Wage Increases Remain Historically High Despite Slight Decline
Wage Increases Remain Historically High Despite Slight Decline
Economic pressures and labour market tightness drive wage growth, impacting business competitiveness.
Wage increases in the Netherlands have remained high in 2023, with an average rise of 5.2% in the first seven months. This figure, while lower than the 7.1% increase seen in the same period last year, still marks a significant rise. In July alone, wages increased by an average of 5%, according to preliminary figures from the employers' association AWVN.
The sectors experiencing the fastest wage growth include construction, hospitality, culture and sports, and education. A total of 25 collective labour agreements were concluded in July, covering 80,000 employees. Despite a levelling off in wage growth since the beginning of the year, the current 5% increase remains historically high.
High inflation and a tight labour market are the primary drivers behind the sharp rise in wages. Companies are striving to retain employees by offering attractive employment conditions. The unemployment rate in the Netherlands is currently around 3.6%, with job vacancies far exceeding the number of people seeking work.
High inflation rates have eroded employees' purchasing power over the past few years, leading to intense negotiations at collective labour agreement tables. In 2022, inflation was 11.6% and 4.6% in 2023. In July 2023, inflation slightly rose to 3.7%, driven by increased food prices and rental housing costs.
Economic Outlook
Economists at ING expect an average wage increase of 5% this year, while RaboResearch projects a 6% rise. For 2025, RaboResearch anticipates a wage increase of 4.6%. Before the COVID-19 pandemic, the average wage increase was 2.5%, which was considered high at the time.
The AWVN has expressed concerns about the rising wage costs and their impact on the business climate and competitive position. While workers are experiencing solid wage growth, the increasing labour costs pose challenges for companies trying to maintain profitability.