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OECD Economic Surveys: Netherlands 2008

image of OECD Economic Surveys: Netherlands 2008

This 2007 Economic Survey looks at how, after a long stagnation during the first half of the decade, the Dutch economy has made a successful comeback. Living standards in the Netherlands are among the highest in the OECD, and over recent years growth has strengthened and unemployment has fallen.

This most recent survey focuses on labour utilisation, which has been the main source of growth in the past decade, but which is likely to slow sharply with the ageing of the Dutch population. Improving work incentives is therefore a key imperative. Although labour-market participation rates are high, there are several groups who continue to be less active.

This survey looks at the challenges threatening the prosperity of the Dutch economy, which include: addressing the effects of population ageing on the sustainability of the public finances; boosting the labour market involvement of under-participating groups; helping parents reconcile work and family responsibilities; and improving the immigration policy and the integration of migrants.

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Increasing working hours

Helping reconcile work and family

About two-thirds of Dutch female workers opt for part-time jobs, bringing down the country’s average working time to one of the lowest levels in the OECD. It is often said that the preference of Dutch women for part-time work reflects a social norm strongly favouring family values. This chapter shows that the Dutch-specific prevalence of part-time work also reflects the influence of public policies, notably regarding the provision of childcare and the taxation of second earners. Recent government decisions have started to make it easier for people to work longer hours and take care of children at the same time. Facilities to help parents balance their work and care responsibilities have been expanded, such as with more abundant and cheaper childcare services, but not all obstacles have been removed. Moreover, the marginal effective tax burden on second earners remains high as social benefits are conditioned on family income, which creates incentives to work part time. Thus, more emphasis is needed in further reducing the marginal effective tax rate. This could include both measures to expand existing work-related tax credits as well as reconsidering the withdrawal of benefits when the income of second earners rises as they work longer hours.

English

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