The Dutch labour market is currently affected by a combination of factors that together create a complex environment for many businesses. On one hand, the Netherlands has one of the lowest unemployment rates in Europe at just 3.8% as of July 2025. Also, the country’s labour force participation rate stands at an impressive 76.2%, placing the Netherlands among the top performers in Europe for workforce engagement and productivity.
Yet beneath these impressive statistics lies a more intricate reality. Two-thirds of businesses are currently struggling with staff shortages, with the problem being most acute among larger companies, where over 70% report difficulties finding suitable candidates.
Looking ahead, the challenges facing the Dutch labour market are set to intensify dramatically. According to a report from McKinsey, the Netherlands is projected to face a labour shortage of approximately 1.4 million people by 2030 – a figure that would represent roughly 14% of the current workforce.
In this article, we’ll explore the core reasons behind these hiring challenges, from economic factors and skills mismatches to the impact of AI & automation. We’ll also provide actionable strategies to help your business navigate these difficulties, improve your hiring process, and attract the right talent in a highly competitive market.
Main reasons for hiring challenges in the Netherlands
Economic uncertainty and market conditions
The current economic climate has created a paradoxical situation where businesses simultaneously face labour shortages and increased caution about expansion. Job growth is expected to slow significantly, with only 100,000 new positions anticipated between 2024-2027, compared to 300,000 jobs created between 2022-2024.
Economic uncertainties, including concerns about international trade policies and rising operational costs, have made employers more conservative in their hiring decisions. This caution is reflected in decreased staff turnover, as employees also become more risk-averse about changing jobs during uncertain times.
Demographic shifts and aging workforce
The Netherlands is experiencing significant demographic changes that are reshaping its labour market. The population aged 65 and over has increased from 12.8% to 20.8% between 1990 and 2025, and this aging trend will continue. This creates a double challenge: more people are retiring while fewer young people are entering the workforce.
The demographic shift means that older workers will make up an increasing part of the labour force, requiring businesses to adapt their recruitment strategies and workplace practices to accommodate multi-generational teams effectively.
Housing crisis
The ongoing housing shortage in the Netherlands has become a significant barrier to talent attraction and is directly impacting hiring decisions. Research shows that 25% of job seekers would turn down a job offer if they cannot find suitable housing near the workplace. This housing constraint particularly affects major economic centres where job opportunities are concentrated but accommodation remains scarce and expensive.
Skills mismatch and talent shortages
A fundamental challenge for many Dutch employers is the skills mismatch between available workers and job requirements, with healthcare, construction, education and IT being the most affected sectors.
Paradoxically, while businesses struggle with skills shortages, many also deal with high volumes of applications for certain positions (a trend accelerated by AI tools), making the screening process more time-consuming and complex. This suggests that the issue is not simply one of quantity, but of matching the right skills to the right opportunities.
AI & Automation
The integration of artificial intelligence and automation technologies presents both opportunities and challenges for Dutch employers. According to a recent analysis from ING, 43% of Dutch jobs are complementary to AI technologies – higher than in neighboring countries. This makes the country well-positioned to benefit from AI integration and potentially accelerate economic growth. However, this transition requires significant investment in retraining and reskilling existing workers. Companies must navigate the delicate balance of implementing productivity-enhancing technologies while managing workforce transitions and maintaining employment levels.
Evolving work expectations and cultural shifts
Candidate expectations have evolved significantly over the years, creating new recruitment challenges. Today’s professionals increasingly demand transparency throughout the hiring process, and slow responses or unclear communication often result in candidate withdrawal. Additionally, the candidates expect competitive salaries, comprehensive benefits packages, flexible working arrangements, and clear career development pathways. This shift in expectations means companies must invest more heavily in their employee value proposition and recruitment experience.
Complex employment laws and regulations
While providing strong worker protections, the Dutch employment law creates layers of complexity for employers. From understanding different contract types to navigating dismissal procedures, companies (especially international ones) often struggle with compliance requirements. The regulatory landscape demands expertise that many organisations lack internally, potentially slowing hiring processes or creating legal risks.
Strategies to attract and retain the right talent in a competitive market
If you’ve read this far, you might think it’s difficult to grow a company in the Netherlands today, and you’d be right. But the good news is that in our work with hundreds of companies this year, we’ve encountered many businesses that manage to successfully navigate the current environment and adapt their operations to compete for the best talent.
In the following sections, we’ll outline some of the key strategies we’ve noticed that help these companies stand out, along with ideas you can implement to attract and retain the right talent in the current market.
Expanding talent pools
When facing a talent or skills shortage, one of the first steps is to look beyond your traditional recruitment sources and access broader talent pools. This includes considering older workers who offer experience and stability, individuals with disabilities who are often underutilised and professionals from diverse backgrounds and industries who could bring new perspectives to your business.
Additionally, you could start offering remote and hybrid work arrangements that can significantly expand your geographic reach, allowing you to access talented professionals who may be unable to relocate due to housing constraints or personal circumstances.
Streamlined recruitment processes
Speed and transparency have become non-negotiable in the Dutch recruitment market. The best candidates are often involved in multiple interview processes, and we’ve seen plenty of situations where a slow process or poor communication has led to a great candidate withdrawing or accepting another offer.
To compete for the best talent, you must review your entire interview process and eliminate unnecessary stages if needed. Provide clear timelines and maintain regular communication with candidates, including being upfront about role expectations and growth opportunities.
Working with a dedicated recruitment partner can significantly improve the candidate experience and help you manage applications and interviews more efficiently.
Competitive compensation and benefits
With talent scarcity driving up market rates, you must regularly benchmark your company’s compensation packages. This extends beyond base salary to include benefits that matter to Dutch workers: flexible working arrangements, comprehensive pension contributions, professional development budgets, and health and wellness programmes. If your compensation package falls behind, it’s often the first reason candidates decide not to apply.
Career development and upskilling initiatives
Perhaps one of the most important aspects you can invest in to future-proof your company is a strong focus on career development and internal upskilling initiatives. Companies that prioritise continuous learning are better positioned to attract and retain talent, a crucial advantage given the projected increase in skills shortages and automation challenges.
By creating clear career pathways, offering relevant training programs, and supporting reskilling initiatives, you can attract candidates who seek long-term opportunities while at the same time addressing your internal skills gaps.
Enhanced onboarding and working conditions
When hiring a replacement is challenging and expensive, reducing employee turnover becomes crucial. You can ensure new employees integrate successfully by developing comprehensive onboarding programs that extend beyond the first week. This includes team immersion, setting clear role expectations, and creating early wins that build confidence.
Following the onboarding period, you must also focus on improving working conditions and management quality to retain talent. Supporting work-life balance, providing opportunities for meaningful work and career advancement, promoting employee engagement – all factors require constant attention as they contribute to long-term employee happiness.
Automation and improving productivity
As companies increasingly focus on using AI tools to boost productivity and revenue, employees and candidates are facing a lot of fear and uncertainty about their future roles. While there is no clear best way to approach this situation since we’re still in the midst of this transition, a great strategy is to find a way for both the company and its staff to benefit from automation without resorting to layoffs or hiring freezes.
As mentioned earlier in the article, the Netherlands is well-positioned to benefit from AI integration and potentially accelerate economic growth, but it’s crucial to approach it carefully so as not to negatively impact your employer branding and employee value proposition. What makes companies attractive and a great place to work is still the human aspect, and businesses that continue to prioritise this will always have people eager to work for them.
Conclusion
Companies that are thriving in this complex environment share common characteristics: they prioritise speed and transparency in recruitment, offer competitive benefits, invest in their people’s growth, and maintain a human-centered approach even while using technology for efficiency.
If you view the Netherlands’ hiring challenges not as roadblocks, but as catalysts for building more resilient, adaptive, and employee-focused organisations, you will not only survive current labour market pressures but will be positioned to lead your industry in the years ahead.
