The Dutch economy is strong and resilient, but not everyone in the Netherlands experiences it that way and many people are struggling financially, Dutch central bank chief Klaas Knot said on Thursday, at the publication of the bank’s annual report

From a macroeconomic perspective, the Dutch economy is doing “quite well”, Knot said. “Despite continued sluggish economic growth, the economy is still running above capacity and we have not entered a deep recession despite the pandemic and high inflation. Inflation is receding and unemployment remains exceptionally low.”

Nevertheless, he said, the economy also faces significant challenges when it comes to the labour and housing markets, and making the most of limited space. In particular, the “underlying inequalities that seem to be fuelling discontent in society” which are most evident in the housing market and the labour market – need to be addressed.

“We have to make choices,” Knot said. “What can help here is to ensure that all forms of economic activity are charged at their true cost, and phase out activities that currently take place below that cost. This implies setting a real price for energy consumption, carbon emissions and nitrogen pollution, as well as paying at least the statutory minimum wage for labour.”

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Knot later told the Financieele Dagblad in an interview that there is little point in supporting industry that can really only be done because of huge subsidies.

“I am not saying that there is no room for greenhouse horticulture, the meat-processing industry and the distribution sector,” he said. “These sectors also have highly innovative companies… that do try to solve labour market bottlenecks with robotisation.

“But within these sectors, there are also companies that are still based on underpaying workers and providing poor housing. The social cost of this kind of low-value labour migration is passed on to the surrounding community.”