News item | 20-09-2022 | 15:30
The Netherlands is struggling with historically high inflation. Energy bills have risen sharply this year and will remain high pending the announced price ceiling. Many people worry about whether they can continue to pay their bills. With a package of €17 billion for 2023, the government wants to mitigate the negative effects of high inflation as much as possible. And thus protect a growing group of vulnerable households. The government also wants to offer prospects to lower and middle incomes. Based on the principle that work should pay. In addition, in line with the coalition agreement, the government is taking measures to make the labor market future-proof, combat poverty and improve the relationship between citizens and government. Ministers Van Gennip (Social Affairs and Employment) and Schouten (Poverty, Participation and Pensions) write this in their budget that was submitted to the House of Representatives today.
After the far-reaching corona crisis, Dutch society and our economy have shown great resilience. We are still experiencing strong economic growth and unemployment is exceptionally low. At the same time, the Netherlands is currently facing new challenges. Due to the historically high inflation, many people have difficulty making ends meet. That is why the government is taking measures to improve people’s purchasing power.
Purchasing power measures
The government is making €17 billion available to protect the most vulnerable people and offer lower-middle-income prospects. Never before has the government invested so much money in purchasing power repairs for households. Just under € 12 billion of this is for incidental measures in 2023, such as a continuation of the energy surcharge of € 1300 via municipalities, which they can partly pay out this year. In addition, an increase in the health care allowance, an increase in the child budget, a reduction in the energy tax (this will change if there is a price ceiling) and a reduction in fuel excise duties.
It is essential to improve the starting position of people with lower incomes. The government also wants to offer prospects for middle-income households. An important principle here is that work should pay. After all, work is the most important source of income for most people. That is why almost € 5 billion will go to structural measures, including: a 10% increase in the statutory minimum wage (WML), an increase in the employed person’s tax credit, a reduction in the rate of the first wage and income tax bracket and an increase in the housing allowance. A higher child-related budget will also remain structurally available, for which an additional 100 million euros per year will be made available. Furthermore, the higher minimum wage also affects the coupled benefits (such as the AOW and social assistance) and is expected to lead to wage increases in the wage scales just above the minimum wage.
As a result of these measures, we generally see a positive picture of purchasing power for Dutch households in 2023. This plus does not make up for the exceptional decrease of 6.8% in 2022. The purchasing power picture of 2023 must therefore be viewed in conjunction with 2022. Moreover, there are major differences in how the rise in energy bills affects households. This is highly dependent on income, the type of energy contract, energy consumption and what type of house someone lives in.
To help residents of the Caribbean Netherlands meet their necessary living costs, the cabinet also wants to increase the minimum wage and minimum benefits there. The energy allowance will also be extended next year, the personal contribution for childcare will decrease and the child benefit will increase.
Tackling money worries, poverty and debt
The government is committed to reducing poverty, paying special attention to children. The purchasing power measures will reduce poverty among both children (6.9%) and adults (5.1%) in 2023 and fall below the level of 2021. Without the measures, poverty would increase further next year.
More and more households are threatened with financial problems due to the sharp rise in energy prices. The government is taking measures to prevent them from being cut off from energy and to avoid debt as much as possible. Nevertheless, it is expected that more households and entrepreneurs will call on municipal debt assistance. Municipalities therefore receive additional resources to be able to offer debt counseling to more people. In addition, the cabinet wants to make extra use of volunteer organizations to support people with money worries. The cabinet is also making more money available for national institutions that work to reduce child poverty and for food aid.
It also makes €35 million available to help students in serious financial difficulties as a result of high energy bills.
Labor market plans
Many employers are looking for staff, at the same time there is a considerable divide between people who have a permanent and a flexible contract. The risks of flexible contracts lie with workers. That is why the cabinet is abolishing on-call contracts, except for pupils and students. It also tackles bogus self-employment and there will be a certification obligation for employment agencies.
The cabinet also wants to strengthen the learning development culture in the workplace. That is why there will be learning rights for those with a practical education and the STAP scheme will receive an additional € 500 million (over 4 years) specifically for people with a maximum of an MBO-4 diploma.
Relationship between citizen and government
The government wants to improve relations with citizens. It does this, among other things, by simplifying laws so that people who are entitled to benefits or allowances actually receive them. Implementing organizations will also provide more customization. In order to make this possible, the cabinet will invest a total of €600 million in the implementation of and services provided by the UWV, SVB, Tax Authorities and DJI in the coming years.