Demand for labour is high, supply not so much

Shortage of labour

Focus on parts of the labour market where there is an abundance of employees: that’s the message of Bas Jacobs. By making the labour market more efficient, people from these sectors can find a job elsewhere. However, this can only be achieved by reforming the current institutions of the labour market. Flexible jobs are being protected a lot worse in comparison with regular jobs. This makes acquiring flex workers very profitable for employers, since these jobs are easily dispensable. Working conditions therefore are not as good as they should be, which makes it less attractive for the unemployed to join the working force. This leads to a shortage of supply. Therefore, wages are rising. Due to shortages in the supply chain of products, such as crude oil and other resources, inflation counteracts the possible rise in wages. However, Jacobs expects these inflationary effects to decrease or disappear within the next two years. At that moment, we will probably reach a phase of stagnation, since the aging population are a burden on the economy. Furthermore, the need for investments will be less since capital intensive industries are not as booming as they used to be: in this current age, technology is more important (and less capital intensive). Savings are high, which means that interest rates are low.

The lawfulness of box 3

According to a Dutch court, the tax system of box 3 is unlawful. Jacobs points at the fiction that people with more wealth tend to be able to achieve a higher return on investment by investing in more risky investments. This would be unfair to wealthy people who just put their money on a savings account, since they are taxed at a rate as if they were making lots of money. According to the court, this is discrimination. Jacobs agrees that the system of fictive returns is very problematic, since this leads to situations which are not in line with reality. All professors in taxation but two opposed the policy of the government since 2001. All countries that are part of the OECD tax the actual return on capital but the Netherlands: it is time to start using a system which is more fair, simple and efficient.