New labor law to push up prices in hospitality industry: ABN Amro

Consumers can expect to pay more at hotels, restaurants, bars, and campsites next year, according to economists at ABN Amro. The Labor Market In Balance Act, which will be implemented in January, will increase labor costs, which turn will increase prices, NOS reports.

The Labor Market In Balance Act is intended to encourage companies not to hire people on flexible contracts, but on permanent once. According to the economists, this law will make the hiring of staff more expensive - especially in the hospitality industry, where almost half of the staff work on flexible contracts because there is more work in the summer than in the winter.

The new law means that employers will have to pay more unemployment insurance for flexible workers over the age of 21, and they will have to ay for hours even if it turns out at the last minute that the staff are not needed. ABN Amro expects that the hospitality industry will see its personnel costs rise from around 30 percent to 32 percent.

"The timing of this law is a bit unfortunate for hospitality companies", ABN Amro economist Sonny Duijn said to NOS. "In the past three years, the number of hospitality businesses with a staff shortage has risen from 5 to 29 percent. So that can also cause rising staff costs. And then the law will be added on top of it."

The hospitality industry has seen a considerable increase in turnover over the past years, but that came with an increase in supply, Duijn said. "So the cake has to be shared between more companies. Sometimes the growth seems stronger than that of an individual company."

The economists therefore believe that restaurants, hotels, campsites, bars and other hospitality businesses will cover the higher personnel costs by increasing their prices. Rober Willemsen, chairman of hospitality trade association KHN, agrees. "Many hospitality companies cannot afford to bear the higher personnel costs on their own account", he said to NOS.

Prices at hotel and catering businesses already increased relatively sharply over the past six months, by 4.4 percent. This is mainly due to the increase of the low VAT rate from 6 to 9 percent.