Foreign companies outperform Dutch counterparts

The average labour productivity of large, foreign-owned, non-financial companies in the Netherlands increased by 23 percent between 2000 and 2006. Their Dutch counterparts only achieved growth of 17 percent.

Over the 2000-2005 period, the average added value produced per person employed in foreign-owned non-financial companies has risen from 90,700 to 111,200 euros. The average labour productivity of equally large, Dutch-owned non-financial companies increased from 74,300 to 85,400 euros in the same period, show figures by the Central bureau for Statistics (CBS).

Part of the discrepancies in labour productivity between foreign-owned and Dutch companies can be accounted for by the fact that foreign-owned companies are relatively more often active in sectors where the average output per staff member is higher. “In 2005, the share of foreign companies in high-productive areas was 52 percent, as against 38 percent in low-productive areas,” CBS noted.

But there are also differences in average output between foreign and Dutch companies active within the same sector. Differences are relatively large in retail trade, hotels and restaurants and repair. Foreign companies in this sector are, for example, car and car component retailers.

Costs of adapting to the Dutch language, laws and regulations, culture and market partly account for the differences in labour productivity per person employed. “Foreign companies are prepared to invest in the Netherlands, provided they can offset the costs of adaptation by producing better or cheaper products or production processes.” Foreign companies with their head office and supporting services located in the country of origin have lower overhead costs and therefore higher productivity than Dutch companies.

Source: NIS News, 9 November 2007