Moderate Wage Policy and Employment in the Netherlands: Theory, Practice and Inspiration

Abstract

The unemployment rate is an important indicator reflecting the operation of the national economy and national happiness. The Netherlands is one of the more successful countries in dealing with unemployment. The Okun 's law is verified by using the economic growth and unemployment rate data of the Netherlands from 1980 to 2021. It was found that Okun 's law did not pass the model test in the Netherlands. The preliminary conclusion is that general economic growth does not necessarily increase employment. The theoretical analysis of the labor market supply and demand curve, found that a moderate reduction in wage growth rate can increase the actual employment, to achieve higher target employment. In theory, the smaller the wage growth rate, the more employment growth, the greater the decline in unemployment. Moderate Wages are the result of negotiations between employers and employees under government coordination. Positive negotiations at the national level are a prerequisite for this policy. The government not only coordinates negotiations but also actively provides social security. The policy not only improves the profit margin of employers, increases the enthusiasm of investors, increases the competitiveness of product exports, but also protects the fundamental interests of employees.