According to new findings by Statistics Netherlands (CBS), labour productivity in the Netherlands has fallen by more than 1,3 percent - the first time this has happened in over a decade. It is becoming more difficult for Dutch workers to do their jobs more efficiently, as many sectors struggle to innovate for better productivity.
Labour productivity is the yield per hour worked and is an economic indicator of how efficiently work is done. For decades the Netherlands’ labour productivity had been rising by an average of 1,5 percent per year, but since 2014 the growth rate had slowed to an average of 0,4 percent per year, before dropping by 1,3 percent in 2023.
The main reason for this rapid decrease is due to the effect that phasing out gas extraction in Groningen has had on the mining sector. The rather high decrease of 16 percent in this sector since 2014 impacts the labour productivity of the whole country. There was also a decline in productivity among workers in the sectors of government and healthcare.
Other sectors that also experienced lower labour productivity than before included agriculture, financial services and manufacturing.
According to CBS, the growth of the Dutch economy can be attributed to employees working more hours or due to more value created per hour (i.e. higher labour productivity). Between 2014 and 2023, economic growth was largely driven by an increase in hours worked.
"A large part of that is due to the fact that many innovations that are needed for that higher productivity have already been done," said Peter Hein van Mulligen, chief economist of Statistics Netherlands. "So it is increasingly difficult to work even more efficiently."
It is particularly harder to introduce innovation and new technology to the service sectors and that is why productivity is lower. However, a decline in productivity is not all bad. "The Netherlands is still one of the most productive countries in the world," said Van Mulligen.
The five other EU countries that had lower growth in labour productivity over the last five years were Finland, Greece, France, Italy and Luxembourg. “The easy innovations have already been made,” Van Mulligen told NU.nl. “Countries in central and eastern Europe are growing faster because they have some catching up to do.”
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