Corporate profits rose more than wages through Covid-19 pandemic, energy crisis

Despite two significant shocks to the Dutch economy—the COVID-19 pandemic and the energy crisis—corporate profits and employee remuneration grew between 2019 and 2023. However, company profits grew quite a bit more than the money paid to employees, Statistics Netherlands (CBS) reported on Wednesday.

Corporate profits increased by 32 percent between 2019 and 2023. According to CBS, profits grew along with the economy. Companies also achieved high profits partly due to the various subsidies that were part of the government’s coronavirus support measures.

The statistics office pointed out that higher profits don’t automatically mean higher profitability because they can also be caused by more production. But it added that the profit ratio - the standard for measuring profitability by looking at the operating profit as part of the added value - “remained at a historically high level.”

Employee remuneration also increased and came out 24 percent higher in 2023 than in 2019. This increase is partly due to the creation of more jobs and partly due to higher wages, CBS said. “The strong economic growth in 2021 and 2022 and the tight labor market were important causes of this.”

Trade union FNV has long complained that corporate profits were rising faster than wages. “While families worry about their bills and livelihoods every day, companies are raking in ever-increasing profits,” FNV board member Petra Bolster told ANP. The trade union plans to push for wage increases of 7 percent in the coming year.

De Nerlandsche Bank president Klaas Knot again raised concerns about a wage-price spiral, in which higher wages lead to higher inflation, speaking to Nieuwsuur this week. “If wages do indeed increase by 7 percent, that will add a full percentage point to inflation in 2026. That means that your and my shopping basket will continue to rise in price for even longer. The parties at the collective labor agreement table must take that into account,” Knot said.

Netherlands residents’ disposable income—employee remuneration, plus other forms of income, adjusted for price increases—increased by 5.4 percent from 2019 to 2023. The population also grew during this period. In 2023, the average disposable income per inhabitant was 2.2 percent higher than in 2019.

“This average does not apply to everyone, and there can be large differences between population groups,” CBIS said. “The available figures on income groups show that households in the lower income groups have made more progress than households in higher income groups.”