Welfare State Crisis in the Lowlands

In the struggle by European welfare states to overcome recession during the 1980s, two countries in particular lingered behind. The Netherlands and Belgium exemplified the pathology of ‘welfare without work’ that characterized continental welfare states. In their enduring attempts to improve their macro-economic and financial situations, both states were largely unable to tackle their most pressing social policy problems. In Belgium, the total unemployment benefits covered income transfers for approximately one million people – roughly one-tenth of their population. Likewise, in the Netherlands roughly one million of the country's 16 million people received disability benefits. These respective programs were responsible, in large part, for the countries’ high inactivity rates. They represented the Achilles’ heels of their social security systems.

The institutional settings in both states are very comparable, as will be discussed further in chapter 3. In both countries, social partners have a structural impact on social policy in agenda setting, decision-making, and implementation phases. While employers’ and employees’ income contributions finance the programs, the social partners are responsible for administration and allocation of funds to the beneficiaries (Deleeck 2001). Also, powers and responsibilities are diffused in complex configurations of interdependent policymakers. The political systems are home to a wide variety of political parties, governing together in multiparty coalitions. Therefore, possibilities to inhibit change are abundant.

Yet, the 1990s showed a surprising divergence in scope and extent of the policy changes in both welfare states. In Belgium, the government announced major reforms but took only incremental steps to improve the financial sustainability of the system and to activate the unemployed with subsidized work programs. Belgium's previous social security arrangements proved remarkably resilient. In the Netherlands, policymakers announced fundamental reforms to both the contents of the disability program and the way it was organized and implemented. The results were unprecedented cutbacks and a major overhaul of the organization of disability benefit administration and supervision. This book explains the divergence of policy reforms in the two welfare states from an institutional crisis perspective.

Reform is the product of the deliberate construction of an imperative for change by change-oriented politicians. This imperative takes the form of a crisis, when politicians engage in rhetoric that stresses the severity and urgency of the situation.