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 Dennis Vermeulen

By Dennis Vermeulen | July 18, 2016 |

Wages and Hours


Labor costs are determined by the wages paid effectively and the hours worked productively. To be more precise, labor costs depend on minimum wage regulations, on working time regulations (including shift work and overtime compensation), on social security benefits, and on labor productivity. Not only do labor costs form a large part of the recurring operational costs, they are also easily affected. For many years the Netherlands has experienced moderate wage increases, achieved by collective bargaining and political stability. Because of high labor productivity and moderate wage increases, Dutch unit labor costs have risen less than those in surrounding countries. And it is surely this consideration which should be taken into account by the employer.

Labor cost in the Netherlands

The Netherlands scores well on labor costs because it offers value for money, costs per unit of output prove to be lower than in most surrounding countries. Compared to the hourly rates of income in Northwestern Europe, the Netherlands belongs to the middle group of countries. However, when the hourly rate of income is considered in conjunction with productivity, the Netherlands scores very well. This is because workforce productivity and labor flexibility is high. The Dutch labor force preserves high worker productivity levels as the result of good working attitudes and highly efficient processing. In the Netherlands, it is possible to have flexible working hours in employment contracts. Dutch employees offer a high return at a reasonable cost so that final labor costs influence companies’ performance favorably.

Wage Cost Subsidies

The Dutch government has set up special programs in an effort to increase job opportunities and work participation by offering financial benefits to employers. Under the WVAOW (‘Wet vermindering afdracht onderwijs’: law on tax reduction on education) employers can deduct a maximum of EUR 2,738 per employee, depending on the qualifications of the employee. The WVAOW applies to employees earning less than EUR 23,943 per annum (2011).

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