‘More and more support in the Netherlands for higher wages’

Companies are finding it increasingly difficult to find employees. This is reflected in their wages, for example in those of cleaners and security guards. In their new collective labor agreements, security guards received an additional 14.5 percent in one year and cleaners 18 percent since 2022. In the Netherlands it was always said that higher wages would lead to more unemployment, and that wage moderation was therefore necessary. This has changed in recent years. There is more support for higher wages because higher wages lead to higher productivity. This is what Thijs Knaap from APG says.

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Marginal productivity
Economic theory says that in a labor market with free choice, wages should equal marginal productivity (the number of products produced by one additional worker). If you as an employer do not pay this, people will look for another job.

It is assumed that people have a fixed productivity and convert that into money. It is certainly not the only model. It can also work the other way around. Not: work harder and get more pay, but rather that people get more pay and therefore work harder.

People are happier with higher wages
The Netherlands has turned 180 degrees: from wage moderation until about ten years ago, to the situation now, in which we say that wages are not high enough, because higher wages ensure productivity and benefit the economy. Recent research indeed shows that people become happier with a higher wage. Unless you belong to the group that is chronically dissatisfied.

Another model is that if everyone is paid more, there will be more money in circulation. And this stimulates the demand for products. Companies sell more because workers spend more money with them, which also increases productivity.

This is reflected in Dutch policy via a long detour. The previous cabinet, Rutte IV, had stated in the coalition agreement that they wanted to increase the minimum wage by 10 percent. This was based on the Promising Labor Market Policy study.

More information:
APG
www.apg.nl