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The Dutch elections last year were largely focused on one topic: immigration. To a certain extent, immigration has always been a topic that mobilised Dutch voters, but last elections were different: Geert Wilders’ far-right, anti-immigration PVV managed to win the elections by a substantial margin, an unprecedented victory. After years of being a one-issue opposition party, Wilders’ PVV was now the undisputed winner of a crucial election. With immigration reduction being the central mission of Wilders' party, it is clear that anxiety around migration has reached a new peak. For instance, voters see migration as a contributing factor to one of the worst housing crises in the country’s history.
As a part of the government’s new migration policy, the PVV announced the implementation of the ‘toughest asylum policy yet’. The PVV intends to legally declare an ‘asylum crisis’ in order to circumvent migration laws, and wants to model its asylum policy on a ‘Danish model’, which is infamous for being especially tough. The PVV, to a large extent, also points to asylum seekers for the Netherlands’ housing shortage. Statistics from the Central Bureau for Statistics (CBS) have shown this is unfair, seeing as a relatively small proportion of people settling in the Netherlands are those seeking asylum.[1] It is true, however, that migration in the Netherlands is on the rise, particularly in the form of foreign workers and international students, indeed with negative consequences for the already dramatic housing shortage.[2] The newly elected populist government is thus set on reversing this trend. How did the Netherlands get here? And what consequences might such a reversal have?
Dutch Reliance on Cheap Foreign Work
The Netherlands is the world’s second-largest food exporter—not per capita, but in total, trailing only behind the United States.[3] The Dutch food industry is one of several sectors, including logistics and IT, that heavily rely on cheap foreign labour. Hundreds of thousands of workers, about half from within the EU and half from outside, are employed in these industries.[4]
For a long time, this system was supported—or at least condoned—by the Dutch government. However, the relatively high and constant influx of cheap foreign workers has recently become politically contentious. The number of foreign workers in the Netherlands quadrupled between 2006 and 2021[5]. With a stubborn housing crisis and an aging population increasingly straining the healthcare system, this dependence on cheap labour and the effect it has on population growth is facing growing scrutiny. The Hague, for instance, is a city near large agricultural centres where many low-skilled migrants make a living, which drives up housing demand dramatically. Additionally, the city is a popular choice for expats in innovative sectors, who take up a very competitive position on the housing market. Apart from issues of supply and demand, the city’s social cohesion is affected by this increase in short-term residents.[6]
In response, the Dutch government has introduced plans to reduce low-wage migration, particularly targeting workers from outside the EU. These measures include stricter regulations on hiring non-EU workers, emphasising skill requirements, and cracking down on abuses in migrant labour practices. The government is also encouraging businesses to focus on automation and the recruitment of local workers, aiming to shift away from the reliance on cheap, temporary labour.
Expats and Students
In the past few decades, the Netherlands has for a large part relied on a diverse mix of international talent, including both highly skilled expats and international students, to fuel its economy and educational institutions. However, the new government’s intentions on this topic reflect a nuanced approach to managing this influx of foreign talent.
The new Dutch government has decided to maintain its welcoming stance towards highly skilled foreign workers, recognising their role in keeping the country innovative and globally competitive. The existing "expat deal," which offers favourable tax arrangements and other benefits to these professionals, will remain intact, due to pressure from companies that threatened to leave the Netherlands were the “expat deal” repealed.
In contrast, the government aims to reduce the number of international students in Dutch universities. Over the past 15 years, there has been a dramatic increase in foreign students, with their numbers rising from 33,000 to 115,000. Currently, 40% of students at Dutch universities come from outside the Netherlands.[7] This surge has led to concerns about the strain on resources and the impact on the Dutch education system. This has prompted the government to seek ways to curb this growth. Possible measures include only offering certain degrees in Dutch, and putting a cap on popular degrees.
Consequences for Doing Business in the Netherlands
The proposed changes in Dutch migration policy will have far-reaching consequences for various sectors. The government's plan to reduce low-wage migration, particularly from outside the EU, while maintaining policies favourable to high-skilled workers, will create a complex landscape of challenges and opportunities.
If the government manages to impose strict measures in order to curb migration through foreign work, the Netherlands' reliance on cheap foreign labour, especially in sectors like agriculture and logistics, will likely be significantly impacted. The new restrictions on low-wage migration could lead to labour shortages in these sectors, in a time where labour shortages are already significant. Also, employers in industries that heavily rely on low-wage foreign workers will face additional requirements and restrictions, even when recruiting from within the EU. This could result in increased labour costs and operational challenges for businesses in agriculture, logistics, and IT sectors. This almost certainly would affect the Netherlands’ competitive edge in global food exports.
On the other hand, the decision to maintain favourable policies for high-skilled workers, including the "expat deal," will help preserve the Netherlands' ability to attract top talent in competitive fields. This could support continued innovation and global competitiveness in high-tech and knowledge-intensive industries.
A reduction in low-skilled migration and international students may slightly alleviate pressure on the housing market. However, this could come at the cost of reduced diversity and global perspective in Dutch society and higher education.
For our clients, these changes present both challenges and opportunities. Businesses reliant on low-wage foreign workers will need to advocate for sector-specific exemptions or develop strategies to cope with potential labour shortages. Meanwhile, companies in high-skilled sectors can continue to leverage the Netherlands' attractiveness to global talent.
[1] https://www.cbs.nl/nl-nl/dossier/dossier-asiel-migratie-en-integratie/hoeveel-immigranten-komen-naar-nederland
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