Take-home pay set to rise 2% in Netherlands; Big bump in purchasing power likely

Staff employees in the Netherlands are likely to see a slight bump in take-home pay next year. Net pay is likely to rise for many people by nearly two percent because of tax cuts announced on Budget Day, wrote Wouter Koolmees, the Minister of Social Affairs and Employment, in a letter to parliament.

Workers earning 105 thousand euros, three times the national average, will see the biggest bump, equal to about 2.1 percent. Minimum wage workers will only see a net increase of about 0.9 percent. Workers earning the national average of 35 thousand euros should see an increase of 1.9 percent, Koolmees said, while those earning 70 thousand euros will see a 1.6 percent bump.

He attributed the positive changes for workers to increases in the general tax credit and the employed person’s tax credits. “This is separate from salary increases that they may receive from their collective labor agreements,” the ministry said in a statement.

Most people will also feel an improved economic situation with an increase in purchasing power, both the minister and the Central Planning Bureau said. This is especially true for families with children, who will also be affected by an increase in childcare benefits.

“The Cabinet uses these numbers and calculations to monitor what, against the background of wage trends and inflation, among other things, the overall effect is of the pursued policy,” Koolmees explained.

These families with single-earners could feel the equivalent of a 4.9 percent pay increase, while dual-earning families could feel like they are earning 4.6 percent more. Individual single parents will feel a far lower benefit, at 0.6 percent if earning the minimum wage, with the plurality of single parents feeling a 1.8 percent increase.

The consumer price index said inflation was likely to rise from 1.5 percent to 1.6 percent, Koolmees said. As this was lower than the rate of wage growth, and the care premium increase, many average people were likely to see a nice boost in purchasing power.