2006 OECD Economic Surveys: Netherlands 2006

image of OECD Economic Surveys: Netherlands 2006

This 2005 OECD Economic Survey of the Dutch economy (published as the second issue in the 2006 volume) examines key economic challenges including putting public finances on a sustainable path, increasing resiliency in labour markets, strengthening product market competition, and improving the environment for innovation. As always, it assesses short-term prospects and provides a series of policy recommendations.

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Labour Market Reform to Increase Resilience and Labour Utilisation

This chapter discusses labour-market reforms to increase macroeconomic resilience and labour utilisation. Strict EPL on regular contracts and long unemployment benefit duration weaken re-equilibrating mechanisms that drive the economy back to trend. Regulations that make EPL strict on regular contracts are identified in the first part of the chapter, along with recent and planned reforms to ease EPL on such contracts and suggestions for further reforms. The need to sharpen incentives for unemployed persons to search for a job early in their unemployment spell is also touched upon. Concerning labour utilisation, the main weaknesses are in female working time and in the employment rate for older workers. Low female working time appears to be mainly attributable to difficulties that mothers have in reconciling family and work life. Childcare and out-of-school-hours care arrangements are being strengthened but more needs to be done. To encourage older workers to remain in the labour force longer, access to publicly subsidised routes to early retirement has progressively been made more difficult but there is still scope to go further, especially in respect of unemployment benefit. At the same time, more needs to be done to enhance the employability of older workers.

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