Boosting Dutch Labor Productivity: Diagnostic and Policy Options
Selected Issues Papers, September 5, 2025
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Bibliographic details
- Authors: Shinya Kotera
- Published: September 5, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229021821.018
Summary findings
- Although the level of Dutch labor productivity is high, its growth faces challenges.
- From an employment perspective, productivity gains depend on improving education outcomes, strengthening vocational training, and reducing labor market duality.
- Maintaining high skills across generations amid population aging and better integrating migrants are crucial for sustaining productivity.
- From a firm perspective, promoting business dynamics and encouraging productivity-enhancing investment will be vital.
- Continued progress on the EU single market and addressing investment bottlenecks will be essential to raise productivity.
Employment-perspective diagnostics
- Key constraints identified:
- Education outcomes need improvement to raise worker skills.
- Vocational training requires strengthening to better match labor market needs.
- Labor market duality reduces overall productivity by segmenting employment conditions.
- Population aging threatens the maintenance of high skills across generations.
- Integration of migrants is important to fully utilize labor resources.
Firm-perspective diagnostics
- Firm-level impediments to productivity growth:
- Limited business dynamics reduce reallocation toward more productive firms.
- Insufficient productivity-enhancing investment by firms.
- R&D activities and productivity spillovers are currently underutilized.
- Investment bottlenecks constraining firm investment:
- Labor shortages.
- Electricity grid constraints.
- Policy uncertainty.
Policy options and recommendations
- Employment-side policies:
- Improve education outcomes across the system.
- Strengthen vocational training to better align skills with employer needs.
- Reduce labor market duality to create more uniform employment incentives and opportunities.
- Implement measures to maintain high skills across generations in the context of population aging.
- Enhance integration policies for migrants to improve labor market participation and productivity contributions.
- Firm- and investment-side policies:
- Promote business dynamics to facilitate firm entry, exit, and reallocation toward higher-productivity firms.
- Encourage productivity-enhancing investment through addressing bottlenecks such as labor shortages, electricity grid constraints, and policy uncertainty.
- Support R&D activities and policies that promote productivity spillovers across firms and sectors.
- Advance progress on the EU single market to enlarge opportunities for scale and competition.
Key themes for implementation
- Balance measures between boosting supply-side skills and creating firm-level incentives for investment and innovation.
- Coordinate infrastructure and regulatory reforms to remove specific bottlenecks (labor, electricity grid, policy uncertainty).
- Leverage EU single market integration to amplify domestic reforms and diffusion of best practices.
Source: Boosting Dutch Labor Productivity: Diagnostic and Policy Options — https://www.imf.org/en/publications/selected-issues-papers/issues/2025/09/04/boosting-dutch-labor-productivity-diagnostic-and-policy-options-570082
Content in this bundle
- Sipea2025120