Dutch workers less productive; Labor productivity dropped 1.3%

Labor productivity in the Netherlands fell 1.3 percent last year - the second biggest decrease in 50 years, Statistics Netherlands (CBS) reported. Labor productivity doubled in the past five decades, and a decrease in productivity is rare.

Labor productivity is the yield per hour worked. Economists use this figure to indicate how efficiently people do their work. The only larger decline since 1974 was in 2009 when the Netherlands was in the midst of the financial crisis. Then, labor productivity fell by 2.2 percent.

The mining sector accounted for most of this decrease due to the phasing out of gas extraction in Groningen. Labor productivity also fell slightly among government employees and in healthcare. Other sectors still saw an increase in productivity, but less so than in previous years.

“A large part of that is due to the fact that many innovations that are needed for that higher productivity have already been done,” CBS chief economist Peter Hein van Mulligen told NOS. “So it is becoming increasingly difficult to work even more efficiently.

Another factor is that sectors with lower productivity, like healthcare and the government, are playing an increasingly big role in the Netherlands. These are also professions that are more difficult to automate. At the same time, “the importance of high-production sectors such as industry and agriculture has decreased,” Van Mulligen said.

The increase in labor productivity in the Netherlands has been slowing down over the past ten years. It nearly doubled since 1974, but most of that growth happened in the first 40 years of that period, when labor productivity increased by 1.5 percent per year on average. Since 2014, that average has been 0.4 percent.

Van Mulligen stressed that the decline in productivity is not all bad. “Ultimately, it is also about the quality of life and, therefore, of care. But of course, that care has to be paid for somewhere, and economic growth comes with higher productivity. So ultimately, it is important.”

“The Netherlands is still one of the most productive countries in the world,” Van Mulligen said. “If you look at the club of rich countries, the Netherlands is now around 10th place in terms of productivity. But not so long ago, it was still fifth. So we have fallen somewhat. In that respect, there is some work to be done.”