The Dutch economy.
Economic situation: continued recovery.
The Dutch economy was in manifestly better
health than for some years past. This is very
clear from the development of the principal
economic magnitudes. The gross national
product again displayed growth, albeit still
modest at 2%; the number of unemployed fell
below 750,000; inflation was less than 2% by the
end of the year; the current account continued
to show a substantial surplus; and the Budget
deficit again declined. Furthermore, the basis of
the recovery became better balanced in the sense
that the overall growth reflected not only higher
exports but also an increase in industrial invest
ment (up by 8% in volume terms) and an
improvement, albeit still fitful, in consumer
spending.
If the emphasis is placed on the state of various
magnitudes, rather than the development, the
picture appears somewhat less rosy. The
situation in the Netherlands is then seen to
contain a number of major imbalances. First and
foremost, of course, there is the high rate of
unemployment (13.6%), the most disturbing
aspect of which is that the jobless rate among
young people still is high (26.5%).
In the discussion of ways to solve the unemploy
ment problem, there is still no agreement as to
which of a number of approaches should have
priority: wage costs moderation, further
reduction of the working week, a higher growth
rate or improvement of the operation of the
labour market by means of flexible conditions of
employment and better matching of training to
the requirements of industry. In our view,
continuation of the policy aimed at moderating
wage demands should receive priority, because
this prevents as far as possible the loss of existing
jobs while at the same time encouraging the
creation of new ones. In addition, great care
must be taken to ensure that the policy pursued
is conducive to growth; flexibility and training
are the keynotes. While it continues to interfere
with the implementation of the above-
mentioned measures, the further shortening of
the working week cannot be expected to have a
long-term impact on the unemployment
problem.
The beneficial effect on employment of
increased economic growth also shows how
important it is for the recovery of investment to
be sustained. For however sharply investment
may have risen, it is still at a very low level.
There is thus a degree of imbalance in this area
also, the counterpart of which is the large
balance of payments surplus. There is every
reason to anticipate an even greater willingness
to invest in the years ahead, provided that the
manifestly improved external circumstances
which commerce and industry have faced in
recent years do not worsen. Of importance in
this context are the significant improvement in
profitability, to which more moderate wage
20
There was strong growth in investment by Dutch industry.
Dutch exporters made an important contribution to economic
activity.
