Economic growth of Amsterdam Metropolitan region leveling off

The economy of the Amsterdam Metropolitan Area is still growing, but the growth is leveling off. The aging population is causing structural shortages in the labor market, according to the Economic Outlook 2024 of the Amsterdam Metropolitan Area (MRA). Political developments, including the fragility of the Schoof I coalition and the rise of the radical right in Europe, are also causing uncertainty for the region, the researchers said.

The MRA is a partnership between the provinces of Noord-Holland and Flevloland, 30 municipalities, and the Amsterdam Transport Region.

In 2021 and 2022, the MRA’s economy grew by 7.5 and 6.9 percent, respectively, thanks to rapid recovery after the coronavirus pandemic. In 2023, the growth fell to 1.2 percent. The researchers expect that economic growth will not top 2 percent in the coming years.

Amsterdam itself, which accounts for about 52 percent of the money earned in the MRA and nearly half of the region's employment, is in good economic shape. But the researchers stressed that not everyone benefits equally from the city's prosperity - household wealth in Amsterdam is lower than in the rest of the country, and unemployment is relatively high.

Despite the positive economic growth expected for the region in the coming years, the MRA is still concerned because of the growing uncertainty caused by national and international developments. The researchers specifically mentioned the fragile trust between the coalition parties in the new Dutch government and the rise of the radical right in Europe.

Radical-right tends to be against cooperation with other countries and for closed economies. The MRA depends on an open economy in which countries work together. “These uncertainties and risks require continuous attention because several major transitions in the areas of energy, circularity, and climate require rapid, decisive, and consistently sustained measures,” the researchers said.

They also have concerns about the labor market. The researchers expect structural labor shortages in the region in the coming years due to the aging population, which is expected to peak in 2040. The MRA currently has 44 unfilled vacancies for every 1,000 jobs, and that will increase.

The report also shows an increasing number of mismatches in the labor market. Employers indicate that more and more employees are over- or underqualified for their work. The researchers attribute that mainly to the digital and energy transitions, which require new knowledge and skills.

More retraining and further training are needed to address this issue, the researchers said. “This is not only important to keep as many people as possible employable in the labor market, but also to limit resistance to the transitions. It is important that everyone can bear the transitions and associated necessary changes.”