PARIS: Unemployment in the Netherlands dipped below 3% recently, a figure for the most part unheard of in Europe since the oil shocks of the 1970s. Indeed, not so long ago unemployment in the Netherlands stood above 10%. Have the Dutch invented a Fourth Way to improved economic performance and are there lessons for the rest of Europe in the Dutch experience?
For some observers across Europe, the economic performance of the Netherlands is so surprising that they believe it a product of smoke and mirrors, or of some statistical trick. But as with those who doubted the reality behind American economic growth five years ago, this view is also emphatically wrong. Not only is unemployment way down in the Netherlands, but the rate of participation by the entire population in the labour market is growing sharply as well. True, the proportion of workers who remain classified by the state as sick or invalid – currently 12% – remains much too high, to be frank. But this proportion is less today than it was in the 1980s; so a higher unemployment rate is not being disguised by medical certificates.
Other disbelieving observers say that what we are seeing in the Netherlands is the effect of a shortening of the work week. The average work week in the Netherlands (counting both those who work full-time and those who work part-time) is 27 hours, compared to 29 hours in France. Advocates of a shorter work week as the road to full employment, indeed, often cite the Dutch example to declare victory for their arguments. Those against a shortened work week, however, dismiss the increase in the number of jobs that results from shorter working hours as a false solution – a crude swap of working hours for an increase in the number of workers.
Both hostile camps are wrong. There is a significant increase in part-time work in the Netherlands, to be sure, but it is due, primarily, to a large increase in labor participation among women. Thus part-time work does not mechanically explain the country’s lower unemployment rate.