Amsterdam’s canals may be pretty, but it is the Dutch labour market that should command Whitehall’s attention. A new report from the Resolution Foundation suggests that the Netherlands’ ‘no dead ends’ approach to youth employment might hold the key to reversing Britain’s alarming rise in economic inactivity among 16-24 year olds. For a country that has long fancied itself as a bastion of flexible labour markets, the comparison is bruising.
Consider the numbers. In the UK, nearly 900,000 young people are not in education, employment or training – the so-called NEETs. That is roughly 12 per cent of the age group, a figure that has been creeping up since the pandemic. In the Netherlands, the NEET rate hovers around 4 per cent. Their secret is not some expensive welfare state, but a system that prevents young people from ever reaching a dead end.
The Dutch model rests on three pillars. First, a statutory right to a ‘practical learning’ place for every school leaver who does not go to university. Second, a strong vocational education and training (VET) system that is integrated with employers, not tacked on as an afterthought. Third, a social security system that treats young people as future workers, not passive claimants.
Let’s focus on the numbers that matter: the cost to the Treasury. Every NEET costs the public purse an estimated £37,000 in benefits, lost tax revenue and health spending over a lifetime. Multiply that by 900,000 and you get a staggering liability of over £33 billion. The Dutch spend roughly 1.5 per cent of GDP on active labour market policies, twice the UK’s paltry 0.7 per cent. But that upfront investment pays for itself: the Netherlands has a youth unemployment rate of 8 per cent, against our 14 per cent.
Of course, the Dutch have a more coordinated economy. Their ‘polder model’ involves unions, employers and government in constant negotiation. Britain’s atomised labour market, with its gig economy and casual contracts, makes that tricky. But the principle of ‘no dead ends’ does not require social partnership on a Dutch scale. It requires a fundamental shift in mindset: from seeing education as a sprint to 18, to a lifelong ladder.
Take the Dutch MBO system, equivalent to our further education colleges. In the Netherlands, MBO students have a legal right to a workplace placement. If no employer offers one, the state steps in with a subsidised position. The result: 90 per cent of MBO graduates find a job within a year. In Britain, we have apprenticeships, but they are patchy and often used by employers as cheap labour. The government’s own data shows that only 60 per cent of apprentices complete their programme.
Then there is the benefit system. In the Netherlands, 16 and 17 year olds can claim welfare only if they are in training or work. The message is clear: you cannot coast. Meanwhile, Britain’s universal credit often pays young people to do nothing, a policy that has fuelled the rise in economic inactivity. The Resolution Foundation notes that the Dutch system is tougher but fairer: it offers intensive coaching, not just a cheque.
The City will ask: can we afford it? The better question is: can we afford not to? The UK’s productivity growth has been moribund since the financial crisis. A generation of young people disconnected from the labour market is a drag on potential output. The Office for Budget Responsibility’s fiscal projections assume rising productivity, but if we fail to integrate these youths, the fiscal arithmetic will worsen.
There are risks, to be sure. Importing a model wholesale never works; the Dutch have a different industrial structure and a more collectivist culture. But the principles are transferable. We could start by reforming the apprenticeship levy into a broader training fund, giving young people a ‘right to a placement’. We could overhaul universal credit to condition payment on education or job search for under 25s. We could encourage local authorities to act as ‘guarantors’ for training places.
The bottom line: Britain’s youth inactivity crisis is not an inevitable product of post-pandemic ennui. It is a policy failure. The Dutch have shown that a smarter, more integrated system can slash NEET numbers without exploding the budget. If the Chancellor is serious about growth, he should look to the Netherlands. There is no dead end here, just a choice between short-term savings and long-term decay.
