Wellink: Dutch economy recovering slowly

27 May 2004

AMSTERDAM — Recovery of the Dutch economy is being held back because the Netherlands is not benefiting as much as it should from revitalisation in the global market, the president of the Dutch Central Bank (DNB) said Thursday.

In his assessment of the Dutch economy in 2003, Nout Wellink warned Dutch business had to improve its competitiveness to speed up the economic upturn.

Wellink also expressed concerned about the prospect of wage increases now that negotiations between the social partners and the government about reforming the pre-pension system had broken down, RTL News said.

He said labour unions would have to act responsibility and keep to the nullijn — meaning keeping wage demands to 0 percent.

“Some 54,000 people have joined the dole queue in recent months, the largest increase since the 1980s. I therefore make an urgent call on the unions to keep to the nullijn,” Wellink said.

The DNB president said unemployment levels in the Netherlands would not fall this year and might increase because retarded economic growth was only slowly the creation of new vacancies.

But he said the present situation differed to that of 20 years ago because the labour market was more flexible and that vacancies were being filled sooner.

Wellink also said that European Monetary Union had been a “success” in relation to price stability so far. He noted inflation in the euro-zone was at 1.7 percent in March, with the Dutch level below that.

But he voiced concern about the stability pact which underpins the value of the euro currency.

The pact commits member countries to keeping their budget deficits below 3 percent of Gross Domestic Product (GDP), but both France and Germany have ignored the rules by running higher deficits.

Dutch Finance Minister Gerrit Zalm severely criticised France and Germany, last year only to see the Netherlands end up in the same situation as its budget deficit rose above the 3 percent limit in 2003.

Subject: Dutch news