Minimum wage rises again in 2025!

From 1 January 2024, the legal minimum wage in the Netherlands increased to €13.27 gross per hour, and from 1 July 2024 to €13.68. The minimum wage will rise further to €14.06 for workers aged 21 and above from 1 January 2025, see Parliamentary letter on indexation statutory minimum wage from 1 January 2025 | Parliamentary paper | Rijksoverheid.nl. These increases are an important step in improving the purchasing power of low-income workers. But why have we seen such sharp increases in the minimum wage in recent years? And how did the minimum wage historically come about? In this blog, we dive into the history, current developments and interesting facts about the minimum wage in the Netherlands.

The history of the minimum wage in the Netherlands

The legal minimum wage was first introduced in the Netherlands on 27 November 1968. The aim was to protect workers from wages that were too low and to ensure that everyone could meet basic needs. In the early years, the minimum wage was set at 100 guilders a week for workers aged 25 and above.

During the decades that followed, the minimum wage was adjusted several times to keep it in line with wage trends in the Netherlands. The level of the minimum wage in the Netherlands is determined based on average contract wages, looking at both the market sector and the public sector.

Some historical highlights:

• 1980s: Minimum wage growth was temporarily frozen in the 1980s to control inflation.
• 2000s: The 2000s saw moderate wage growth, although the minimum wage continued to grow in line with collective bargaining wages.
• 2017: The law was amended, entitling workers to the full adult minimum wage from the age of 22 (previously it was 23). From 2024, the full minimum wage will apply from the age of 21.
• 2023: The minimum wage was exceptionally increased by 8.05% to support purchasing power in response to high inflation and rising cost of living.

Why is the minimum wage rising so sharply in recent years?

In recent years, increases in the minimum wage have been remarkably large, especially since 2023. Here are some reasons why:

1. Inflation adjustment: Rising prices in the Netherlands, especially of basic commodities and energy costs, led the government to increase the minimum wage faster to protect the purchasing power of low-income workers. This was especially visible in 2023, when the minimum wage was raised by 8.05%, much higher than the usual increases of around 2%.
2. Legal adjustments: Since 2024, a statutory minimum hourly wage has been introduced, which means that the minimum wage per hour is fixed, regardless of the number of hours contained in a full-time working week. For sectors where a full-time working week comprises more than 36 hours (e.g. the agricultural sector), this has provided a one-off additional increase in the monthly wage.
3. Contract wage development: The minimum wage is linked to the development of collective wages. So in times of strong wage increases, as we have seen in recent years, the minimum wage automatically grows along with it. This is done according to a fixed formula in which the Central Planning Bureau (CPB) estimates the contractual wage increase every year.
4. Social pressure and inequality: There has also been a growing public debate in recent years about income inequality and the need to increase lower incomes more strongly. Politicians have responded with a more deliberate increase in the minimum wage, as part of broader social reforms.

Interesting facts about the minimum wage

1. Increase by age: In the Netherlands, the minimum wage differs by age. For workers aged 21 and above, the full minimum wage of €14.06 per hour applies (as of January 2025), but graduated rates apply to younger workers. For example, a 20-year-old receives 80% of the adult minimum wage, while an 18-year-old receives 50%.
2. International perspective: The Netherlands is among 22 out of 27 EU countries that have a statutory minimum wage. In countries such as Austria, Denmark, Finland, Sweden and Italy, the minimum wage is determined by agreements between employers and trade unions, rather than by the government.
3. Minimum wage and benefits: The minimum wage also affects various benefits, such as welfare and state pension. Increases in the minimum wage often lead to similar increases in these benefits because they are linked to it.
4. Minimum wage in different sectors: In some sectors, a different number of working hours apply to a full-time working week. For example, in the agricultural sector, a full-time working week is considered 38 hours. This means that employees in this sector, at a minimum hourly wage of €14.06 (as of January 2025), end up at a weekly wage of €534.28 gross. This while, until recently, the hours of work weeks all had to amount to the same amount.
5. Wages rise faster than prices: Although wages in the Netherlands have been rising faster than prices recently, there is no 'excessive' wage growth under the law. The increases are in line with productivity and the value workers add to the economy.

Conclusion

Over the years, the minimum wage in the Netherlands has become an important tool to protect the purchasing power of low-income workers. With the recent sharp increases in the minimum wage, especially since 2023, the government continues to respond to the challenges of inflation and economic inequality. These changes have both benefits for workers, who gain more financial security, and challenges for employers, who must ensure efficient operations to bear the higher wage costs.

Wondering how these changes affect your business or personal situation? Our employment agency will be happy to help you with advice and support on these developments. Feel free to contact us!

As the minimum wage rises, rates based on the minimum wage also rise with it! As a temporary employment agency, we just don't earn more from this, even though it seems that way. Want to know why? What is the cost of an employment agency made up of? | Twente Personeelsdiensten Wierden