Labor shortage is the biggest problem in Dutch industrial sector, expert says

The biggest problem Dutch industry is currently facing is a lack of workers. "The industrial sector does not have enough people to do all the work. That's the biggest problem, more so than a lack of demand," said Statistics Netherlands Chief Economist Peter Hein van Mulligen on Monday.

His remarks were in response to the revised data that showed the Dutch economy suffered a much sharper contraction during the first quarter of the year than previously thought. The overall economic contraction in the first quarter was 0.5 percent compared to the previous quarter, but the rapid early estimate from the CBS stated the contraction was 0.1 percent just after the quarter ended.

This significant adjustment is mainly because new data showed that the Dutch industrial sector's exports were more heavily impacted than previously estimated, Van Mulligen explained. Fewer products were sent abroad because the industrial sector has been struggling for some time.

The extraordinarily tight labor market situation probably played a major role in this, Van Mulligen said. "There are more vacancies than unemployed people. That puts pressure on the economy."

He described the situation in which the Dutch economy now finds itself as a period of "stagnation to slight decline." But that was also the case before the new figures were released, the economist emphasized. The overall picture has not changed, in his view.

For the time being, it does not look like the situation will change any time soon. According to Statistics Netherlands, consumer confidence has decreased somewhat in recent months. Van Mulligen does not rule out that the economy as a whole will still show growth this year. "But it won't be very exuberant."

Monday's negative adjustment also plays a role in the fact that CBS revised its method for correcting seasonal effects. That happens once every five years and this time it fell exactly between the first and second estimates of the quarterly figures.