Beware, we are becoming less attractive for labour migration!

Why the Netherlands is becoming less attractive to migrant workers

The stretch has crept out of net wages for migrant workers in recent years. The biggest culprits? The way the ET scheme (extraterritorial costs) is applied in the temporary staffing sector as well as policy changes that the exchange space-the part of gross pay that you can exchange in a tax-friendly way- systematically reduces. Below I explain how the technique works, what changed legally/tax-wise and why in practice it leads to lower net's and less attractiveness of the Netherlands.

ET scheme in one paragraph 

The ET scheme allows foreign temporary workers who are temporary in the Netherlands work part of their gross salary exchange for untaxed allowances for ET costs (such as housing, higher living expenses and periodic "home-leave" travel expenses). The aim: net higher for the employee and often cost savings for the employer. This possibility is laid down as an industry-specific elaboration in collective agreement/sector schemes (ABU/NBBU) and confirmed in tax frameworks. SNCU ABU

How exchange space is technically determined

Research commissioned by Finance (SEO Economic Research) describes the actual calculation sequence: the exchange space is bounded by (a) the difference between the statutory minimum wage (WML) and the gross pay including non-statutory days, bonuses and overtime, and (b) ceilings in CBA/WAS. In addition, a total ceiling of 30% of gross salary. You should never push the taxable wage below the (hourly) minimum. Since 2025 is the exchange rate adjusted from 81% to 100% (see below). SEO.co.uk

Specifically, if you pay only €0.40 per hour above WML, then at 40 hours the maximum exchange capacity in practice at most €16 per week (0.40 × 40), even if the actual ET costs are higher; after all, you cannot fall below WML. SEO.co.uk

In 2023, there was a lot more to trade out because the statutory minimum wage (WML) was lower and the exchange base was still 81%; a production worker in the metal sector back then often earned €13.50-€14.00 per hour while the WML was around €11.50, leaving more than €2 margin per hour to exchange in a tax-friendly way-a margin that has since been sharply curtailed by the increase in the WML as well as the exchange rate to 100%.

What changed since 2024/2025 and why this depresses net's

1. (a) Renewed ET covenant (June 2024).
   Tax authorities, ABU and NBBU have updated the annex. Key points: the temporary stay is deemed proven for the tax authorities if a number of conditions are met (recruitment abroad, foreign residential address, specific contract conditions, offer of NL health insurance, and organised housing or transport). The annex links temporariness practically to the maximum duration of the 30% scheme (5 years). This sharpens evidence practice and administrative pressure on the front end. ABU
2. (b) Minimum-hourpay pushes down the exchange space.
   Since 2024, one minimum hourly wage. It rose to €14,06 by 1 January 2025 and to €14,40 by 1 July 2025. The higher the WML floor, the less margin is left to exchange wages for tax purposes. This particularly affects jobs close to WML (manufacturing, logistics, food, engineering inflow). Official Noticesgovernment.co.uk
3. (c) Exchange rate from 81% → 100% (by 2025).
   In broadcast ET practice, a exchange base of 81% To partially compensate for missed reservations (holiday pay/pension). From 2025, that exchange rate is 100%, making 100% of the amount exchanged deducted from gross pay. The employee benefit falls as a result, while the employer benefit increases earlier (less top-up needed). This makes the Netherlands net less rewarding for migrant workers at equal gross wages.

Housing: higher quality requirements, price caps and tighter withholding space

• Max. deduction for housing from WML: at present, employers are still allowed to maximum 25% from WML withhold for housing-but this ceiling is politically under discussion. A phased reduction for up to 5% in 2029 (consultation/proposal; not yet final). Less withholding room means ET costs can be "funded" less via exchange. Central government 
• PKS price bands as of 1 July 2025: in the CAO chain is a Price-quality system (PKS) guiding what employment agencies are allowed to charge. Since 1 July 2025 lies the allowable weekly price for housing between €115.20 and €144.10. At high scarcity, this puts additional pressure on margins and leaves less room for net optimisation. SNCU

Combined with the rising WML floor, this creates double bottlenecks: you can deduct less and exchange less without falling below WML. The consequence is that actual ET costs (rent, energy, transport) increasingly above protrude the fiscal/contractual ceilings, while the exchange space under that ceilings remain.

Why labour migration remains indispensable

Despite the limitations and shrinking benefits of the ET scheme, labour migration remains essential for the Netherlands. In sectors such as logistics, manufacturing and engineering, labour migrants are an indispensable link to meet shortages and ensure the continuity of our economy. They contribute to Dutch prosperity through taxes, premiums and consumption, and help maintain our international competitiveness. The challenge is therefore not whether labour migration is necessary, but how we shape the conditions so that the Netherlands remains attractive and fair for employees and employers.

Result at the kitchen table: less net benefit, more often "Holland? Meh."

• WML rises → space to the bottom Shrinks → less exchange per hour/week.
• Exchange base 100% → employee gets less net upward impact at the same ET exchange.
• Housing rules (PKS bands + deduction of deductions) → less financial leeway To neutralise actual ET costs.
• Tighter evidence/requirements from the 2024 covenant → more administrative thresholds, quicker "no" when in doubt about temporariness/residence/recruitment.

Add to this the tight housing market and rising healthcare and living costs, and you can understand why migrant workers are more likely to choose countries/regions where either net wages are more predictably higher or housing costs are significantly lower. (The ET scheme itself has not been abolished; it only works less and less powerfully at the lower end of the wage distribution).

What can you do as a sender/hirer now?

1. 1. Recalibrate grossing and pay mix.
      Send on structural higher basic wage compared to WML (where the market allows) instead of leaning on ET optimisation. This is how you create intrinsic exchange space as well as labour market attractiveness.
   2. ET costing standardised by project & week.
      Use an up-to-date ET tool (2025 parameters) and explain the rationale for transience/residence/recruitment fixed directly (file-level checklist). NBBU ABU
   3. Housing: from cost to proposition.
      Work with PKS-compliant homes and communicate all-in net meaning transparent. Monitor policy intentions around phase-out deduction from 2026, because that hits your cost price directly.
   4. Transport & home-leave tightly arranged.
      Handle the (targeted) exemptions carefully and monitor supporting documents as advised in the covenant; this prevents retrospective assessments and dropouts. ABU

 

Bottom line

The Netherlands is losing attraction for migrant workers not because the ET scheme has disappeared, but because the room for exchange is structurally shrinking by higher minimum hourly wage, a exchange base of 100%, tighter conditions and tighter housing and retention frameworks. If you keep building your proposition on tax optimisation alone, you are going to lose the market. The winning strategy for 2025-2026 is simpler: fair (higher) gross salary, PKS-compliant housing and faultless compliance-and the ET scheme as sideshow, not as a business model.