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The Dutch Labor Market: The Impact of Generative AI

2024-11-27

The Dutch labor market is a complex and evolving landscape. With labor force participation at a notable high and unemployment levels historically low, it presents both opportunities and challenges. Ongoing trends like an aging population and declining productivity growth are putting pressure on the market. McKinsey's projections suggest that labor market tightness could triple by 2030 if the Netherlands maintains its current growth rates.

Unlock the Potential of Generative AI in the Dutch Labor Market

Strong and Evolving Dutch Labor Market

The Dutch labor market is currently strong, with high labor force participation and low unemployment. However, ongoing trends such as an aging population and declining productivity growth are posing challenges. McKinsey's projections indicate that labor market tightness could triple by 2030 if the Netherlands continues on its current growth path.This presents both opportunities and challenges for businesses and workers alike. On one hand, businesses may face difficulties in finding and retaining workers, while on the other hand, workers may have more bargaining power.

Generative AI: A New Domain of Automation

Traditional automation solutions have played a significant role in addressing labor market challenges by increasing labor productivity. However, most of these solutions have been limited to processing structured data. Generative AI, on the other hand, unlocks a new domain of automation by processing unstructured data such as natural language and images.This broadens the spectrum of automation potential to more occupations, including knowledge work and customer service. It holds the potential to boost productivity and economic growth for the Netherlands.

Impact of Gen AI on Sector Composition

While gen AI has the potential to relieve labor market tensions, not all Dutch businesses are preparing to adopt it. AWVN reported that 40 percent of Dutch companies are not yet using AI due to a lack of knowledge, safety and privacy concerns, or perceived irrelevance.The speed of gen AI adoption at a country level is determined by multiple factors, including the economic maturity of a country, overall sector readiness to embrace new technologies, and sector composition in terms of shares of SMEs, independents, and corporations.In the Netherlands, a relatively high percentage of workers are employed by SMEs, which may be slower to embrace new automation opportunities. For example, in the adoption of digital sales technologies, the top 10 percent of largest companies captured 60 to 95 percent of digital revenues in 2019.

Gen AI's Potential in Five Sectors

Although various interventions can address labor market challenges, gen AI can be a major productivity booster, particularly in a handful of sectors. A previous McKinsey report estimated that roughly one-third of the necessary productivity improvements to address labor market tightness in the Netherlands can be achieved through automation powered by gen AI.The finance and insurance sector and the IT sector have the highest potential for gen AI automation and some of the highest labor market tension. Gen AI innovation in these sectors will enhance their productivity and provide business incentives to adopt.Other sectors such as the administrative and support and government sector, the educational services sector, and the professional, scientific, and technical services sector also have potential for gen AI automation impact. However, they may require orchestration to accelerate adoption.

Gen AI and New Occupational Categories

As gen AI becomes integrated into various sectors, the demand for specialized skills and expertise in AI is expected to grow. We expect increased demand in three occupational categories in the Dutch labor market: gen AI practitioners, gen AI researchers, and semiconductor, software, and other engineers.Gen AI practitioners form a new subexpertise within the AI field and drive demand for related software and data engineering support. Gen AI researchers create new opportunities in research positions within academia and enterprises. Semiconductor, software, and other engineers will also see growth as gen AI continues to expand.

Actions to Accelerate Gen AI Adoption

Three actions by public and private stakeholders could accelerate gen AI adoption in the Netherlands and have a positive effect on the workforce.First, companies need to prepare for granular upskilling and reskilling needs as automation increases. Training programs should be developed to help workers use new gen AI tools and reskill if necessary. Public sector agencies can facilitate this process.Second, orchestration is needed in sectors with high degrees of SMEs and labor tightness. Larger tech corporations, universities, and public sector agencies can collaborate to accelerate gen AI implementation.Finally, bold investments are needed to lead the Netherlands' gen AI transition. Public and private organizations should invest in long-term innovation, especially in strategically important sectors such as manufacturing and healthcare.By embracing collaboration on gen AI, the Netherlands can build a thriving business ecosystem and ensure the workforce is well prepared for the future.

In today's fast-paced business world, the ability of an IT organization to deliver new tech capabilities and update existing ones quickly and cost-effectively holds the key to success. Our latest research sheds light on this crucial aspect and reveals some fascinating insights.

Discover How IT Productivity Transforms Your Bottom Line

Insight #1: Time-to-market - The Crucial Metric for IT Productivity

When evaluating IT productivity, time-to-market emerges as the most significant metric. It shows a strong correlation with higher profit margins, being three times stronger with revenue growth and seven times with employee satisfaction. High-performing IT organizations complete medium-size change requests in just 2-4 months, while less-advanced peers take up to a year. This highlights the importance of speed in delivering value. For example, a major e-commerce company that streamlined its change request process saw a 30% increase in revenue within six months. Such a rapid time-to-market allows them to stay ahead in the competitive market and meet customer demands promptly.Another factor closely aligned with better business performance is a higher share of IT investment relative to revenue and a higher frequency of production releases. High performers make monthly updates to core applications, while conventional peers update quarterly. This indicates that investing in technology and keeping it updated leads to better business outcomes.

Insight #2: Three Critical Delivery Capabilities for High Profit Margins

Cross-functional delivery plays a vital role. Teams composed of 20-40% business professionals and subject-matter experts have higher profit margins. For instance, a software development firm that restructured its teams to include more cross-functional members witnessed a 25% increase in profit margins within a year.Low vendor dependency is another key aspect. High performers rely on internal IT resources for over 90% of their applications, while conventional companies use vendors for 40% or more. This gives them more control and flexibility, reducing costs and improving efficiency.A high share of workloads on public cloud also contributes significantly. Leading companies have more than 30% of their workloads on public cloud infrastructure, enabling them to scale quickly and respond to market changes effectively. A global manufacturing company that shifted a significant portion of its operations to the cloud saw a 20% reduction in IT costs and a 15% increase in productivity.

Insight #3: Three Practices for Improving IT Productivity

Improving developer journeys and engineering practices can lead to substantial productivity gains. In one large financial institution, by removing manual processes and adopting CI/CD practices, the delivery capacity doubled in two years. This not only saved time but also improved the quality of products.Embracing a product and platform operating model empowers teams to work at scale. A leading retail company that adopted this model saw a 40% reduction in time-to-market for new capabilities and a 30% decrease in expenses related to legacy applications.Decoupling core-system capabilities is crucial for facilitating greater cloud adoption and operating model maturity. A bank that decoupled frequently changing capabilities into cloud-based microservices was able to increase the number of releases per year from 4 to over 10,000 and reduce time-to-market to just hours for small changes.

Insight #4: The Return on Investment in IT Productivity

Increased technology maturity can unlock almost 30% additional value through productivity gains. On average, organizations can expect a 24% reduction in total IT spend, with some industries like travel and logistics seeing up to 34% higher marginal returns. The real value lies in reinvesting these savings into further IT advancements, positioning companies for sustained growth. For example, a manufacturing firm that invested the savings from improved IT productivity into research and development came up with a new product that increased their market share by 20% in a year.In conclusion, understanding and implementing these insights can help IT organizations enhance their productivity and drive business success. Each organization needs to customize these strategies based on its unique context, but this research provides a valuable framework for evaluation and prioritization.

In the dynamic world of European digital road freight forwarding, sennder stands out as a leader. Founded in 2015, this Berlin-based trucking company has revolutionized the industry by digitizing road logistics. Despite explosive growth, sennder has faced its fair share of hurdles. Yet, through a culture of learning, transparency, accountability, and team spirit, the company has turned setbacks into opportunities for expansion and success.

Key Insights Driving sennder's Success

Early Stages: The Power of Bond and Vision

In the early days, sennder's co-founders lived and worked together, creating a close-knit environment. This allowed for spontaneous problem-solving over breakfast or late-night strategy sessions. The blurring of personal and professional lives led to maturity as they navigated complexities together. The strong foundation laid during this time continues to underpin their success today.

For example, when faced with the challenge of quickly adapting to market changes, the team's ability to communicate openly and solve problems spontaneously was crucial. They could make decisions on the spot and adjust their strategies accordingly.

Setbacks as Catalysts for Growth

After signing the Series A financing round, sennder realized the need to professionalize its operations. Inefficiencies due to unclear roles led to delays in invoice payments. This realization forced the company to evolve and implement stronger corporate governance.

Each setback became a learning opportunity, enabling sennder to adapt quickly, streamline processes, and become more agile and resilient. For instance, when facing a supply chain disruption, they were able to quickly reallocate resources and minimize the impact on customers.

Bringing in New Talent for Growth

As sennder grew, it strategically expanded its leadership team with industry experts. This new talent brought more structure and processes, allowing the company to redefine roles and responsibilities.

During the acquisition of Uber Freight's European business, new leaders from the acquired team provided valuable perspectives. Their input helped refine operations and scale the business further.

Balancing Failure and Accountability

sennder's corporate ethos emphasizes learning from failure. Openly discussing mistakes creates a safe environment for innovation and calculated risk-taking.

However, there are limits. As the company grows, structured risk assessment processes are implemented to manage risks and prevent serious errors. This ensures that the entrepreneurial spirit is maintained while minimizing potential losses.

Strategic Communication for Agility

After acquiring Uber Freight's European business, sennder adopted Amazon-style memos. These concise yet comprehensive memos provide targeted preparation and lead to more productive discussions.

For example, when discussing a major expansion plan, the memo helped clarify the key points, and the subsequent conversation focused on specific actions and strategies. This approach enhanced clarity and efficiency in the company.

Looking Ahead: The Path to Leadership

sennder's focus is on becoming the leading FTL forwarder in Europe. With planned acquisitions and investments in technology and sustainability, the company aims to expand its network and digital capabilities.

By combining businesses and talents, sennder plans to accelerate its European expansion and create a greener, more efficient future for road freight. This purpose-driven approach is at the core of their growth strategy.