The OECD is optimistic about the prospects for the Netherlands economy. Increased consumer spending, projected to continue to grow through 2019, comes on the back of a strong labor market with growing wages. All-in-all, the Dutch economy is going strong and is expected to continue on this path. It’s a great time for businesses to enter or expand into this vibrant market. Because the labor market is so tight, international companies looking to expand into the Netherlands will need to understand the Netherlands’ immigration law, as there may be a need to tap into foreign talent.
The Labor Market and Netherlands Immigration
The Netherlands is currently going through a strong period with their labor market. The OECD reports that unemployment is lower than it has been since 2012, and the housing market keeps rising. All signs point to a thriving economy with rising wages.
The European Commission concurs with the OECD; their website reports that the unemployment rate will continue to drop to an estimated 4.7% in 2018. They also report that, while there is no shortage of low-skill labor, it has become more difficult to fill medium-skill jobs. Shortages include:
- Design engineers, Technically qualified project managers, and R&D specialists
- Information and Communication Technologies specialists
- Medical professionals like nurses and medical specialists
- Accountants, auditors, and tax advisors
It may be difficult for a business to find qualified workers to fill these roles with employees from the Netherlands. To do so, employers may need to work through the Dutch immigration system to bring foreign workers to the country.
Changes to the Netherlands Immigration Law
In June 2013, the Netherlands enacted a major overhaul of their immigration policy with the adoption of two laws, the Modern Migration Policy Act and the National Visa Act. The two laws changed Dutch immigration law by putting more emphasis on sponsorship when bringing workers into the country, by streamlining the application process, and by increasing enforcement and penalties for violating the law.
One of the most important changes to the law is regarding sponsorship of all foreign workers. While not a requirement in the past, every foreign worker who resides in the country will now need to have a local sponsor to work and live there legally.
To be able to sponsor a foreign highly skilled worker for a local work permit or a combined permit for residence and work, a company in the Netherlands must first register with the Dutch Immigration and Naturalization Service (IND) to be recognized as a sponsor. If applying for a European blue card or an intracompany transfer, such a recognition is not compulsory, but still encouraged as it offers such benefits as needing fewer documents to be submitted and a streamlined process. In the case of applications for a work permit or a combined permit for residence and work, the IND will make a decision within seven weeks.
The sponsoring employer will have to report any of the following changes to the IND:
- If the employee no longer fulfils the wage requirement
- If the contract is terminated
- If the employee has changed address or moved back to his country of origin
Even when no longer acting as the sponsor, the employer has to retain the relevant details and documents for the foreign worker for five years.
The sponsored foreign employee and any accompanying family member will have to be enrolled in a healthcare insurance plan in the Netherlands within four months of the issuance of the residence permit. Depending the applicant’s country of origin, a tuberculosis test may be required within the first three months.
The new rules increased the penalties for violating immigration law. First, they introduced administrative fines for employers who don’t file the proper paperwork, risking a fine of up to €3,000. Additionally, illegal residence in the Netherlands is now a criminal offense with penalties of a maximum of four months in prison or a fine of €3,800.
You don’t need to reinvent the wheel or approach international expansion alone. Your business could benefit greatly by partnering with a service like International PEO (Professional Employer Organization), which provides an established infrastructure to hire team members in your target country without the need to establish a foreign entity. Contact Velocity Global today to learn more!