In the Netherlands, the government has raised the minimum wage by 10 per cent, to help lower-paid workers who are struggling with the impact of the soaring cost of food and fuel and housing, Financial Times reports.
The measure is a key part of an €18bn aid package intended to help households cope with rising inflation and energy prices. It was unveiled in the budget on September 20.
King Willem-Alexander announced the government plan in his annual Speech from the Throne; an address to parliament before the budget. He said, “It is a painful reality that more and more people in the Netherlands are struggling to pay their rent, grocery bills, health insurance and energy bill.”
Several European countries, including France, Germany, Italy and Spain have reportedly announced minimum wage increases but the Dutch hike - a rise from €1,756 a month - is the highest yet.
Social benefits, including child allowances and pensions, will rise and income taxes will fall slightly to combat the surge in price pressures. Inflation hit 12 per cent in the year to August and is expected to remain high next year despite a cap on energy prices.
The Dutch government is joining a number of other countries in imposing a windfall tax on firms extracting oil and gas, after reaching a deal with industry on September 19.
In recent weeks EU governments have reportedly been locked in negotiations over how to structure an EU-wide windfall tax and price cap on energy companies and the Netherlands is likely to set its level in line with that.
Energy prices across Europe have surged following Russia’s invasion of Ukraine at the end of February.
The budget also extended cuts on transport fuel duty until July 2023, at a cost of €1.2bn.
The king stated that the measures - primarily targeted at low- and middle-income households - could not prevent some from being worse off.
“Even with a package of this magnitude, not everyone can be compensated fully for all the price rises,” he said.
Corporation taxes will rise to fund the package. The oil and gas windfall tax will raise about €2.8bn in 2023 and 2024 combined. Bumper revenues from the Groningen gas field will also help fund the measures.
In addition, finance minister Sigrid Kaag has shifted spending from other departments, delaying plans to recruit more teachers. The budget deficit will reportedly be 3 per cent in 2023, just within EU fiscal rules, with debt falling to 49.5 per cent of gross domestic product because of inflation.
Frank van Es - a senior economist with Rabobank in Utrecht - said the support for households could increase price pressures. “It is a quite expansionary budget that will drive up inflation,” he said. “They have overcompensated for the shock from energy prices.”
Rabobank expects 5 per cent inflation and just 0.2 per cent growth next year, against government forecasts of 2.6 per cent inflation and 1.5 per cent growth. The Netherlands Bureau for Economic Policy Analysis, a government agency, has calculated that up to 1mn people are at risk of falling into poverty as a result of rising prices.
Source: Financial Times
(Quotes via original reporting)
In the Netherlands, the government has raised the minimum wage by 10 per cent, to help lower-paid workers who are struggling with the impact of the soaring cost of food and fuel and housing, Financial Times reports.
The measure is a key part of an €18bn aid package intended to help households cope with rising inflation and energy prices. It was unveiled in the budget on September 20.
King Willem-Alexander announced the government plan in his annual Speech from the Throne; an address to parliament before the budget. He said, “It is a painful reality that more and more people in the Netherlands are struggling to pay their rent, grocery bills, health insurance and energy bill.”
Several European countries, including France, Germany, Italy and Spain have reportedly announced minimum wage increases but the Dutch hike - a rise from €1,756 a month - is the highest yet.
Social benefits, including child allowances and pensions, will rise and income taxes will fall slightly to combat the surge in price pressures. Inflation hit 12 per cent in the year to August and is expected to remain high next year despite a cap on energy prices.
The Dutch government is joining a number of other countries in imposing a windfall tax on firms extracting oil and gas, after reaching a deal with industry on September 19.
In recent weeks EU governments have reportedly been locked in negotiations over how to structure an EU-wide windfall tax and price cap on energy companies and the Netherlands is likely to set its level in line with that.
Energy prices across Europe have surged following Russia’s invasion of Ukraine at the end of February.
The budget also extended cuts on transport fuel duty until July 2023, at a cost of €1.2bn.
The king stated that the measures - primarily targeted at low- and middle-income households - could not prevent some from being worse off.
“Even with a package of this magnitude, not everyone can be compensated fully for all the price rises,” he said.
Corporation taxes will rise to fund the package. The oil and gas windfall tax will raise about €2.8bn in 2023 and 2024 combined. Bumper revenues from the Groningen gas field will also help fund the measures.
In addition, finance minister Sigrid Kaag has shifted spending from other departments, delaying plans to recruit more teachers. The budget deficit will reportedly be 3 per cent in 2023, just within EU fiscal rules, with debt falling to 49.5 per cent of gross domestic product because of inflation.
Frank van Es - a senior economist with Rabobank in Utrecht - said the support for households could increase price pressures. “It is a quite expansionary budget that will drive up inflation,” he said. “They have overcompensated for the shock from energy prices.”
Rabobank expects 5 per cent inflation and just 0.2 per cent growth next year, against government forecasts of 2.6 per cent inflation and 1.5 per cent growth. The Netherlands Bureau for Economic Policy Analysis, a government agency, has calculated that up to 1mn people are at risk of falling into poverty as a result of rising prices.
Source: Financial Times
(Quotes via original reporting)