Donner warns of recession

15 January 2008

THE HAGUE – Social Affairs Minister Piet Hein Donner warns that we could end up in a recession if we rest on our laurels and fail to tackle problems on the labour market. "We still have a tailwind, but it looks to be turning."

The Christian democrat CDA minister said this on Monday at the farewell to Jan van Zijl as chairman of the Council for Work and Income (RWI).

Donner said "we are in danger of pricing ourselves off the market and working in a recession long before a recession can actually come about."

He pointed out that businesses are having difficulty finding qualified personnel and do not have enough flexibility to respond to economic developments, while more than 1 million people are standing on the sidelines unemployed and older workers are retiring early.

Donner did acknowledge that many of the uncertainties about the economy, like the credit crisis in the United States, are playing out elsewhere in the world, but he said we should also tackle "economic developments of our own making."

For instance the "level of education and the process of life-long learning" is not adequately developed on the labour market. As a result not enough suitable personnel are on hand and too many older workers are leaving the market because they are unable to find a job.

"At the same time the traditional protection – via income, labour and job security – is in danger of having an adverse effect in international markets," Donner said. He has urged in the past for easing of legislation governing dismissal so that workers can be more flexible in hiring and firing staff. His proposals for making it easier for employers to dismiss personnel were recently rejected by the cabinet because of opposition from Labour PvdA and ChristenUnie.

Subject: Dutch news