Entrepreneurs worried that higher minimum wage will bankrupt businesses

The Dutch Senate is considering a bill by the PvdA and GroenLinks to establish an hourly minimum wage instead of a monthly minimum wage. This would mean that people who work more hours earn more. Entrepreneurs fear the higher wage costs will cause business closures and launched a petition calling for lower employers’ costs, the Financieele Dagblad reports.

The Eerste Kamer, the Dutch Senate, will debate the proposal by parliamentarians Barbara Kathmann (PvdA) and Senna Maatoug (GroenLinks) on Tuesday. They want to calculate the minimum wage per hour instead of the current fixed monthly amount and base it on a 36-hour work week instead of a 38-hour one from the beginning of 2024.

At the start of this year, the minimum wage increased by 10.14% to 1,934.40 euros per month. The amount is based on a 38-hour work week. In practice, minimum wage earners get 1,934.40 euros per month whether they work 36 or 40 hours a week. If the Eerste Kamer approves the GroenLinks and PvdA proposal, someone who works 40 hours a week will receive 2,149.33 euros per month, over 10 percent more than is currently the case.

That is too much, according to shopkeepers, hairdressers, and security companies who will protest at the Eerste Kamer during the debate on the proposal. “We are already spending considerably more on rent, purchasing, and energy. And now there are the explosively rising minimum wages. Lately, my margin and income have dropped by 5 to 10 percent. And that is without the effects of the minimum hourly wage,” Martin Groen of Groen Bloemsierkunst in Wokrum said to FD.

Twenty sector organizations will submit a petition against the hourly minimum wage on Tuesday. They fear that the increase in minimum wage will result in the entire wage structure having to be revised. “The distance with the higher wage scales is becoming too small,” said Jeroen Dijken, director of policy at retailers’ organization Inretail. “So those scales must also be raised.” The sector organizations also worry about the affordability of the higher minimum wages, they said in their petition, warning that “independent entrepreneurs and jobs will disappear.”

The sector organizations advocate for a phased introduction of the hourly minimum wage, combined with a structural reduction in employers’ costs. They suggest decreasing the employers’ contribution to social benefits.

PvdA parliamentarian Kathmann acknowledged that entrepreneurs are facing higher costs. But that can’t stand in the way of a fair law, she said. “The lower end of the labor market has not seen its position improve for a long time.”

Trade union FNV agrees with the parliamentarian. “Boohoo,” Zakaria Boufangacha of the FNV said to the FD about the petition. “What the employers are actually saying is that their employees can’t earn an income that they can live on. And that despite the fact that these are often thriving companies.”