“The solution is in the mix: it is and, and, and, and”

Published on: 11 April 2024

The Netherlands is aging. And that affects all kinds of things, such as the housing market, the healthcare system, the economy, the labor market and the pension system. In a series of articles, we cover these topics through interviews with an expert. This time, macroeconomist and senior strategist Maarten Lafeber of APG and Aleid Smid (69) on the influence of the gray wave on the labor market.


“The Netherlands is aging and dejuvenating,” Lafeber tells us. People live increasingly longer lives, partly because of better health care. And there is another aspect to this as well, he points out: fewer children are being born. “About sixty years ago there were proportionally more young people than older people in the Netherlands. But dejuvenation, the relative decline in the number of young people, is hitting us and is becoming more and more evident in the population figures,” Lafeber says. This has consequences for the labor market. Lafeber mentions the so-called dependency ratio. “In the Netherlands, that ratio currently stands at 3.1. In other words, for every working older person there are 3.1 younger people. In 1960 there were 6.8. And in 2050, that number is expected to be 2.2.”


The Netherlands scores relatively well on this ratio worldwide. “Countries like Germany and France have a bigger challenge in this respect, for China and South Korea the problems are even bigger. In China, the ratio is now 4.8, but that will drop to 1.9 by 2050. That’s a very rapid decline.” That figure in the Netherlands is “still not too bad,” and Lafeber believes this is partly due to migration. “We thought the ratio would look different and are more or less surprised by the impact of migration. In 2014 we thought: we have reached the peak in terms of the size of the labor force and now we will start shrinking. But that turns out not to be the case, which is quite positive.”

In 2014 we thought: we have reached the peak in terms of the size of the labor force and now we will start shrinking. But that turns out not to be the case

The center of gravity is shifting

The changing composition of the (working) population has an effect on the economy, says Lafeber. “Due to an aging workforce, among other things, the structure of the economy is changing and the focus is increasingly shifting to services.” He is referring to the transition from an agriculture-dominated society, through a more industrial period, to a service economy with more than 80 percent of jobs in the service sector. “This involves a number of factors. First, you can’t import services like goods. They are the hands on the bed in healthcare. Or the barber on the street corner. Second: when people in those professions retire, then partly because of the declining number of young people (“dejuvenation”, ed.) the pressure on the existing labor force automatically increases. We have to watch out for that; we have to be careful not to push the working population over the edge. The working population is getting older, and all hands are needed. And we want people to be able to retire while they're still healthy.”


Lafeber, tells us that the scarcity also means that labor rates are rising. As a result, a haircut at the barber’s is becoming more expensive and health care costs are also rising. “That’s the opposite of what we want, which is to keep healthcare accessible and affordable.” But it’s not just that. In a service-dominated society, Lafeber says, it is also more difficult to achieve economic growth. “A barber can hardly become more productive, which a manufacturing company can - through innovation, for example. What about AI, you ask, of course. That’s true, it could shake things up within the service sector and help achieve productivity growth. However, it is still unclear to what extent and in what way AI will actually affect all of this.”


More solutions

Besides innovation, there are other solutions, in Lafeber’s view. “We need to look seriously at labor migration. And at labor force participation. What part of the labor force is actually participating? In Japan, a large part of the population is working longer. There, a third of people between the ages of 69 and 74 are still participating. And in the age group between 65 and 69, it is as much as half."


Lafeber therefore sees a solution in a mix. “Yes, the state pension age must continue to rise and we must encourage that working longer pays off. But we also need to attract people from outside the Netherlands. And we benefit from technological development. So, it’s not ‘either or’, but rather: and, and, and, and.”

The potential labor force, everyone between the age of 20 and the state pension age, provides a picture of the number of available workers in the coming years. According to the Central Bureau of Statistics (CBS) and the Netherlands Environmental Assessment Agency (PBL), the potential labor force will increase to more than 10.9 million until 2025. After that, the size will remain more or less stable for years. This group is expected to increase in size again after 2040.

“Aging? That doesn’t mean anything to me”


For years, Aleid Smid (69) ran her own television company in the Gooi region with her partner. In 2018, they changed course. Aleid went back to her roots, first professionally and later geographically. So she picked up her old work as a kindergarten teacher again and moved to her native soil in the far north, the tiny Groningen village of Den Andel. A village that - although aging enormously - is anything but dormant.


To get right to the point: aging is a term Aleid would rather say goodbye to. “It is a meaningless container term in which people lump everyone together. But one person is not the same as the next. Take Den Andel as an example. We have quite a lot of people over 65 here. But when we talk about the elderly, they have to be at least 85+!” she laughs. “We have a vibrant community. People can and do an awful lot and I think you should also look at the Netherlands in that way. So, aging? That doesn’t mean anything to me.”


Discarded by society
APG economist Lafeber argues in his vision of the aging labor market that working longer should be encouraged. Aleid nuances this, because the fact that people would not “want” to continue working longer is not the problem as far as she is concerned. “I was very active until I was 67. Then I was allowed to retire. People then look at you as if you no longer count. Under the guise of: now you don’t have to do anything anymore. But to me that feels like I don’t get to do anything anymore. Society tells you that you are finished. That’s how the system is set up; earning money is hardly possible anymore. Well, too bad. I’ll just do things my own way.”


Looking at what someone is able and willing to do
It seems to Aleid that if you still want to work, your competencies hardly matter anymore. She shares her experience. “A senior employment agency offered me low-level work. For example, sitting behind a counter or taking children to school. They don’t take into account what someone is willing and able to do. That’s a very strange feeling. As if your knowledge no longer matters. I was also offered to stay two days a week at the school I was teaching at. The salary? The maximum volunteer allowance of 1,900 euros per year. That is not being taken seriously. I can get by on my pension, a shared partner’s pension and some supplementary policies. But saving is no longer an option.” 


Great labor potential among retirees
As the labor force continues to shrink, the current method of keeping people working seems flawed and demotivating. Aleid agrees: “We are used to older people making way. Off you go, get out and go on a cruise or something. The solution? Let people who want to work work. In a profession that suits them. And don’t take age into account; don’t discriminate. I think the current method is too rigid. You get a state pension starting from a certain day, so you have to stop working. That should be different. If you look at that seriously, you have a great labor potential.”


Raising the eligibility age for the state pension
Aleid sees no point in raising the state pension age. “If all your life you hear: 65 is when you get to retire and then they suddenly raise that age, that’s very difficult, mentally. Let alone if you have a physically demanding profession. As far as I’m concerned, at retirement age you should have the freedom to make choices. Either you stop working, or you continue working and get paid the regular wage for that. I don't understand why that option is not available. I would certainly have stayed.”


Film classes for seniors
Entrepreneurship and being involved with creative content is in Aleid’s blood. And that blood still runs where it cannot go. For example, she is a board member at De Holm, a center for learning, working and caring. “What we do here is a new form of neighborhood-oriented care that has yet to find a place in the healthcare landscape. After eight years of begging for subsidies, this is slowly coming into view,” she says. She is also on the board of the Den Andel festival, a musical platform for musicians from the northern part of the Netherlands. With her experience in subsidy land, among other things, Aleid raises the money to put this festival together. And she takes care of the reporting. Laughing, she says, “I teach the film classes for seniors. After all, I know something about didactics and film. I create the after-movie of the festival and we have eight stages that need to be featured. I teach volunteers to raise their film level a little. Some just want to find the record button, others want to learn how to write a script. But no one dares to film vertically anymore, so the quality of the videos is going up.”


  • Name: Aleid Smid
  • Age: 69
  • Lives in: Den Andel
  • Marital status: widow, no children
  • Date of Retirement: January 2021
  • Employers: Stadschouwburg Groningen, VARA, her own company ASTC Media, elementary school De Ridderhof