Pay rises reached a historic high average of 7.1% this year, but continued wage growth is unsustainable given the economic situation facing many companies and sectors, Dutch employer organisations said in their recommendations ahead of next year’s pay round.

In particular, the private sector is facing several major challenges, including the ageing population and the need to make industry more sustainable. At the same time, employers say, labour productivity is stagnating and investments have gone down.

The coming round of pay negotiations should focus on the long term, which is in the interests of both workers and the continuity of companies, the three organisations – AWN VNO-NCW and MKB – say in their joint statement.

Wage growth should again be linked to the actual economic situation in a particular sector and to the longer term prospects. And efforts must be made to boost productivity, partly by the use of new technology.

Although the Dutch economy appears to be doing well, with low unemployment and high profits for some key companies, “there are worrying developments in the background,” the employers say.

Bankruptcies are rising, low levels of investment are pressuring growth, there is persistent inflation and the Netherlands is currently in a mild recession.

Wage costs are also having an impact. The minimum wage, the employers say, has risen by up to 30% over a year and is now among the highest in Europe.

“At the same time, a higher minimum wage is not solving the problems of the working poor,” the employers say. “People in work should keep more of their earnings and this should be a top priority for the next cabinet.”

A reform of the current income tax and supplementary benefit system is likely to be part of the next government’s strategy.

Among the big pay deals agreed this year are a rise of up to 33% over two years for Schiphol airport baggage handlers and 10% for primary, secondary, and special education teachers.