Webinars salary increases 2025

The economy is rebounding, inflation and labor tightness are leveling off. What to do about salaries in 2025? Rob Westrek and Emmy Kooloos of Highberg discuss relevant developments and current salary intentions in the market.

Time to set salary budgets. But what do you base them on after years of spiking inflation? Five decisive factors Highberg consultant Rob Westrek takes a closer look at during the webinar on Nov. 5. To begin with, the economy: it is expected to cautiously pick up again starting next year. The Nederlandsche Bank (DNB) predicts growth of 1.3 percent in both 2025 and 2026.

Perhaps even more concerning is the buoyancy of inflation. That peaked in 2022 at 12 percent and has dropped considerably since then, but still remains on the high side, Westrek said. DNB's forecast is 2.8 percent for this year and 2.0 percent over the next two years, but that seems too optimistic to Westrek. Following a recent analysis by Rabobank, a level around 2.5 percent seems more likely to him. Not only are the rising costs of (rental) housing, hospitality and food underlying this, higher wages also play a role. 'Especially companies that rely heavily on minimum wage employees have had to pass on the sharp wage increases in prices.' Lower oil prices had a dampening effect last year, but given the unrest in the Middle East, it remains to be seen whether that will continue. Other inflation risk is the import tariffs that incoming U.S. President Donald Trump has in mind. If these follow suit, prices will rise again.

The labor market supply/demand ratio is also important for salary budget decisions. What about it? The sharp rise in jobs and vacancies over the past decade seems to be stabilizing in recent months. As is the increase in the number of employed people and the simultaneous decline in unemployed people. Westrek: "With that, the tension in the labor market is less extreme, but still high. There are still more vacancies than people looking for jobs. The tightness has hardly diminished.'

Effect on salaries additionally has the minimum wage set by the government. That has increased by a whopping 41.3 percent from 2022, including the proposed plus of 6 percent as of Jan. 1, 2025. Thus, especially for companies employing many minimum wage workers, labor costs have risen sharply. 'The downside, however, is that the minimum wage in the Netherlands has now also become a living wage. People can make ends meet. This puts the Netherlands in the highest position in Europe after Ireland,' Westrek said.

What other organizations are doing with salaries is also a factor to consider in the new salary rounds. To get a picture of that, Highberg conducted a survey of clients on their plans for their employee benefit plans (avr's). Emmy Kooloos shares the findings. It turns out that, on average, avr's lag considerably behind Dutch collective bargaining agreements. While the indexation of the scales next year averages 3 percent, the newly agreed collective bargaining wages make a jump of 4.3 percent (source: employers' association AWVN). Now that does count outside the individual wage component, which tends to be higher with avr's than with collective bargaining agreements. Employers who distinguish both wage components promise an accumulated salary increase for 2025 of 5.5 percent on average, while organizations using an all-in system arrive at a total of 4.0 percent on average. The salary budget required for the individual component varies by population type, Kooloos said. 'If you have a lot of young employees, they will still grow strongly in salary. Then you need a larger budget than with mostly older employees who are already at the maximum within their scale.'

It is notable that the planned salary increases are about the same as those in 2024, while inflation has fallen significantly in the meantime. Kooloos: "Earlier inflation still has to be compensated for, that's why you see catching up.

Interesting conclusions additionally emerge from the database in which Highberg collected the compensation policies of 227 organizations. For example, the differences between avr's and collective bargaining agreements appear to be strongly correlated with job gravity. At the lower job levels, avr's lag nearly 10 percent behind the salary increases promised by collective bargaining agreements. However, that gap decreases as the job level increases, tilting between levels 12 and 13 (middle management), rising to a plus of 10 percent at senior management positions.

Also insightful are the differences between public and private employers. The salary outlook for lower levels appears similar, but from middle management up, the private sector rewards more generously. 'The public sector has indexed higher and, as a result, has experienced considerable development,' Kooloos said. 'Keep in mind that work weeks are often shorter with more vacation days. If you apply an hours adjustment, the public sector actually rewards quite higher.' By sector, proposed salary increases also vary. Energy and utility workers, for example, are making the biggest jump, while business services and construction have the least progress to make.

Again, these findings involve fixed salaries, Kooloos emphasizes. As job levels rise, the impact of variable pay increases, is the experience.

Thanks to collective salary increases, purchasing power has picked up considerably since the deep dip in 2022. This is especially true for working Dutch people covered by a collective bargaining agreement. These were energetically indexed from 2023. As a result, real wage growth is almost back to 2021 levels. 'But with avr's there is still a big gap to close,' Kooloos said. 'Unless you include individual increases, but those are steps within a scale. Employers need to be aware of this.'

In conclusion, the motto is: when determining salary budgets for next year, look at the context - the still tight labor market, moderate growth and often not yet fully offset inflation - and its impact on your own organization. Kooloos: "The question is how long substantial indexing will remain sustainable. Higher wage costs cannot be infinitely passed on in prices; eventually profit margins will come under pressure.' Productivity growth could provide solace, but studies have shown it to be zero in the Netherlands for some time and even negative in the service sector. 'Fine if the higher salary budgets for next year are meant as a catch-up,' Westrek adds. 'But unless you can pass it on to customers or your profit margins can withstand it, wage increases have to start declining in subsequent years. So it very much depends on what situation you're in as a company.'