Netherlands

Cabinet calls on employers to raise wages as prices rise and labour shortage worsens

As the national labour shortage worsens and the cost of living continues to rise, several cabinet ministers have called on Dutch employers to raise wages in order to boost purchasing power. 

Government asks employers in the Netherlands to increase wages

Following a meeting on Tuesday, members of the Dutch government expressed sympathy for the people of the Netherlands who were struggling to make ends meet as inflation remains high and prices continue to rise. While there are currently no plans to take political action to combat the growing issue, a number of Prime Minister Mark Rutte’s ministers have called on companies and entrepreneurs to raise salaries as a short-term solution. 

“These are exceptional times that call for exceptional measures,” Karien van Gennip, the Minister of Social Affairs and Employment, told the press. “Here and there you also see that wages are rising, but it does not keep pace with price increases…We can only solve this with each other, so also with the employers. There is room to increase the salaries.”

Finance Minister Sigrid Kaag shared a similar message: “Higher wages are a structural solution. Not everything can come from the government.” The government is facing growing pressure to tackle the cost of living crisis, and while Kaag didn’t rule out the possibility of government intervention, she did emphasise that it would be difficult to take structural action in the current tax year

In response to the cabinet’s words, employers’ organisation VNO-NCW has argued that businesses in the Netherlands are already struggling to turn over a profit in the current economic climate. “Employers take their responsibility,” a spokesperson told NOS. “But they can never compensate for the problems surrounding high energy prices alone.” 

Dutch salaries rising at historic rates – but it isn’t enough

Recent figures from employers’ association AWVN revealed that wages in the Netherlands have risen by an average of 3,2 percent this year – a historic increase, however not enough to keep up with the high rate of inflation. Talking to NU, a spokesperson for AWVN explained that it was unreasonable to expect salaries to keep pace with inflation: “Inflation has been low in recent years and wage agreements have always been above inflation.” 

Meanwhile, the national shortage of workers across various sectors continues to worsen, which is leading to higher salaries – but is also leading to larger workloads for those with jobs. “The persistent shortage of staff is causing a higher workload for staff in almost all sectors,” Statistics Netherlands (CBS) notes, adding that higher salaries are also leading to increased labour costs for entrepreneurs. 

The most recent data published by CBS shows that the number of job vacancies continues to rise: in the second quarter of 2022, 143 vacancies were recorded for every 100 people without work, up from 133 in the first quarter. The trade sector is suffering from the greatest staff shortages, followed by business services and healthcare

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