Annual Labor Market Forecast: Slow Job Growth and Mismatched Hiring Needs in the Netherlands

Job growth in the Netherlands is almost at a standstill. Although the number of positions will increase by 1.4 percent this year, the figure is expected to fall to 0.5 percent in 2024. There will therefore be sectors where contraction will take place, such as construction and financial services, but the labor market will remain tight.

This can be read in the annual labor market forecast of the UWV benefits agency. He attributes the leveling off to lower economic growth and the chronic tightness on the labor market. As a result, the number of new vacancies will also shrink by 119,000 this year, about eight percent, and by another three percent next year.

According to the UWV, the decrease in the number of vacancies is due to the lower economic growth, which means that job growth is moving into a lower gear than in the past two years. In addition to companies producing less due to the deteriorating economy, persistent staff shortages are also increasingly hampering growth, expects labor market expert Rob Witjes.

“In the past, the economy almost exclusively dictated the labor market,” says Witjes. “Now we see that the supply of labor in particular is more emphatically determining the limits of the economy. Companies are sometimes unable to grow further due to the perceived shortage.” According to Witjes, they will have to think of other ways to increase production, such as focusing on automation and smarter design of processes and functions.

In 2022, the Netherlands will have almost 1.6 million new vacancies, the highest number ever. “That has now come to an end.”

Because there are fewer vacancies, you might think that there is less work to do and companies therefore have less need for new staff. But that is not the case, because vacancies also arise because staff change jobs or, for example, retire.

So even though there are fewer vacancies, the shortage on the labor market remains, says the UWV. “The shortage is largely structural, because supply and demand are insufficiently matched in terms of content.”

According to the benefits agency, there is mainly a ‘qualitative mismatch’. This means that the competences of people looking for work do not always match the demands of employers. Retraining for more promising professions can help, according to the UWV.