The Dutch non-work experience

OECD Observer

Click for larger graph

How is it that the booming Netherlands, with its traditional social regulations and its sophisticated welfare system, manages to keep its unemployment so low? In mid-1999 joblessness was just over 3.2%, compared with 4.2% in the United States, for example, or over 10% in several other OECD countries.

But the interpretation of this impressive Dutch job performance has been much debated. Here is a strong economy which independent surveys consistently rank as having one of the world’s most attractive business environments, and yet the overall Dutch labour market could hardly be described as the most deregulated in the OECD. The quality of Dutch regulation is clearly good on the whole, otherwise business would not be so interested. Indeed, regulatory policies have had a strong market orientation for several years now. There has been an acceleration in market-oriented reform too, particularly in the 1990s, which may even have helped to bring down inflation.

But those reforms have mainly affected transportation and some traded services, like telecommunications, and not yet sheltered sectors, such as construction, or much of the public sector. Rather, it is in the private sector where employment has soared in recent years – only slightly slower than the US rate, but faster than most other European countries. In fact, net private sector jobs rose by 25% between 1984 and 1997, cutting unemployment in half. That growth more than offset an effective freezing of government employment, which had expanded rapidly in the 1970s.

So is there more to the Netherlands’ labour market performance than meets the eye? Yes, there is. Although unemployment has fallen, and manufacturing employment declined more slowly than the OECD average, with services employment growth well above average, the Netherlands does have an unusally large proportion of its working age population actually outside of the employment market. In fact, the Dutch employment rate is among the lowest in the OECD (see chart).

Declining unemployment has been offset by increases in disability benefits, early retirement and subsidised employment programmes, and labour force participation rates among men aged 55-64 are low. Well over half of the jobs created have been part-time, and most have been in the service sector. Dutch workers on average have the lowest annual average working time per employee of any country. This may be because of a preference for leisure, which probably to some degree reflects high marginal income tax rates. The fact is the Dutch economy, while good at producing employment, is not very good at generating full-time jobs. The overall result is that a large share of potential labour resources is not utilised. Moreover, within the workforce, more than half of the Netherlands’ unemployed have been out of work for over a year, a high proportion by OECD standards. A strong reminder that Dutch reforms should continue. End

* Article based on the recently published Regulatory Reform in the Netherlands, OECD, Paris, 1999.

About book/order here

©OECD Observer No 219, December 1999

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Dec 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.5% Dec 2017
Last update: 12 Feb 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018