Is the Netherlands really drowning in red tape?

Rules do more than slow things down

Not every regulation should be judged purely on how it affects productivity, Dyaran Bansraj argues. Rules also protect health, safety and financial stability. Europe has, in his view, deliberately chosen slower, more stable growth, over the steeper, more volatile growth pursued in the US. Those goals need their own yardstick: a food safety rule should not just be measured by what it costs producers, but by the cases of food poisoning it prevents. Bansraj’s conclusion: 'measure a rule against the problem it is meant to solve, and not only against the effect on productivity.' 

Assistant Professor Arjan Non offers a broader reason why compliance costs might be climbing at all: society itself has become more complex. 'In a digital society, privacy is simply more of an issue than it was 20 years ago,' he says. It is even possible, he suggests, that the Netherlands is already close to an ideal amount of regulation, and that increasing complexity simply requires a bit more of it to stay near that balance.

The cost of confusion

There is a cost PwC's method cannot capture at all, according to Non: confusion. 'The more complex a scheme is, the more likely people are unaware of it, or make the wrong choices because of it,' he says, pointing to the recent confusion among students over interest on their loans. Ideally, we would look not just at hours spent complying, but at how complexity itself shapes people's decisions, he argues, even if that is nearly impossible to put a number on. 'Complexity has its price,' even when that price stays invisible.

The numbers show labour costs, not economic damage

According to Bansraj, PwC's €16.8 billion is not a measure of economic damage. It is an estimate of the wage costs of hours that employees, in both the private and public sector, spend on compliance related tasks, and that is an important distinction. 'Labour input is not the same as what regulation costs the Netherlands at the bottom line.' 

Non adds that the number can rise without any real change in the rules. If more international firms set up on Amsterdam's Zuidas, that shows up as more highly paid compliance staff, 'but that does not mean more rules have actually been made.'

Furthermore, if you compare the increase in regulatory burden against GDP – which, according to Bansraj, is a fairer comparison – a different picture emerges. As the estimate is based on wages and employment, it naturally grows in line with the economy. ‘The estimated compliance costs have barely risen as a percentage of GDP,’ he says: from 1.45 per cent in 2013 to just 1.49 per cent in 2024. Additionally, PwC’s own figures show that the Netherlands has one of the lowest compliance costs in the EU. That puts the figure of a 28 per cent increase into perspective.

Rules need proper assessment

Neither economist is arguing against cutting red tape. Bansraj agrees with PwC's broader recommendations: scrap duplicate reporting, simplify procedures, avoid unnecessary Dutch deviations from EU rules. Non agrees too, with a caveat: 'everyone wants to scrap pointless rules, of course, but reality is stubborn.' 

Their real objection is that the report, for all its scale, never says which rules cost more than they deliver, or how much of that €16.8 billion could genuinely be saved. The more useful conversation, both say, is not about one headline figure, but about individual rules: ‘What is the purpose of the rule, is that purpose achieved as simply as possible, and what drawbacks are we willing to accept in order to achieve that purpose?’