By the time the second purple government left office in the early 2000s, the Netherlands found itself in a very different economic position compared to two decades earlier. The country that had once been described as one of the most spectacular employment failures in the Western world could now boast having one of the highest labor market participation rates in the industrialized part of the world and a benefit dependency ratio significantly lower than that of most neighboring countries. Mostly owing to this employment miracle, Dutch levels of social spending – which had been the highest in the world up to the mid-1980s – were now also below the average of neighboring countries. While the number of benefit recipients continued to be high in absolute numbers, the size of the active workforce had increased so dramatically in the preceding decade that this no longer presented a major constraint on the Dutch economy. As a result, from the second half of the 1990s onwards, the Netherlands once again started to attract significant attention from foreign commentators and policy-makers. However, this time these foreign observers did so for very different reasons: rather than serving as a prime example of a “welfare without work” society, the Netherlands – whose welfare system continued to be quite generous and comprehensive for international standards – now served to show that welfare generosity did not have to conflict with successful macroeconomic performance.

However, this did not mean that pressure for further welfare reform abated in subsequent years: on the contrary, the various CDA-led coalitions chaired by prime minister Jan-Peter Balkenende that governed the country until 2010 pursued a reform agenda that was just as ambitious as the one pursued by their predecessors one decade earlier. The first two of these Balkenende governments – which were of a confessional-liberal signature – pursued a particularly radical agenda that revolved around harsh benefit cuts and further de-collectivization and privatization of existing welfare programs. Nonetheless, its successors – including those under which the Labor Party was part of the coalition – also adopted various sweeping reforms that were often quite painful to welfare constituents. Initially, the impending ageing crisis served as the main catalyst for these reforms.