Brussels: Netherlands Reforming Too Slowly
THE HAGUE, 15/11/13 - The Netherlands is doing too little to strengthen its economy structurally. The changes on the housing market do not go far enough and the reform of the labour market is proceeding too slowly, the staff of the European Commission write in a working document.
The document is an interim evaluation of the reforms that the European Council of EU leaders recommended in June. The conclusion is that due to “substantial structural distortions” of the Dutch housing market, “further reforms” are necessary, all the more so as the recovery of the total economy is hindered by the problems on the housing market.
The changes that have been introduced since April 2012, such as restricting tax deductibility of mortgage interest payments and the obligation to repay mortgages are considered “useful” by the Commission. But their introduction is proceeding too slowly.
After a transition period of 28 years, 60 percent of what the State is now missing out on in tax income due to the mortgage interest deductibility will still remain, as implicit debt subsidy. As well as this, the introduction of income-linked rent in the social housing centre is “welcome,” according to the Commission, but its effect is uncertain.
The Commission says in its working document, which has no official status yet, that the Netherlands is reform-weary. “The momentum for urgent necessary reforms appears to have fallen off since 2012, while it is precisely in difficult times that new efforts are necessary to increase the growth potential.”
The labour market situation in the Netherlands is deteriorating, but the reforms in the Unemployment Act, dismissal protection and the new Participation Act still await implementation. And even if this is done, it will still not be enough, according to the Commission.