The Unassuming Economist

The IMF’s latest report on Netherlands says:

“Besides various cyclical factors, rising labor market flexibility may have contributed to the wage moderation in the Netherlands. Like other advanced economies, slower productivity growth and lower expected inflation are important drivers to the wage moderation in the recent years. In addition to that, remaining slack in the labor market also weighed on wage growth. Like many other EA or EU countries, foreign wage growth has been showing strong spillovers to domestic wage development, especially for small open economies with strong trade exposures that strive to safeguard competitiveness. But more specifically to the Netherlands, rising labor market duality/flexibility with higher share of temporary and self-employed workers, may have also contributed to stagnant wage growth. Reforms to harmonize labor market employment contracts in a manner that increases flexibility but also allows greater bargaining power for the more “flexible” employees might allow both greater flexibility and higher wages.”