendations to support the economy • Provide targeted fiscal support until the economic recovery is well underway. • Phase out policies aimed at preserving existing companies and jobs when the health crisis is brought under control. • Design in advance a multi-year plan for fiscal adjustment once the recovery is self-sustained. • Fully implement the tri-partite occupational pension agreement moving to defined contributions.
REDUCING HOUSEHOLD DEBT AND RE-BALANCING THE HOUSING MARKET
House prices continue to rise Real house prices Index 2015=100 140
Netherlands
Euro area
OECD
Index 2015=100 140
130
130
120
120
110
110
100
100
90
90
2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 2018Q3 2019Q1 2019Q3 2020Q1 2020Q3
Source: OECD (2021), OECD Economic Outlook: Statistics and Projections; CBS (2021), House Prices: new and existing dwellings price index (database), CBS (2021), Dwellings and non-residential stock; changes, utility function, regions.
Home-owner tax relief benefits the wealthy % 100 90
Percentage of owner households by income Low income
High income
% 100 90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
NLD
OECD
Note: Low-income households are those with equivalised net disposable income in the bottom quintile of the distribution. Source: Calculations based on data from OECD Affordable Housing Database.
Rent controls stifle private rental supply Share of households, private rental excluding social % of households 60
% of households 60
50
50
40
40
30
30
20
20
10
10
0
0
Note: For more details on definitions see OECD affordable housing Database. Source: Calculations based on data from OECD, OECD Affordable Housing Database.
Recommendations to reduce household debt and rebalance the housing market • Increase the supply of housing by speeding up land use planning and building procedures, designating housing construction locations, and making binding agreements with all parties involved. • Gradually reduce favourable tax treatment of owner-occupied housing beyond current plans. • Gradually limit rent controls to a narrower part of the market. • Evaluate how housing corporations affect the overall housing market and ensure that enough space is left for a private rental market.
REDUCING LABOUR MARKET DUALITY AND INEQUALITIES
The divide in worker status is high Protection of workers on temporary contracts
Protection of workers on regular contracts
5
3,5 3
4
2,5 3
2
2
1,5 1
1
USA CHE CAN AUS AUT GBR DNK EST DEU OECD NOR KOR FIN ESP FRA SWE LUX BEL ITA NLD PRT ISR
CAN USA GBR AUS NLD CHE ISR SWE FIN DEU DNK OECD AUT BEL PRT KOR EST NOR ESP FRA ITA LUX
0
0,5
Note: The index ranges from 0 (low regulatory protection) to 6 (high regulatory protection). Source: OECD (2020), OECD Employment Protection Database.
0
The share of flexible workers has increased % of population 15-75 80
% of population 15-75 80 2010
70
2019
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
Permanent employees
Self-employed (with employees)
Flexible employees
Self-employed (without employees)
Source: Statistics Netherlands (CBS): De arbeidsmarkt in cijfers 2019 [The labour market in numbers 2019]; and CBS open data platform.
Women’s labour participation is rising Employment, 15-64 year-olds Number of persons, millions 6 5
Number of persons, millions 6 Women 5
Men
Source: OECD (2021), OECD Labour Force Statistics (database).
2019
2016
2013
2010
2007
2004
2001
1998
0
1995
0
1992
1 1989
1 1986
2
1983
2
1980
3
1977
3
1974
4
1971
4
Nearly 60% of women work part-time Gender gap in working hours % 30
% 30
24
24
18
18
12
12
6
6
0
0
SWE
OECD
Note: Average usual weekly hours worked on the main job. Source: OECD (2021), OECD Labour Force Statistics (database).
DEU
NLD
More part-time work means lower pay and pensions for women Gap between women’s and men’s pensions as a share of men’s pensions % 50
% 50
40
40
30
30
20
20
10
10
0
0
Note: The figure refers to population aged 65 or older. Gender gap in pensions calculated using the following formula: 1 – women’s average pension / men’s average pension. It includes persons who obtain old-age benefit (public or private), survival pension or disability benefit.
Source: OECD (2019), Pensions at a Glance 2019: OECD and G20 Indicators and Eurostat (2021), Gender pay gap in unadjusted form by NACE Rev. 2 activity.
Recommendations to reduce labour market duality and inequalities • Implement the Commission for the Regulation of Work recommendations, including:
– Allow employers to adapt jobs, workplace and working hours of regular employees in line with the needs of the economy. – Align tax rates and social security contributions between contract types for workers doing similar jobs.
• Go further than current plans in reserving leave entitlements following childbirth for partners. • Increase leave replacement rates after the birth of a child for partners to the level available to mothers. • Reduce user prices for childcare.
INVESTING IN THE ENVIRONMENT
Many are exposed to air pollution Exposure to more than 10 micrograms/m3 % of population 100 90 80 70 60 50 40 30 20 10 0
HUN SVK ISR POL SVN TUR CRI CZE MEX KOR COL CHL NLD JPN GRC BEL ITA DEU AUT EU-27 LVA FRA LUX OECD GBR LTU CHE ESP DNK PRT USA ISL CAN SWE NOR IRL AUS EST FIN NZL
% of population 100 90 80 70 60 50 40 30 20 10 0
Source: OECD (2021), Air pollution exposure (indicator)
High nitrogen emissions constrain investment Nitrogen emissions per capita
Nitrogen emissions per km2
Kg 30
Tonnes 7 6
25
5
20
4
15
3
10
2
5
1
0
0
EU-27
Netherlands
Note: SO2 equivalent emissions of NOx and NH3. Source: Eurostat
EU-27
Netherlands
Air quality improved only temporarily during the pandemic % difference in air pollution per month compared to average of 2018 & 2019 NO2
60
PM2.5
PM10
40
Oxford Stringency Index 80.1-100
20 0
70.1-80
-20
55.1-70
-40
40.1-55 0.1-40
-60 -80 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Note: Air pollution per month is calculated as monthly average (µg/m3) over all measurement stations Source: European environment agency; Hale et al. and Oxford COVID-19 Government Response Tracker, Blavatnik School of Government.
Even more must be done to meet emission targets Megatons of CO2 equivalent 200
200
180
180
160 140 120 100
Baseline projection¹
160
Additional policy measures
140
NLD Climate Act
2015
120
2020
2025
2030
100
Note: 1.Baseline projections are from the Netherlands Environmental Assessment Agency and based on policy planned and outlined by May 2020. Source: PBL Netherlands and RIVM.
Recommendations to invest in the environment • Make emission pricing more consistent across sectors and fuels not covered by the EU emissions trading scheme. • Consolidate instruments to manage transferable nitrogen emission rights to further facilitate standardisation and transfer of rights. • Further enhance cross-border cooperation to tackle the nitrogen problem.
BOOSTING PRODUCTIVITY
Productivity growth has been slow Labour productivity growth 5
% annual average, 2009-19
% annual average, 2009-19 5 4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
MEX LUX ITA NOR GBR NLD NZL BEL AUT FIN USA FRA PRT CAN OECD ESP ISL DEU CHE SWE AUS JPN HUN CHL ISR DNK SVN CZE SVK EST TUR LTU KOR LVA POL
4
Note: Labour productivity is measured as real GDP per hour Source: OECD (2021), OECD Productivity Statistics (database).
The Netherlands could be more digitalised ICT adoption, composite index, 2019 Index 100
90
90
80
80
70
70
60
60
50
50
40
40
COL MEX TUR CHL HUN ITA GRC POL AUT IRL BEL ISR CZE SVN SVK DEU CAN PRT OECD GBR AUS FRA USA NLD NZL LUX ESP CHE EST LVA FIN LTU NOR DNK ISL JPN SWE KOR
Index 100
Note: For more information on composite index see survey.
Source: World Economic Forum (2019), Global Competitiveness Report Pillar 3 ICT Adoption, October.
High levels of teleworking helped during the crisis % of respondents working from home 70 Before COVID 19 60
% of respondents working from home 70 During COVID 19 60
Source: Eurofound (2020), Living, working and COVID-19 dataset.
FIN
LUX
BEL
NLD
DNK
IRL
AUT
SWE
ITA
CZE
PRT
FRA
0
LTU
0
DEU
10 EU
10 EST
20
POL
20
SVK
30
LVA
30
ESP
40
HUN
40
GRC
50
SVN
50
Small firms lag behind in the adoption of digital technologies Businesses using selected digital technologies (% of firms), by size class % of firms 100
Small
Medium
Large
80
% of firms 90 80 70 60
60
50 40
40
30 20
20
10 0
Cloud computing
Big data analysis
0
Note: Firms with at least 10 employees. Small firms are those having 10-49 employees, medium-sized firms 50-249 employees, and large firms 250 employees or more. Source: OECD (2021), ICT Access and Usage by Business (database).
Employment in some sectors hard-hit by COVID-19 is also vulnerable to automation 75
% pts
Hours worked (LHS)
Risk of automation (RHS)
Index
75
50
50
25
25
0
0
-25
-25
-50
-50
-75
-75
Information & communication
Wholesale & retail trade
Manufacturing Transportation Administrative Accommodation & storage & & support services food services
Note: Data on hours worked refer to the percentage change between 2019Q2 and 2020Q2. Source: Author's calculations based on Nedelkoska and Quintini (2018) and Eurostat (2021), Short-term business statistics.
Spending on training is relatively low Labour market policy spending per unemployed (% of GDP per capita) by policy type, 2018 or latest % of GDP per capita 0,5 Training 0,4
% of GDP per capita 0,5 0.76
Other labour market policies
0,4 0,3
0,2
0,2
0,1
0,1
0
MEX GRC CHL USA LVA CAN AUS ISR NZL SVN ITA ESP SVK JPN IRL KOR EST PRT FRA OECD CHE NOR POL FIN CZE NLD LUX SWE HUN AUT DEU BEL DNK
0,3
Note: Other labour market policies includes: Early retirement & job sharing, PES & placement, Recruitment incentives, start-up incentives & direct job creation.
Source: OECD (2020), Labour Market Programmes (database); and OECD (2020), OECD Economic Outlook: Statistics and Projections (database).
0
Recommendations to boost productivity • Increase direct support to SMEs to facilitate the adoption of digital tools, including business advisory services and testing facilities. • Encourage enterprises to implement existing digital security standards. • Increase training subsidies to jobseekers and workers with high up-skilling and re-skilling needs.
For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Borowiecki, M. et al. (2021), “Can intangibles and digital adoption lift productivity growth? Firm-level evidence from the Netherlands”, OECD Economics Department Working Papers, forthcoming, OECD, Paris.
https://www.oecd.org/economy/netherlands-economic-snapshot/
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