OECD Economic Surveys: Netherlands 2023

The Dutch economy swiftly returned to its pre-pandemic growth path, but rapidly rising inflation disrupted growth, magnifying existing challenges, such as the urgency of the transition to net zero, ageing-related fiscal pressures, and pervasive labour shortages. Significant investments in low-carbon infrastructure and technologies are needed to reduce fossil fuels dependence and exposure to global energy price fluctuations. Healthy public finances allowed for fiscal support to protect households and firms from surging energy prices, but population ageing will increase fiscal pressure going forward. Streamlining the tax system would enhance macro-financial stability and productivity by reducing distortions in investment and labour supply decisions. Lifting labour supply, in complement to raising productivity, would help to strengthen growth potential and enable the green and digital transitions. Removing tax disincentives on additional hours worked and streamlining income-dependent benefits while improving access to childcare would both increase labour input and reduce inequalities. Supporting re- and upskilling of the workforce, as well as 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 could further boost labour supply. SPECIAL FEATURE: LIFTING LABOUR SUPPLY