Underutilisation of the labour force
The unemployment rate is the most commonly used indicator for labour market tension. However, this indicator is gradually becoming less relevant. There is more slack in the labour market than the unemployment rate suggests: there are many more people seeking a job or more work than just the unemployed. In the last quarter of 2015 there were 591,000 unemployed people in the Netherlands, yet at the same time there were almost one million employed and self-employed people (see chart) who wanted to work more hours. Over half of them were immediately available (within two weeks) for additional work or a second job. There are also those who do not participate in the labour market but who do want to work. For example, there are 131,000 discouraged workers, who have given up looking for a job. In addition, there are 330,000 people who do want to work but are not immediately available. For example, students approaching the end of their studies. All these people are not included in the unemployment statistics, but a quarter of them do apply for vacancies. In total, the underutilised labour force – comprising the number of unemployed, people wanting to work more hours and economically inactive people who want to work – is currently three and a half times greater than the number of unemployed.
Chart 1: In addition to 591,000 unemployed, a further 1.5 million people are seeking a regular job or more work