2002 OECD Economic Surveys: Netherlands 2002

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This 2002 edition of OECD's periodic review of the Dutch economy examines recent economic developments, policies and prospects and  includes special features on coping with population ageing and on productivity growth and the new economy.

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Structural reform

Until the recent deterioration in its macroeconomic situation, the Dutch economy had recorded a period of nearly two decades of virtually uninterrupted rapid growth with relatively few tensions. This good performance has undoubtedly reflected persistent and wide-ranging efforts of structural reform in the labour, product and financial markets, as well as in the social security system41 which have interacted with appropriate macroeconomic policies and wage moderation.  As a result, output growth and job creation have exceeded the EU averages, without – until recently – any major inflationary pressures (Table 13). Also, the unemployment rate has fallen to around 2 per cent, one of the lowest among Member countries. At the same time, however, the Netherlands continues to have a very large number of "inactives" – i.e. jobless people not seeking a job and on welfare. Hence, total working-age "benefit recipients not in employment" (inactives plus unemployed seeking a job) are still close to 1.5 million (in full-time equivalents), or nearly 20 per cent of the corresponding labour force. This largely explains why the participation rate and the employment rate (also in full-time equivalents) are still below the levels of the early 1970s, before the so-called "Dutch disease" set in. In other words, the socio-economic framework which was introduced in the early 1980s, and which is often referred to as the "Dutch model", has led to a remarkable recovery of the economy in general but, as yet, not to a commensurate decrease in the number of "inactives".

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