The Netherlands and the Lisbon agreements: current state of affairs

08/11/2005 14:00

In the years to come the Netherlands will put in extra effort to promote economic growth and realise higher labour force participation and output rates in tune with the Lisbon Convention. This is imperative because, according to the most recent measurement of the so-called Lisbon indicators, the Netherlands is gradually losing its leading position. 

Losing its leading position

In March 2000 government leaders of the EU member states collectively agreed in Lisbon to transform Europe into the world’s most dynamic and competitive economy by the year 2010. Fourteen key performance indicators have been formulated to monitor progress in a number of policy areas. The Netherlands plays a leading part in only two Lisbon key indicators, i.e. labour force participation and GDP per capita, but other countries are closing the gap. As far as the remaining indicators are concerned, the Netherlands does not occupy a prominent position.

National Reform Programme

In the recently published National Reform Programme 2005-2008 (Nationaal Hervormingsprogramma Nederland 2005–2008) the Dutch government has laid down steps to be taken to implement the Lisbon strategy in the years to come. The government seeks to reinforce economic growth and employment. Sustainable economic growth, improved labour force participation and higher output growth are the main objectives.

GDP per capita: initial advantage evaporates

What is the position of the Netherlands at the start of the programme? GDP per capita  and labour participation are high in comparison with other EU countries. In 2004 the Dutch GDP per capita was almost 17 percent higher than the eurozone average and 25 percent higher than the EU-25 average, making the Netherlands one of the most prosperous countries of the EU, but other countries are closing the gap. In 2001 the Dutch GDP per capita was 28 percent up on the EU-25 average. In recent years economic growth in the Netherlands was lagging behind the growth in the EU and the level of prosperity deteriorated compared to the EU-25. The countries which recently joined the EU in particular are performing well.

GDP per capita

GDP per capita

High participation rate due to part-time jobs

(Net) labour force participation in the Netherlands is almost 10 percent above the EU-25 average, but the picture is somewhat distorted, because many employees work on a part-time basis. Since 2002, when the situation on the labour market deteriorated, the labour force participation rate fell slightly. In the period 1997–2002 the rate increased noticeably from 68.5 to 74.4 percent. Due to ageing of the population, labour force participation in the 55 - 64 age bracket is becoming increasingly important. Since 1997 the participation rate in the Netherlands in this age category has increased by no less than 13 percentage points to over 45 percent in 2004. This is well above the average levels in the EU-25 and the eurozone.

Labour force participation rate

High participation rate due to part-time jobs

Unemployment below EU average despite sharp rise

Unemployment, according to European standards, was 4.6 percent in 2004, as against 9 percent in the EU-25. Part of the contingent of unemployed are long-term unemployed. In the last few years the percentage of long-term (i.e. 12 months or more) unemployed was far below that of the EU-25 (4.1 percent), but has risen from 0.6 to 1.6 percent since 2001, as a result of further worsening of the economic climate.

Long-term unemployed

Long-term unemployed

Frederik Heinsius, Hermanus Rietveld and Gert-Jan van Steeg