Labor migration not the solution to staff shortages in the Netherlands: CPB

More migrant workers and knowledge migrants will not solve the widespread staff shortages in the Netherlands, according to the Netherlands Bureau for Economic Policy Analysis (CPB). Pushing part-time workers to work more hours will also not offer quick solutions. The government will have to intervene, the agency said on Wednesday.

The Netherlands’ labor market has been extremely tight for several years, with more vacancies than job seekers. Staff shortages affect almost all industries. “That has consequences for many companies and organizations and makes it difficult to realize social challenges in areas like housing, healthcare, education, and the energy transition,” the CPB said.

Various options have been mentioned to solve the shortages, including retraining workers, recruiting more workers from abroad, enticing part-time workers to work more hours, and encouraging the unemployed to start working again. However, according to CPB director Pieter Hasekamp, none of those options are viable solutions.

More migrant workers can alleviate shortages in some sectors, but they can’t work in all sectors due to the language barrier. Bringing more workers to the Netherlands also means more people spending money here, increasing the demand for goods and services. And that, in turn, means more workers are needed.

The Netherlands already has the highest labor market participation rate in the world, the CPB said. So convincing more non-workers to work will have limited effect. “The number of hours worked could still increase, but the part-time culture is deeply rooted in the Netherlands,” the CPB said. Such social norms change very slowly and won’t offer a quick solution.

Retraining also offers limited relief. Because of the tight labor market, the workload is high, and many companies, therefore, have no capacity to offer training. Moreover, there are hardly any sectors with a surplus of people to retrain for the many sectors with shortages.

According to Hasekamp, the only way out of this shortage is by addressing the demand for labor. And the government has an important role to play here. “The government can reduce the demand for labor by making clear choices in tackling social challenges and limiting the growth of expenditure,” Hasekamp said.

The government can improve employment conditions in crucial sectors with high staff shortages to make them more attractive than other sectors. For example, increase wages for teachers and healthcare workers so that more people want to work in those sectors.

Lower government expenditure will mean less demand for goods and services. That will cool down the economy and make more people available for other sectors.

Finally, the government can make its laws and regulations less complex, so fewer workers are needed for government services like the Tax Authority.