Britain’s labour market is a mess. Youth unemployment remains stubbornly high, productivity is stagnant, and the government’s solution seems to be throwing more money at skills schemes that produce little more than bureaucratic bloat. Yet across the North Sea, the Netherlands has built something approaching a miracle: a youth employment model with ‘no dead ends’. The phrase comes from a recent OECD report that hails the Dutch approach as a blueprint for Britain. Given the sorry state of our own labour market, it is worth examining what the Dutch do differently and whether we can import their success without importing their taxes.
At the heart of the Dutch model is a simple premise: every young person, regardless of qualifications, should have a clear pathway into work or further training. This is achieved through a combination of early vocational education, strong employer involvement, and a social security system that penalises idleness. The result is that Dutch youth unemployment stands at just 8.5%, compared to Britain’s 11.2%. More importantly, the gap widens when you look at long-term unemployment: Dutch youngsters rarely fall into the trap of years on benefits, whereas in Britain, nearly a quarter of unemployed 18-24 year olds have been out of work for more than 12 months.
The key to the Dutch system is its focus on ‘learning and earning’. From age 16, students can choose between academic or vocational tracks, but the latter is not treated as a second-class option. Apprenticeships are integrated into the education system, with wages paid by the state and firms given tax breaks for taking on trainees. This avoids the British problem of apprenticeships being a cheap source of labour rather than a genuine training pathway. In the Netherlands, completion rates for apprenticeships are over 70%, compared to just 50% in England.
Another crucial element is the role of the UWV, the Dutch employment agency. Unlike our fragmented Jobcentre system, the UWV operates as a single, efficient gateway. It uses data to match jobseekers with vacancies and has the authority to cut benefits for those who refuse training or suitable work. This ‘work first’ principle is something Britain has tried to mimic, but without the political will to enforce it. The Dutch also have a ‘participation income’ for those who cannot find jobs, but it is conditional on regular contact and active job search. The result is that the Dutch spend less on unemployment benefits as a share of GDP than Britain, while achieving better outcomes.
What about costs? Critics will say that the Dutch model relies on higher public spending on education and training. But the numbers tell a different story. The Dutch spend 5.4% of GDP on education, versus 5.2% in Britain. The difference is small and more than offset by lower benefit costs and higher tax revenues from employment. Moreover, the Dutch economy benefits from a more flexible labour market, with lower hiring and firing costs than ours. This encourages firms to take on young workers, knowing they can shed them if needed. Britain’s regulations, by contrast, create a bias towards hiring older, more experienced workers to avoid the hassle of dealing with younger, less productive staff.
So why hasn’t Britain adopted this model? The answer lies in our ingrained suspicion of state intervention in the labour market. The Dutch model requires active cooperation between government, employers, and unions. In Britain, we prefer a hands-off approach, leaving it to the market. But the market has failed millions of young people, trapping them in a cycle of low-skilled work and underemployment. The Dutch have shown that a properly designed public-private partnership can work.
There is, of course, a risk. The Dutch model relies on a high degree of social trust and consensus that may not be replicable in our more adversarial industrial relations system. But we have little to lose. Our current trajectory is unsustainable: rising youth unemployment, falling productivity, and a ballooning welfare budget. The Netherlands offers a proven alternative. It is time for our policymakers to learn from the polders and build a job market with no dead ends.
