The solution to the Dutch labour shortage lies in the hands of government, and immigration and encouraging part-timers to work more hours are not the answer, the government’s macro-economic planning bureau said on Wednesday.

Increasing the supply of workers is not only difficult, but it will not remove all the bottlenecks either, the CPB said in a new discussion document. 

“The real solution to labour shortages lies on the demand side and that is where the government itself has influence,” CPB director Pieter Hasekamp said.

There are currently 114 vacancies in the Dutch labour market for every 100 people without work, and the official unemployment total had fallen to 360,000 at the end of last year, according to figures from national statistics agency CBS. That takes the jobless rate to around 3.5%, which is down marginally on a year ago.

While higher wages, better working conditions, and productivity gains are expected to ease the problem in the coming years, change will be slow, the CPB said. At the same time, policies aimed at creating an additional labour supply can only play a limited role. 

“The Netherlands now has the highest participation rate in the world,” the agency said. However, while the number of hours worked could still increase, the part-time culture is deeply rooted in the Netherlands.”

In total, 73% of the population aged 15-to-75 have some form of work. According to CBS calculations, as well as 360,000 people who are officially unemployed, a further 525,000 part-timers would like to work more hours.

Migration can also temporarily reduce labour shortages in some sectors, the CPB argues, but in the longer term, more labour supply creates more economic activity and, as a result, the demand for labour naturally rises along with it.    

The real solution, the agency says, will have to come from the demand side by making sharp choices and reducing government spending. The government can also improve working conditions, including wages, in specific sectors, so that working in certain professions becomes more attractive.

In addition, the government can promote better productivity by supporting more automation where possible, introducing less complex laws and regulations and cutting red tape.