Netherlands steadily losing competition power within Europe: ING

​​The Netherlands is slowly losing its competitive advantage within the eurozone when it comes to the labor market, warned ING's economic research office in a new report. A senior economist at the bank, Bert Colijn, points out that labor costs per delivered product in the Netherlands have risen at almost the fastest rate of all eurozone countries since the introduction of the euro.

Productivity growth has been declining in the Netherlands for years. At the same time, wages have been increasing.

"In the meantime, southern European countries, whose high wages and low productivity have long been a concern in the EU context, have started to catch up," says the economist.

"The question remains, how bad is it?" Colijn acknowledges. "More Dutch companies than Southern European companies indicate that their competitive position within the eurozone is deteriorating, and exports have been growing less rapidly than in Southern European countries since 2015. But some catch-up growth in the south was also reasonable."

In Colijn's view, this is a sign that the export-driven growth model of the Netherlands may come under pressure. That is why it is important to stimulate productivity growth, he says.

“For this, it is important, among other things, to invest well in research and development, but also in physical, digital, and human capital, and to ensure that innovations can be widely used in the economy.”

“Colijn does not think strong wage moderation compared to other eurozone countries is wise. The labor shortages are already greater here than in other countries. Making the Netherlands more unattractive in that regard could be counterproductive.