Economic surveys and country surveillance

Economic survey of the Netherlands 2008: Reaping the economic benefits of immigration

 

Contents | Executive summary | How to obtain this publication | Additional info

The following OECD assessment and recommendations summarise chapter 5 of the Economic survey of the Netherlands published on 31 January 2008.

 

Contents                                                                                                                   

Immigration policies should be adapted further to respond to labour market needs

Immigrants have traditionally made an important contribution to increasing the labour supply, as first-generation immigrants and their children constitute about 19% of the labour force. In recent years, however, the net flows of migration turned negative, as emigration increased while inward migration dropped, in part reflecting adverse cyclical developments. The drop in inward migration was partly caused by the tightening of age and income requirements for family-related migration and the introduction of language and cultural tests. Also, the introduction of the Alien Act of 2000, which considerably changed asylum policy, seems to have reduced inflows. On the other hand, entry procedures for high-skilled workers from outside the European Economic Area (EEA) have been simplified by abolishing the work permit requirement for employees with an income above € 45 000 (€ 33 600 for employees younger than 30 years). To increase the attractiveness of the Netherlands for high-skilled migrants, the current scheme, which is largely demand-driven, should be supplemented by a supply-driven immigration system, under which workers with desired characteristics would be granted a work permit without the ex-ante requirement of holding a job contract. The number of temporary work permits granted to workers from the countries that joined the EU in 2004, mainly for low-skilled employment, rose to almost 60 000 in 2006 (0.6% of the working-age population) under a sector based transition arrangement. All remaining restrictions were abolished for this group in May 2007. People coming from Bulgaria and Romania remain subject to the strict labour market test applicable to all workers from outside the EEA. In many cases, this test entails a bureaucratic process to prove that no job seeker is available within the EEA. If labour shortages persist, the government should consider implementing a transition scheme for Bulgaria and Romania similar to the earlier scheme for the other new EU member states. Furthermore, to allow a smoother adjustment of migration flows to labour market needs, the authorities should consider reducing the overall length and administrative complexity of the general labour market test.

 

Share of foreign-born in the labour force in selected OECD countries, 2005

Source: OECD Immigration Outlook, 2007.

 

The economic integration of immigrants could be improved

The contribution of immigrants to the economy depends on their labour market performance, which is significantly lagging behind that of natives, notably for immigrants of non-OECD origin. Several labour market institutions seem to pose barriers to immigrants as outsiders on the Dutch labour market. Strict employment protection legislation for regular contracts hampers opportunities for outsiders, of which immigrants are an important group and should therefore also for this reason, be eased. Also administrative and regulatory burdens should be further reduced, as they can be particularly discouraging to immigrant entrepreneurship. Two specific groups with lagging labour market performance are women who enter for family-formation or reunification reasons and former asylum seekers; encouraging an early entry into the labour market seems particularly relevant for these groups. Another problem behind the poor labour market integration is the educational attainment of immigrants, which lags behind that of natives. A negative factor in the Dutch educational system seems to be the early streaming taking place at the start in secondary education (age 12). The authorities should postpone the age at which children are placed into different streams during secondary education. It is also important to introduce greater flexibility between streams thereafter, which would improve the educational performance of immigrants and facilitate their integration. To enable immigrants to better reap economic opportunities, geographical and social mobility should be improved, notably by changing regulations in the rental housing market that hamper mobility.

 

Participation rates for immigrants and natives in OECD countries, 2003

Source: OECD Migration Outlook 2006, Secretariat's calculations.

 

How to obtain this publication                                                                               

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of the Netherlands 2008 is available from:

Additional information                                                                                             

 

For further information please contact the Netherlands Desk at the OECD Economics Department at eco.survey@oecd.org.  The OECD Secretariat's report was prepared by Jens Hoj, Ekkehard Ernst and Jasper Kieft under the supervision of Patrick Lenain. Research assistance was provided by Laure Meuro.

 

 

 

 

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