Higher minmum wage off the table

April 18, 2024

The Dutch Senate rejected a slight increase in the minimum wage and linked benefits set to take effect on July 1st. The decision, which was made on Tuesday evening, overturns a previous decision made by the Lower House just before last year's elections, bypassing the government. The Senate's vote differed from the Lower House's decision.

The proposed increase aimed at raising the minimum wage by 1.2%, in addition to the regular adjustments tied to the average wage increase in the country. However, the largest faction in the Senate, BBB, deemed the plan "unfocused." Despite including a higher minimum wage in their election program, the party prefers to assist those at the bottom through other targeted measures.

Joining BBB in opposition were the VVD, CDA, FvD, SGP, and JA21. Of the parties discussing a new coalition, only the PVV supported the proposal. On Monday, outgoing Minister of Finance, Steven van Weyenberg, cautioned that scrapping the increase would affect purchasing power (koopkracht) projections, as they had already been factored into calculations.

Not only is the increase itself contentious, but so is its financing. One proposed method to fund the measure is the introduction of dividend tax on shares companies repurchase. Chip equipment manufacturer ASML has vehemently protested against this. Outgoing Minister of Economic Affairs and Climate, Micky Adriaansens, previously informed the Lower House that companies would struggle to justify this tax to their shareholders, potentially prompting them to relocate.

In addition to rejecting the wage increase, the Senate passed a motion urging the government to repeal this tax, scheduled to take effect in 2025. State Secretary for Finance, Marnix van Rij, mentioned that he could consider adding the repeal as an "option" to a list of alternatives for this tax.