Low income and job insecurity often occur in combination with other vulnerabilities

This is shown in a recent study conducted by DNB. The government's labour market plans, recently submitted to parliament by employment minister Karien van Gennip, are a first step to reduce job and income insecurity.

Labour market position plays major role in vulnerability

A recent DNB study (available in Dutch only) shows that households' vulnerabilities are related to their position in the labour market. In the Netherlands, 15% of primary earners are on a flexible contract or self-employed. Not all of these households are vulnerable, however. DNB's study on people with low job and income security looks at the combination of work and income for people who are self-employed or on a flexible contract and have an income below or close to the poverty line. In this group of 165,000 households, many vulnerabilities converge.

Figure 1 shows that people in this group are almost five times more likely than average to also have high housing costs. They are also much more likely to have small homes and high energy bills. In addition, they are more likely than average to have arrears and net debt, and to have limited buffers to cope with financial setbacks.

This group includes many young people. Some 30% of the people with low job and income security are between 18 and 30 years old, compared to only 17% in the labour force as a whole. A quarter have a non-western migration background, compared to 12% in the population as a whole.

Figure 1 - People with low job and income security are also more likely to be vulnerable in other areas

Figure 1 shows how much more common vulnerabilities are among people with low job and income security than among the population as a whole. Source: DNB, Statistics Netherlands microdata

Some people remain in a low job and income security position for a long time

Temporary contracts are often seen as a stepping stone to a permanent contract and thus to greater security. In these cases, low job security is only temporary. However, a quarter of the people with low job and income security in 2012 were still on low incomes in 2020, mostly as flexible workers or self-employed (10%), or they were unemployed (10.1%). Only just under a quarter of those with low job and income security in 2012 had a permanent contract and an income of more than 120% of the poverty line in 2020.

Almost a third, while still in a low job security position, managed to improve their income. This group includes many self-employed people. The picture for this group is more nuanced, since some of them may have consciously chosen self-employment over other forms of work, and their labour market position need not be vulnerable. They do have less security in terms of occupational disability and retirement provisions, however. Moreover, the coronavirus crisis, among other things, has shown that self-employment may lead to insecurity in the event of a drop in income.

Figure 2 - A third of people with low job and income security are unable to improve their position

Source: DNB, Statistics Netherlands microdata

Addressing the most vulnerable forms of labour contracts can help people with low job and income security

The DNB study shows that labour market position is an important factor in household vulnerabilities. A proportion of workers remain in low security positions for prolonged periods of time. The government recently presented plans to improve the functioning of the labour market. For instance, temporary workers should be entitled to permanent contracts sooner and the ability of employers to stack temporary contracts will be reduced. Improving job and income security will make it easier for households to build up buffers for difficult times and thus become more resilient to sudden, adverse changes.