What can we learn from the Dutch? Tony Blair is spending the weekend in Barcelona lecturing his fellow EU leaders on the merits of British flexibility, but to many continental Europeans there is an alternative model in the Netherlands.
It is on most measures the best-performing of the European economies. It has the lowest unemployment and is second only to Ireland, a rather special case, in terms of growth. It manages to combine this with a highly- developed welfare state.
The charge against the Netherlands is that while it has been successful at bringing flexibility into some aspects of its economy, it is merely good at running an existing economy rather than creating a new one. Thus its labour market is extremely flexible, with the highest level of part- time workers in Europe. But its low unemployment level, just under 2 per cent, conceals the highest level of disabled unemployment (some 10 per cent of the workforce) in the developed world. Unless you think the Dutch are uniquely unhealthy, something's amiss. What is happening is that anyone who says they are disabled can claim 70 per cent of their salary from the state. Plans to check the abuse are politically stalled. Despite these burdens the country has been doing well. The great question is, can it continue? Looking ahead, one of the most important determinants of economic success will be the rate at which new businesses are created.
Last week, from a firm of economic consultants in the Netherlands produced a report* criticising the lack of attention Dutch schools paid to preparing young people for an entrepreneurial career. Few people, it said, regarded self-employment as a serious career option: a paid job as an employee was still the dominant perspective in Dutch society. The government was sufficiently concerned about this to have set up a National Programme on Entrepreneurship and Education to try to correct this balance.
This might seem an unremarkable observation. The cultural impetus to set up a business, rather than find a job, is not strong in most of Continental Europe or in much of the UK. But it is intriguing that the Dutch government should be so worried about this, for on several measures the Netherlands does rather well.
Two such measures are shown in the charts. One is the league table of barriers to entrepreneurship compiled by the OECD. Britain comes out top by a large margin, ahead even of the US. But the Netherlands does well by continental standards. On the other measure, venture capital investment in high-technology companies as a proportion of GDP, the Dutch are second only to the Americans.
So the money is available and the regulatory barriers to setting up a business are not particularly high. In addition young people are mobile and the physical infrastructure for setting up businesses is good. So what is missing? …