Europe 2020 in the Netherlands

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Country overview

The Netherlands has made some progress on meeting the 2012 CSRs, particularly on fiscal consolidation and the long-term sustainability of public finances. Some progress has also been made in response to the recommendations concerning the labour market and the housing market. Good progress has been made in response to the recommendation on innovation and science/business links. However, further measures remain necessary in all areas where the recommendations have not yet been fully achieved.

The policy response needs to strike a balance between the need to make adjustments and pursue reforms and the desirability of supporting near-term activity. Within the fiscal constraints, efforts to promote innovation and safeguard growth-enhancing expenditure will be key to achieving a balanced adjustment. Managing the transition in the housing market gradually and at a sustainable pace, yet with a sufficient level of ambition, will be a defining element of such a strategy.

The immediate policy challenge for the Netherlands will be to contain balance sheet adjustments, to restore confidence and harness growth while simultaneously stabilising public finances. There are considerable challenges when it comes to fiscal policy, the labour market, the housing market, investments in research and development (R&D) and education.

2013 European Commission's recommendations for the Netherlands in brief

The Commission has issued four country specific recommendations (CSRs) to the Netherlands to help it improve its economic performance. These are in the areas of:

  1. Sustainable public finances
    The Netherlands has levels of government deficit and debt above the thresholds set in the Excessive Deficit Procedure (3% and 60% respectively). In order to get its public finances back on a sustainable footing the Netherlands should continue with fiscal consolidation, whilst accelerating structural reforms and prioritising growth-enhancing expenditure.
  2. Housing market
    Imbalances and rigidities in the housing market are having a negative effect on the Dutch economy. In the property market the Netherlands should address tax incentives for home ownership, which leave households with high levels of mortgage debt and vulnerable to fluctuations in house prices. In the rental market, further steps should be taken to relate rents to household income and to target social housing at those most in need.
  3. Reform of pensions and long-term care
    The Netherlands is likely to face pressure on its public finances due to demographic change. It has already taken some important steps to reform the pension system, but to further enhance pension sustainability and adequacy these should be complemented by efforts to increase the employability of older workers. To offer a more efficient long-term care service, the Netherlands should follow through with its reform plans and consider additional measures to limit cost increases.
  4. Labour market participation
    In order to address future labour shortages, the Netherlands should encourage maximum participation in the labour market. Currently a number of groups, including second-earners, people with a migrant background, the disabled and older workers are relatively underrepresented. Further efforts should be made to speed up the removal of disincentives to work in the tax system, as well as revision of employment protection legislation and the unemployment benefit scheme.

See how the Netherlands compares with other EU Member States in key areas

European Semester Documents