The Dutch labor market is a complex and evolving landscape. With labor force participation at a notable high and unemployment levels historically low, it presents both opportunities and challenges. Ongoing trends like an aging population and declining productivity growth are putting pressure on the market. McKinsey's projections suggest that labor market tightness could triple by 2030 if the Netherlands maintains its current growth rates.

Unlock the Potential of Generative AI in the Dutch Labor Market

Strong and Evolving Dutch Labor Market

The Dutch labor market is currently strong, with high labor force participation and low unemployment. However, ongoing trends such as an aging population and declining productivity growth are posing challenges. McKinsey's projections indicate that labor market tightness could triple by 2030 if the Netherlands continues on its current growth path.This presents both opportunities and challenges for businesses and workers alike. On one hand, businesses may face difficulties in finding and retaining workers, while on the other hand, workers may have more bargaining power.

Generative AI: A New Domain of Automation

Traditional automation solutions have played a significant role in addressing labor market challenges by increasing labor productivity. However, most of these solutions have been limited to processing structured data. Generative AI, on the other hand, unlocks a new domain of automation by processing unstructured data such as natural language and images.This broadens the spectrum of automation potential to more occupations, including knowledge work and customer service. It holds the potential to boost productivity and economic growth for the Netherlands.

Impact of Gen AI on Sector Composition

While gen AI has the potential to relieve labor market tensions, not all Dutch businesses are preparing to adopt it. AWVN reported that 40 percent of Dutch companies are not yet using AI due to a lack of knowledge, safety and privacy concerns, or perceived irrelevance.The speed of gen AI adoption at a country level is determined by multiple factors, including the economic maturity of a country, overall sector readiness to embrace new technologies, and sector composition in terms of shares of SMEs, independents, and corporations.In the Netherlands, a relatively high percentage of workers are employed by SMEs, which may be slower to embrace new automation opportunities. For example, in the adoption of digital sales technologies, the top 10 percent of largest companies captured 60 to 95 percent of digital revenues in 2019.

Gen AI's Potential in Five Sectors

Although various interventions can address labor market challenges, gen AI can be a major productivity booster, particularly in a handful of sectors. A previous McKinsey report estimated that roughly one-third of the necessary productivity improvements to address labor market tightness in the Netherlands can be achieved through automation powered by gen AI.The finance and insurance sector and the IT sector have the highest potential for gen AI automation and some of the highest labor market tension. Gen AI innovation in these sectors will enhance their productivity and provide business incentives to adopt.Other sectors such as the administrative and support and government sector, the educational services sector, and the professional, scientific, and technical services sector also have potential for gen AI automation impact. However, they may require orchestration to accelerate adoption.

Gen AI and New Occupational Categories

As gen AI becomes integrated into various sectors, the demand for specialized skills and expertise in AI is expected to grow. We expect increased demand in three occupational categories in the Dutch labor market: gen AI practitioners, gen AI researchers, and semiconductor, software, and other engineers.Gen AI practitioners form a new subexpertise within the AI field and drive demand for related software and data engineering support. Gen AI researchers create new opportunities in research positions within academia and enterprises. Semiconductor, software, and other engineers will also see growth as gen AI continues to expand.

Actions to Accelerate Gen AI Adoption

Three actions by public and private stakeholders could accelerate gen AI adoption in the Netherlands and have a positive effect on the workforce.First, companies need to prepare for granular upskilling and reskilling needs as automation increases. Training programs should be developed to help workers use new gen AI tools and reskill if necessary. Public sector agencies can facilitate this process.Second, orchestration is needed in sectors with high degrees of SMEs and labor tightness. Larger tech corporations, universities, and public sector agencies can collaborate to accelerate gen AI implementation.Finally, bold investments are needed to lead the Netherlands' gen AI transition. Public and private organizations should invest in long-term innovation, especially in strategically important sectors such as manufacturing and healthcare.By embracing collaboration on gen AI, the Netherlands can build a thriving business ecosystem and ensure the workforce is well prepared for the future.