Increasing demand for costly care

08/03/2004 10:00

The production value of the care sector in the Netherlands rose by more than 130 percent between 1987 and 2002. This is a larger increase than for the production value of the Dutch economy as a whole, which rose by 110 percent in the same period.

This picture changes after correction for price changes: the increase in production volume in the care sector (+42 percent) is smaller in the period 1987-2002 than for the rest of the economy (+56 percent).

Production volume: care and the total economy

Production volume: care and the total economy

The increase in the production volume of the care sector was also smaller than the increase in real spending capacity of the Dutch population. This rose by about 52 percent in the same period.

Changing population composition

The demand for care is largely determined by the number of elderly people in the population. While the total population increased by about 10 percent In de period 1987-2002, the number of people aged over 80 rose by no less than 35 percent. This trend is likely to continue in the same direction, which means that in spite of the relative decrease in care production in recent years, the demand for care will continue to rise in the future.

Care relatively expensive

The price increase of care production (+ 63 percent) was considerably larger than that of GDP (+ 41percent) in this period.

If we set the development of production against the development in labour volume in the care sector, we see that the amount of labour per unit of product remains almost constant in time. This is in contrast to the total Dutch economy, where labour productivity has risen by an average 1.2 percent per year. Lagging labour productivity is a common phenomenon in the services sector in general. Care and services are fairly labour intensive branches in the economy.

Labour volume: care and the total economy

Labour volume: care and the total economy

Wage costs in step with total economy

On the other hand, across the total period the increase in wage costs per working year are almost the same for the care sector and the total economy.

Labour costs: care and the total economy

Labour costs: care and the total economy

Care will remain expensive in the future

If the expected increasing demand for care is combined with low labour productivity, care will remain expensive in the future, even if developments in labour costs in the care sector stay in step with rest of the Dutch economy (as in the period reviewed here).

Leo Hiemstra