This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.

Russia’s war of aggression against Ukraine disrupted a strong rebound from the COVID-19 pandemic. The cost of living has increased, spurred by rapidly rising energy prices.The government has acted swiftly to support households and firms, but should now shift from crisis mode to longer-term sustainability considerations.

The Dutch economy recovered quickly from the COVID-19 shock, returning to its pre-pandemic growth path by early 2022. But rising inflation, amplified by rapidly rising global energy prices following Russia’s war of aggression against Ukraine, has been weighing on growth. A healthy fiscal position allowed for temporary support against high energy costs, but support should become more targeted to vulnerable households. Streamlining the tax system would enhance macro-financial stability and productivity by reducing debt bias and distortions in investment and labour supply decisions. Policy reforms to advance the green transition can reduce dependence on fossil fuel energy and the country’s exposure to global energy price fluctuations.

The Dutch labour market is strong but very tight. The unprecedently fast recovery from the pandemic, fast-changing skill demand, low hours worked, and the segmentation of the labour market contribute to labour shortages, weighing on growth potential and jeopardising the green and digital transitions. To tackle shortages, lifting labour supply is a necessary complement to raising productivity, as labour-saving innovation alone is unlikely to significantly reduce overall labour demand. Lowering the effective tax rate on moving from part-time to full-time employment and streamlining income-dependent benefits while improving access to childcare would both increase labour input and reduce gender inequalities in career prospects, incomes, and social protection. Narrowing regulatory gaps between regular and non-standard forms of employment further would alleviate shortages by facilitating transitions between occupations. Better integrating people with a migrant background and easing medium-skill labour migration in specific occupations would help to fill vacancies, especially those related to the low-carbon transition. Scaling up the individualised training scheme while ensuring quality and providing stronger incentives for co-financing by employers would boost the supply of skills and promote growth in expanding industries. Rewarding teachers in schools where shortages are significant and facilitating mobility between vocational and academic tracks would improve equality in education and better prepare the future workforce.