Are Dutch people more financially vulnerable than they used to be?

Published on: 9 March 2023

Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: Thijs Knaap, chief economist at APG, on whether the Dutch are more financially vulnerable than they used to be.

Last year, 60 percent of Dutch people were financially vulnerable or unhealthy. In 2021, the figure was 50 percent. Just over half (54 percent) of households can pay all bills without a problem, compared to 65 percent in 2021. This is evident from research on the financial health of Dutch households conducted by Deloitte in collaboration with Nibud and Leiden University. Does this indicate a downward trend?

Bad year

“2022 was a financially bad year for many people,” Knaap says. “We saw high inflation and declines in real wages (available income after adjusting for inflation, ed.). As a result, people have less money left over at the end of the month. According to Nibud, the situation has improved somewhat this year due to wage increases implemented in many sectors and the increase in the minimum wage.” Nibud therefore sees 2023 as a year in which people need to recover from the blow of 2022. Because many people have had to dip into their savings recently, Knaap believes that a large group is actually more vulnerable now than one or two years ago. However, if we look further back, for example to the 1980s - characterized by economic contraction, unemployment and budget cuts - we are less vulnerable now. Knaap: “We are on an upward trend with occasional nudges up or down, like we just had.” 


Then there is the question of what being vulnerable actually means. According to Knaap, it usually does not mean that you are slowly but surely reaching the end of your budget, but that it happens with a jolt. For example, due to the loss of a job, illness or divorce. “These kinds of shocks have always been there, and the question is, what can you do about it? Part of the solution lies with a social safety net and accessible health care. The other component is resilience: can you withstand a shock, for example by finding a (new) job? In that respect, things have been worse before. Currently, unemployment is about 3.6 percent. In the 1980s it was many times higher, especially among young people. So that resilience is quite high now.”

You could have some concerns about the situation of Dutch people who are less well off


Another positive development is the situation of older people. “Seniors traditionally have far fewer options because they usually can no longer work. Fortunately, in the Netherlands we have set up a pension system, so there is very little poverty among the elderly here.”


There is still a gender gap in the Netherlands, but it is slowly closing. “On average, women are already more educated than men and the number of women earning an income independently is increasing. That increases resilience among women. These are all improvements that add up to making the financial vulnerability of the Dutch, on average, lower than it used to be.”

At the same time, the danger lies in that “on average”, Knaap continues. “Because has the situation of Dutch people who are less well off also improved? You could have some concerns about that. For example, people with flex contracts have a harder time absorbing a shock.” This also touches on the gap between so-called “insiders” and “outsiders”, with the insiders (those with jobs) benefiting more from wage increases than from extending employment to the “outsiders”. “This is true at any time, but to get a job you need not only intellectual capital but increasingly social capital. It’s about knowing how to behave, how things work within a company and who to go to for questions. There is a risk that people who have difficulty with that will increasingly be left out. So in many ways the situation now is better than it was in the 1980s, but that doesn’t mean that everyone is able to keep up on their own.”

Young people

Deloitte’s research also shows that young people are relatively often financially vulnerable. According to Knaap, this is related to the difference between solvency (which indicates whether you can meet your payment obligations over time, ed.) and liquidity. “Young people are enormously solvent because they still have a whole working life ahead of them in which they might earn hundreds of thousands of euros. Only, they don’t have those now, so for many young people the lack of liquidity is a problem. Measures they can take closely resemble what pension investors do to avoid liquidity problems: provide a savings buffer and keep an eye on whether it runs out too quickly. Because of the labor market shortage, it is relatively easy for young people to get a part-time job now, thus increasing their financial resilience. As a young person, it is therefore better to be in financial trouble now than it was in the 1980s.”