Underemployment in the Netherlands: How the Dutch poldermodel failed to close the education-jobs gap

Although the populations of the richest advanced industrial societies have achieved unprecedented levels of formal credentials, analysts report on the massive scale of underutilisation of knowledge and skills in current market economies. This paper describes the underemployment situation in the Netherlands (1977-95). We show by different methods that the `education-jobs gap' has widened increasingly. The return to credentials of Dutch employees has diminished for every educational category. Within the total labour population, an increasing share of employees can be considered as underemployed and deal with credential inflation. At the lower levels of education men have suffered from credential inflation more than women. At the higher levels of education it is the reverse. It also appears that young people deal with a `waiting-room effect': they enter the labour market at relatively low skill levels, given their educational level and gender. A further breakdown by educational specialisation shows that employees with an educational background in health care or technical studies have suffered relatively more from credential inflation compared to those with a commercial education. We conclude by stating that in spite of much rhetoric about the skill deficiencies of the current workforce, the lack of decent jobs has caused basic allocation problems at the Dutch labour market. From a human resources perspective, the growing wastage of employees' potential should not be underestimated or dismissed. We argue that an effective allocation of knowledge and skills to occupations will be the basic tenet of labour market policy and new forms of work organisation.