2007 Progress Report on the Dutch National Reform Programme for 2005 – 2008

2007 Progress Report on the Dutch National Reform Programme for 2005 – 2008 In the context of the Lisbon Strategy 1 Table of Contents Part I General Chapter 1 Tackling challenges 4 Part II Background Chapter 2 Macro-economic policy 15 Chapter 3 Micro-economic policy 20 Chapter 4 Employment policy 42 Annexes Annexe 1 Structural indicators / Dutch position 62 Annexe 2 EMCO indicators 66 Annexe 3 Contribution by the provinces 67 2 Part I General 3 1 Tackling challenges 1.1 The National Reform Programme (NRP) and the progress report A new government with solid ambitions for growth and employment … A new coalition government made up of the Christian Democratic Alliance (CDA), the Labour Party (PvdA) and the Christian Union (ChristenUnie) took office early in 2007. The new Cabinet’s objectives dovetail well with the priority areas (see table 1.1) adopted during the 2006 European Council in the context of the Lisbon Strategy for growth and employment. Actions were linked to these priority areas during the 2007 Spring Council. Since the start of the new Cabinet’s term of office, the Minister of Economic Affairs Maria van der Hoeven has been coordinating the Lisbon Strategy at the political level. The policy programme of the fourth Balkenende Government is called “Working together, living together”. It sets out the Cabinet’s policy plans for the period 2007-2011 based on six pillars. The Lisbon Strategy is reflected in three of the pillars. Table 1.1 shows a number of the most important Dutch measures. 1 Table 1.1: Cohesion between the Policy Programme and the EU priorities Policy Programme Innovative, competitive and Sustainable living environment Social cohesion enterprising economy Priority areas (Pillar 3) (Pillar 2) (Pillar 4) Participation - Increase labour market participation - Improve quality of education - Overall flexicurity policy Business climate - Reducing the administrative/ regulatory burden - Entrepreneurship as a permanent component of education - Expansion of electronic business counter Knowledge and - Promoting excellence in innovation education and research - Innovation programmes for societal challenges - Simplification of procedures for knowledge workers Energy and - Innovation programme for sustainability societal challenges: energy - Commitment to improving EU ETS - Tax greening - Public sector as launching customer 1 Pillars II, III and IV are the most relevant for growth and employment. Pillars I and VI relate to an active international and European role for the government and the public service sector respectively, and include several measures that are relevant for growth and employment. Pillar V, on safety, stability and respect, has no direct links with growth and employment. 4 … in close cooperation with social partners and local governments … In the first 100 days of its term, before adopting the Policy Programme, the Cabinet initiated a dialogue with the public, the social partners and local authorities. This demonstrates the Cabinet’s commitment to increasing social engagement. The social partners have contributed in various ways, not least during the Participation Summit, where agreements were made to increase labour market participation. During the Economic Summit the Cabinet spoke to business leaders about the future of the economy. As they did last year, the social partners will draft a report about their contribution to achieving the Lisbon objectives. In the context of the Participation Summit, the Cabinet also made agreements with the Association of Netherlands Municipalities (VNG) since local authorities also make a valuable contribution to growth and employment. The agreement is aimed at helping social assistance benefit claimants and people not entitled to social security to enter the labour market, In the “Everyone takes part” project concrete policy measures are developed, together with the relevant national, regional and local actors, to get 200,000 more people into work in the next four years. The project will be presented at the state opening of parliament in September 2007. The social partners and local authorities were also involved, through the regular consultation bodies, in drafting this Progress Report. In 2007 EU Member States are not required to submit a National Strategic Report on Social Protection and Social Inclusion (NSR). Since a new government took office the Netherlands reported the most important new policy focal points in the areas of social inclusion, pensions, health care and long-term care in the form of a short letter to the European Commission. Box 1 Examples of local government involvement: The Hague and Eindhoven - Municipalities are implementing the Work and Social Assistance Act. A number of municipalities, including The Hague, is doing so in accordance with the ‘showroom model’. The focus is on the activation chain of work and income, self-sufficiency and personal responsibility and cooperation with the partners in the chain (Centre for Work and Income (CWI), Employee Insurance Schemes Implementing Body (UWV) and municipalities). In this way, the Municipality of The Hague integrates services for jobseekers by providing a one- stop shop for all the services provided by these bodies. Employers, too, have just one account manager with whom they can make arrangements in a wide range of areas aimed at work and/or training for everyone. - In the Eindhoven region local authorities (21 municipalities), high-tech companies, institutions of education and knowledge-intensive organisations cooperate closely within the context of the Brainport agenda: Beyond Lisbon . Brainport aims to become a technology hotspot in Europe. It is one of the most important drivers of the Dutch economy, accounting for approximately 45% of national private spending on R&D. … consistent with the recommendations and points requiring attention for the Netherlands. In order to do justice to the Cabinet’s policy ambitions, this progress report is more forward-looking than the previous progress report and offers a more future-oriented perspective on efforts to promote growth and employment. The country-specific recommendations for the Netherlands and points requiring attention as proposed by the European Commission and adopted by the 2007 Spring European Council will be given special attention. Table 1.2 shows recommendations and points requiring attention, including a few important measures that the Netherlands will be implementing in 5 these areas. The distribution of responsibility between the government and the social partners is specified further in chapter 4. Table 1.2: Recommendations, points requiring attention and policy response for the Netherlands Recommendation & points Policy response requiring attention Recommendation - Improve labour supply, - Improve financial incentives, enhance options for particularly with respect to combining work and care, strengthen market position women, older workers and of people aged 45+, stimulate diversity policy, combat vulnerable groups. discrimination, improve quality of education and prevent pupils’ leaving school early. Points requiring - Increase private investment in - SME innovation offensive, innovation programmes for attention R&D societal challenges, ‘key areas’ approach - Create one-stop shop for - One-stop shop has been realised. Also, more options hiring the first employee for electronic business counter. - Increase the number of hours - Tax measures that make working more rewarding, worked expansion of parental leave and pre-school and after- school care Macroeconomic, microeconomic and employment measures are discussed in detail in chapters 2, 3 and 4 based on the 24 integrated guidelines. The most important developments in the four priority areas are described in this chapter, following the discussion of the economic situation. 1.2 Situation: robust economic picture The outlook for the Dutch economy remains favourable. Economic growth in the Netherlands is expected to be 2.75% in 2007, 2.5% in 2008 and is expected to exceed the euro zone average every year in the period 2006-2008. Table 1.3 Real growth of GDP in % 2000 2001 2002 2003 2004 2005 2006 2007 2008 EU27 3.9 2.0 1.2 1.3 2.5 1.8 3.0 2.9 (f) 2.7 (f) Euro zone 3.9 1.9 0.9 0.8 2.0 1.5 2.7 2.6 (f) 2.5 (f) Netherlands 3.9 1.9 0.1 0.3 2.0 1.5 2.9 2.8 (f) 2.6 (f) Source: Eurostat 2007 The economic growth is broadly based. Domestic expenditure and exports each account for about half of GDP growth. This reflects the optimism among consumers and in the business community. Nevertheless, the Netherlands’ competitive position has still not recovered from the decline in the early years of this decade, which was brought about by significant increases in labour costs, including pension premiums. There has been a slight improvement in the competitive position in the past few years, but this years developments will be less favourable than last year, mainly due to the strength of the euro. On the other hand, ‘Made in Holland’ exports are profiting from favourable world trade developments. 6 A high business confidence index, improved profit margins and a higher degree of capacity utilisation are the key ingredients for further expansion of production capacity. The significant growth in investment in 2006 can largely be explained by the fact that companies were increasingly investing in expansion. Thanks to favourable economic developments, the number of business start-ups reached a record level in 2006. More than 90,000 people started a company last year, which is over 10,000 more than in 2005.

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