Netherlands workers putting in more hours for less money

empty wallet. (Picture: Twitter/@SeaEph)

After the outbreak of the credit crisis in 2008, workers in the Netherlands are working longer hours for lower compensation, according to Statistics Netherlands on Wednesday. This trend can partly be attributed to the relatively high unemployment rate and the growing number of flexible and self-employed workers.

Between 2002 and 2008 labor productivity of the overall economy, excluding public administration and education, grew by an average of 1.6 per year. The inflation-adjusted compensation also increased in this  period, thou well below the development of productivity.

In the second half of 2008 the credit crisis broke out, which resulted in a strong decline in labor productivity in 2009. According to Statistics Netherlands this is a common pattern at the start of a crisis and was caused by the quantity of labor and capital could not be adjusted quickly enough to a fall in demand. After 2009 labor productivity increased by an average of 0.8 percent and compensation per employee decreased by 0.1 percent.

According to Statistics Netherlands, the cause of the declining compensation while labor productivity is increasing is the significant reduction of tension in the labor market after 2008. The number of unemployed rose sharply and was in both 2013 and 2014 well over 600 thousand. In such a labor market employees demand little and there is no incentive to increase pay.

Another cause for the declining compensation is the flexibility of the labor market. The number of flexible workers are increasing, while the number of permanent employees decrease. Since 2009 the compensation for flexible workers is lower than that of permanent employees.