Dutch SMEs face labour shortages, financing barriers and geopolitical risks

Researchers Bas Karreman, Ronald Huisman and Michiel Gerritse from Erasmus School of Economics contributed to the report, each examining a different challenge facing Dutch SMEs. 

Labour shortages require investment in skills 

For many SMEs, labour shortages have become a structural constraint. This is particularly evident in sectors such as healthcare, transport, engineering and IT. At the same time, demographic developments mean that the Dutch working-age population is expected to become smaller, limiting the scope for future growth through additional labour input. In his contribution, Associate Professor Bas Karreman argues that tackling labour shortages requires more than simply attracting additional workers. Greater emphasis should be placed on developing human capital through education, retraining and lifelong learning. 

The report points to the persistent shortage of practically trained and technically skilled workers. For SMEs in particular, labour shortages can also increase workloads, leaving less time for strategic renewal, changes in the organisation of work and investments in productivity-enhancing solutions. Karreman therefore stresses the importance of ensuring that education and training are better aligned with changing labour-market needs. A sustainable labour market requires not only businesses, but also policymakers and educational institutions to invest in skills development and the recognition and appreciation of vocational expertise. 

Access to finance matters more than the availability of capital 

The report also identifies access to finance as an important barrier to SME growth. While capital is available in the Netherlands, many SMEs struggle to find and secure the financing they need. Of the SMEs with a financing need, only 55% ultimately obtain at least part of the financing they seek. Ronald Huisman, Professor of Sustainable Energy Finance at Erasmus School of Economics, argues that simply making more capital available will not necessarily solve this problem. 

His contribution introduces the concept of “system-level investing”, in which the relationship between financier and entrepreneur is central. Rather than viewing finance as a transaction, financiers could take a more active, long-term approach, bringing sector knowledge to the table and supporting SMEs in identifying and pursuing sustainable growth opportunities. According to Huisman's contribution, this would require a shift in the way SME financing is approached. Instead of waiting for entrepreneurs to submit fully developed financing applications, financiers could use their sector expertise and long-term relationships to identify companies with growth potential and engage with them proactively. 

Geopolitical shocks can reach SMEs indirectly 

SMEs may also be particularly vulnerable to geopolitical developments. Although they account for only around one fifth of Dutch exports, their exposure to geopolitical risks extends well beyond their direct participation in international trade. SMEs are often embedded in supply chains and generally have smaller financial buffers than larger companies. Associate Professor Michiel Gerritse at Erasmus School of Economics, examines how geopolitical shocks can affect SMEs through trade, supply chains and energy markets. For smaller businesses, exposure to international shocks is often indirect. SMEs may supply larger exporting companies and can therefore be affected when those companies face disruption in international markets. At the same time, smaller firms often have fewer alternative markets, lower bargaining power and smaller inventories and margins, making it more difficult to absorb sudden shocks. 

Gerritse also highlights vulnerabilities in supply chains. SMEs may benefit from sourcing inputs locally and from using more standardised products, which can make it easier to change suppliers. However, smaller firms may also depend on a limited number of suppliers and have less visibility further down the supply chain. When shortages occur, they may find themselves behind larger customers in the queue for scarce supplies.  

Energy prices and cybersecurity add further risks. The report notes that SMEs generally have less access to financial instruments for hedging price fluctuations, while smaller firms can also face relatively high fixed costs associated with cybersecurity, insurance and compliance. 

Productivity remains a key challenge 

The contributions of Karreman, Huisman and Gerritse are part of a broader picture presented in the report. Dutch SMEs perform relatively strongly in international terms: their productivity is among the highest in the EU. However, productivity growth in the Dutch economy has slowed considerably over the past decade.  

The report also highlights a substantial productivity gap between SMEs and large companies. In the Dutch manufacturing sector, for example, small businesses are more than 60% less productive than large companies, while medium-sized businesses lag behind by around 25%. Differences in management practices, access to finance, economies of scale and technology adoption all contribute to this gap. 

With labour supply increasingly constrained, future economic growth will therefore depend to a significant extent on improving productivity. Investment in skills, access to appropriate finance, digitalisation and resilience to external shocks will all play a role in determining how successfully Dutch SMEs can adapt and grow.