Collective deals pushed wages up 5.3% last year, but lower pay rises expected in 2025
Wages in the Netherlands rose by 5.3 percent in 2024 due to new collective agreements, following a 7.1 percent increase in 2023. However, employers are warning that pay rises in 2025 will likely be more modest, as unions push for higher wages amid concerns about economic sustainability and inflation. Employers’ association AWVN has cautioned that the current wage demands are not economically feasible, with the country’s productivity declining and inflation remaining high.
"The wage hikes we've seen are very high for our economy, especially with labor productivity dropping here," Puts told De Telegraaf, reflecting on the past bargaining season. He warned that union demands for this year’s agreements are creating unrealistic expectations among workers.
"Wages have increased by 25 percent over the past four years, while profits have risen by 31 percent," Puts added. "But these wages are never going to decrease, while companies may face losses this year or next."
Labor unions are pushing for a 7 percent wage increase, while the CNV union is seeking increases between 3.5 percent and 6 percent. Additionally, unions are calling for agreements on shorter workweeks.
Puts believes that the response to inflation should be seen as a success, but he cautioned against focusing solely on pay increases. "We should be thankful for how we've collectively managed inflation," he said. "Wages have increased the most in 40 years, but we must consider our earning capacity and investment climate moving forward."
AWVN’s director expressed concern over the union’s demands, which he views as economically unsustainable. “These expectations are too far removed from what is economically responsible,” he said. "This creates a predictable dissatisfaction among workers. These demands are ones we, as employers, cannot meet, and perhaps we shouldn’t try to."
He further argued that two-thirds of inflation is driven by high wages, which could harm both businesses and employees if the cycle continues.
While acknowledging the tight labor market, Puts emphasized that the rising disposable income of Dutch households should also be highlighted by unions. "The average disposable income per household has risen for the third consecutive year," he noted. "Unions should recognize this as well. If prices keep rising because wages continue to increase, it will hurt both businesses and workers."
The Dutch central bank (DNB) and the International Monetary Fund (IMF) have raised alarms about the risks of persistent high inflation. Puts warned that if inflation remains elevated, it could erode people’s savings and force companies to relocate or even shut down, costing hundreds of jobs.
"Increasing wages excessively could lead to a scenario where businesses go under or move abroad. This poses a significant risk to the Dutch economy," Puts told the newspaper.
AWVN reported that collective bargaining in 2024 saw few discussions about the long-term risks posed by high wages. Negotiations were often heated, with strikes in sectors such as public transportation, metals and technology, Heineken, and pharmacies.
Out of 512 collective agreements reached, only 12 percent involved principle agreements before the disputes escalated. Additionally, agreements had shorter durations compared to previous years.
At Heineken, workers went on strike for significant wage increases. Similar demands for higher wages and benefits were echoed by union members in other sectors, despite the increasing difficulty of meeting these demands.
Employers, however, have argued that wage disparities should not continue to widen indefinitely. "You cannot keep raising the lowest wages at the expense of those with higher salaries," said AWVN. "It places too much strain on internal relations within companies."
The trend of fewer one-off payments is also concerning for labor unions. In 2023, nearly a third of CAOs included one-off payments; in 2024, it was only one-fifth. On average, workers received an extra 662 euros in such payments, down from nearly 1,000 euros in the previous year.
Despite the ongoing wage discussions, Puts emphasized the need for a focus on improving productivity, a key factor in strengthening the Dutch economy. "We need to change this," said Puts. "In 2023, labor productivity actually decreased, causing our economy to slide further down the international rankings."
