Social benefits will cost considerably more due to minimum wage increase

The total cost for social benefits in the Netherlands will be 800 million euros higher this year than previously expected, the said benefits agency UWV on Tuesday. This increase in costs is due to the government's decision to raise the minimum wage at the start of the year because of the high rate of inflation.

The total amount of benefits distributed this year should amount to 24 billion euros. The total last year was approximately 21 billion euros, the UWV said as part of the the publication of its January memorandum. The statement is released annually by the agency to provide a prognosis for the year.

In addition to the higher costs that are the direct result of increasing the minimum wage, the UWV also expects the number of benefits recipients to increase. This will also put more pressure on the amount of benefits distributed by the agency.

For example, the number of unemployment benefits (WW) recipients fell sharply last year, but a slight increase is expected this year. As a result, unemployment insurance costs will increase by more than 300 million euros to 2.9 billion euros. The number of benefits for people with disabilities will also increase in 2023. The total benefit costs for this group will amount to more than 16 billion euros. The benefits for people who are ill or in need of care are projected to have a value of 4.4 billion euros this year.

The increased costs are, to a certain extent, offset by the income generated by employers paying a higher premium and the higher contributions from the government. The total assets of the UWV funds will therefore amount to more than 34 billion euros in 2023.