Yes, prosperity has grown, but has that growth been distributed fairly?

Boats on a canal in the center of Amsterdam, on the first rural tropical day of 2019.Image Robin van Lonkhuijsen / ANP

Is there an uneven growth in the economy or is there a crescendo with the prosperity of Dutch citizens? That question is central to a fierce discussion between Sander Heijne and Hendrik Noten, the authors of Phantom growth (supported by the Rabobank), and on the other hand, chief economist Peter Hein van Mulligen of Statistics Netherlands (CBS). Heijne and Noten argue that many Dutch people do not profit sufficiently from economic growth and that employees with flex contracts and low hourly wages live in uncertainty. On average, however, net disposable income has more than doubled in fifty years, Van Mulligen argues. Which facts are important in this debate?

First of all: the economy has grown and so has the prosperity of many citizens. The main message of Statistics Netherlands – an average citizen really has more to spend in 2020 than, say, 2000 or 1980 – is also correct. There are more double earners than before with a permanent contract, a house to buy and two cars at the door, who can go on holiday three times a year and have money for their children’s sports club.

null Image Volkskrant Infographics

Image Volkskrant Infographics

Fair share?

Heijne and Noten acknowledge this, but they then ask whether citizens should no longer have benefited and, above all, whether the distribution is fair. The authors find support from other calculators who also come up with more sombre figures than Statistics Netherlands. De Nederlandsche Bank, Centraal Planbureau and, for example, Rabobank argue that, certainly in the first ten years after the turn of the century, disposable income lagged behind economic growth. They use slightly different definitions and calculation methods than Statistics Netherlands. For example, if you look at the income per household, the growth is much lower. It just goes to show that you cannot capture a fifty-year trend in one number, as CBS tries. And that important aspect is also left out of the picture: how is higher prosperity distributed?

Citizens with a low income and low education seem to benefit less from the higher prosperity, as surprisingly enough can also be demonstrated with figures from the same CBS. These citizens have a flex contract with a low hourly wage, often live in poor health and have difficulty making ends meet. Various indicators suggest that the gap between rich and poor has deepened in recent years.

In 2003, those with a lower level of education had a flexible contract in 19 percent of the cases and therefore an uncertain income. Just before the disruptive corona year, this had risen to 35 percent in 2019, a significantly higher percentage than among highly educated people. Moreover, uncertainty about your existence cannot be captured in a number.

The citizens of this group also generally live in poorer health and, on average, die earlier. The financial worries are often so great that larger expenses, for example for replacing furniture or the washing machine, are squeezed. There is usually no vacation. And the children of lower-income parents also have fewer opportunities. They receive lower school advice more often and also earn less later.

This list of figures on skewed growth can easily be made much longer. In fact, Statistics Netherlands should dig into its own figures one more time to answer the question of whether prosperity has grown or has grown skewed.

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