Central Planning Bureau’s Perspective on Labor Market Shortage Solutions

This article was last updated on February 28, 2024

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Introduction

The Central Planning Bureau (CPB) recently issued a warning, advising that the widespread belief of labor migration having the potential to ameliorate the tight labor market situation may not be as plausible as it appears. Notably, the bureau points out that it is intricate governmental actions that are causing pressure on the labor market.

Labor Migration: A Boon or a Bane?

The CPB expressed its arguments against the viewpoint that inviting migrant workers could rectify the labor market shortage. In due course, bringing in more migrant labor will ultimately lead to more vacancies, according to CPB. This results from a domino effect; increased labor migration leads to population growth, which incites more economic activity, culminating in additional vacancies.

Full-time Work Culture: A Dead-End?

The bureau also exhibited skepticism about the effectiveness of governmental attempts to make Dutch people invest more hours into work. It stated that making people work more could induce a certain increase in the number of hours worked, although it’s unlikely to bring about a significant shift due to the deep-rooted part-time work culture in the Netherlands. The findings of previous research hint at the possibility that even free childcare may not induce a notable change in this culture.

The Dutch Workforce Scenario: A Reality Check

The CPB contradicts the perception that Dutch people put in very few hours at work. The workforce has witnessed a considerable growth spurt in recent times, with many people who were previously unemployed now joining the workforce. The year 2022 alone will see an expansion of the workforce by 200,000 individuals.

Boosting the Economy: What Could Work?

The CPB suggests that the appropriate move for the government would be to curtail the demand for labor rather than heightening the labor supply. For instance, a critical examination of its own expenditure, specifically on new personnel, would be in order. Governmental spending has surged considerably since 2018, fueling significant economic growth. A portion of this fiscal input is vested directly in the staff recruitment process. This includes recruitment for roles associated with corona pandemic management, such as those in the GGDs, as well as for asylum facilitation and defense. However, the CPB highlights that these expenditures are currently not being compensated through taxes.

Instead of acquiring more staff, the government should design strategies to make certain professions more attractive. This might involve granting higher salaries to socially important professions, thereby bolstering their appeal in contrast to private sectors, as suggested by CPB director Pieter Hasekamp.

Conclusion

The Central Planning Bureau’s revelation essentially challenges the conventional wisdom that the crisis of a dearth in the labor market could easily be overcome through more migrant labor and bridging the gap between part-time and full-time work cultures. The bureau’s insight sheds light on the fact that comprehensive macroeconomic policies focusing on tax revenue allocation and job attractiveness may take center stage in addressing labor market insufficiencies.