In a bid to offset the blow that middle- and low-income Dutch people are taking from inflation, the government has announced an unprecedented package of measures to increase the minimum wage, state pensions and social benefits. From January 1, 2023, the minimum wage will be increased immediately by 10%.
Minimal salary
The minimum wage is currently 10,14 euros per hour and, from the age of 21 full-time, 1756 euros per month. According to CBS (Central Bureau of Statistics), about 438 employees receive the minimum wage in the Netherlands. More than half of them are young people under the age of 25. The group of workers earning just above the minimum wage (125%) is larger. Together, these two groups make up about 1,5 million employees.
Approximately 109 minimum wage adults are the breadwinners (often the only ones) in families. The minimum wage is more often received by people with a migration background (migrant workers from Poland, Romania and Bulgaria) than native Dutch.
Two-thirds of all minimum wage earners work in commerce, healthcare, catering, rentals and other business services. In the field of transport and postal services, this concerns a third of workers. The share of recipients of the minimum wage is 9% in the field of catering and 8% in the field of culture, sports and recreation.
Chain reaction
An increase in the minimum wage will inevitably lead to an increase in other wages. International studies show that a 10% increase in the minimum wage has a chain effect on all wages, especially those that are up to 30% higher than the minimum wage.
State (Standard) Pension-AOW currently €1335 per month for singles and €914 (per person) for married or cohabiting couples. You can read more about the features of pension provision in the Netherlands here. The size auxiliary allowance / material assistance to the unemployed (bijstandsuitkering) for one person is 1037 euros, and for married people and cohabitants - 1481 euros for two. More about the types of financial assistance and social payments - here.
The government wants to support not only the poor, but also people with an average income. It is still unclear whether the multi-billion dollar package is enough to offset all the loss in purchasing power. Prime Minister Rutte and Finance Minister Kaag recently said they would only be able to compensate for the heaviest blows. "We're all getting a little poorer"Rutte stated.
Comment from trade unions
"It's a step in the right direction, says Tuur Elzinga, chairman of the Federatie Nederlandse Vakbeweging (FNV). “But since food alone has risen in price by more than 10%, and electricity is much more, then a 10% increase is certainly too little. We continue to fight for higher wages to compensate for rising prices.”. The Christelijk Nationaal Vakverbond (CNV) also share this opinion: “Government is doing very little for middle-income people”.
Trade unions and other stakeholders are pushing for a return to purchasing power this year as many households are already struggling. But, according to the government, this is not possible, since the executive bodies, such as the tax office, cannot implement such changes in the short term.
Employers in shock
The employers' organization VNO-NCW wants to wait for the government's final plans to raise the minimum wage on Budget Day. However, small and medium-sized businesses (MKB) are shocked by the likely increase in payroll taxes, which comes in addition to a 14 billion euro increase in structural taxes in recent years.
VNO-NCW representatives note: “Many small and medium enterprises are struggling to stay afloat in the face of unprecedentedly high energy prices, 60% are struggling. And now the increase in the minimum wage is added to the existing difficulties.”.
Who will be billed?
The bill for the package of measures to restore purchasing power is mainly billed to large companies and wealthy people. Among them are the energy companies Shell and Exxon. The so-called mining levy, which they pay for oil and gas extraction, will increase. According to CNV chairman Piet Fortuin, these companies have problems with this fee.
At the same time, a number of representatives of the oil and gas industry react positively to these plans of the government. Menno Snel of industry organization Element NL notes: “It is logical that, given the problems with purchasing power and the high price of gas, the government wants gas companies to do their part. After all, they also earn more because of the gas crisis.”.
Other measures to support the poor
In addition to increasing wages and benefits, there is a reduction in excise duties and taxes. The income tax rate (inkomstenbelasting) in the first group of Box 1 will decrease - this year it is 37,07%. We remind you that the first group includes taxpayers who have not yet reached the state pension age, with an income up to and including 35 euros (in 472).
The reduction in excise taxes on fuel, in the form in which it is already in force, while ongoing, will be phased out only over the next year. The discount on energy carriers will also remain. In addition, subsidies for health insurance (zorgtoeslag) and rental housing (huurtoeslag), as well as child allowance (kindgebonden budget) will be increased. Reminder: request All these types of subsidies can be supported by Nalog.nl specialists.
Publication Date: 21.09.2022
