The main aim of this study has been to explain the two major postwar transformations of the Dutch welfare state, which – after having acquired a reputation as a long-term laggard – grew into a remarkably generous and inclusive system of social protection during the 1960s and 1970s, before being subjected to various measures in subsequent years that successfully managed to reduce the growing dependency on benefits in the Netherlands. To account for these two remarkable transformations, the book has challenged conventional views on the political role of Christian democracy and the labor union movement, the importance of the political-religious segregation of Dutch society in the immediate postwar period, and the subsequent process of depillarization, as well as the relationship between welfare state development and collective wage bargaining. Moreover, it emphasized the extent to which the postwar introduction and transformation of social programs in the Netherlands came about through a system of institutionalized consultation with the top representatives of organized labor and business. During the first decades of the postwar period in particular, parliament often took a rather passive stance towards social insurance expansion and closely followed the recommendations that emerged through negotiations between labor union and business leaders.

Like in most other affluent countries, the most constant and significant source of political conflict over postwar welfare reform in the Netherlands did not concern how the welfare system could best cater to “average” or middle-class citizens; instead it focused on how to ensure that low-income and otherwise economically vulnerable groups could also obtain adequate levels of care and protection against labor market risks. Whereas the labor market position of the bulk of voters meant that it did not prove difficult or controversial to assure increasingly generous levels of economic security for them, doing the same for all members of society required introducing measures that were much more contentious. These included expanding the compulsory coverage of social insurance programs to fragile groups (including self-employed workers), easing eligibility rules for them and devising a more redistributive way of relating benefits to contributions. In addition, it was necessary to complement these programs with tax-financed programs that often catered specifically to particularly vulnerable groups.

As a result of its peculiar welfare trajectory, the political and organizational weakness of forces that are traditionally viewed as the major proponents of the welfare state, and its ability to combine generous levels of social provision with high levels of employment, the Netherlands has long attracted much attention from welfare state scholars. At the same time, however, we still lack a comprehensive account of the Dutch welfare state's postwar trajectory – let alone one that is accessible to an English-language audience. This book aims to offer such an analysis. As is the case with most scholarly accounts, it has both empirical and theoretical goals. Its empirical goals are twofold. The first is to provide a thorough analysis of the preferences of the main welfare actors in the Netherlands – Christian-democratic, social-democratic and liberal parties as well as the main union and employer federations – and the role they have played in the process of postwar Dutch welfare reform. The second is to explain the main features of the postwar trajectory of the Dutch welfare state, which include its slow development under leftist governments in the immediate postwar period, its rapid transformation into unmatched levels of generosity under mostly right-wing governments in following years, and its subsequent transformation into a more active but still comparatively generous system of social protection.

The book's primary theoretical goal is to provide a critical analysis of some of the central claims of the welfare state literature, in particular those that relate to the impact of Christian democracy and the labor union movement on welfare state development. These claims, and my criticism of them, will be outlined at length in the chapters below. For here, it is sufficient to point out that the willingness of Christian-democratic parties and (various types of) labor unions in the Netherlands to accept and push for welfare initiatives that massively redistributed resources from the middle-class and other affluent groups towards low income and otherwise vulnerable economic groups has been remarkable, and that this warrants a fundamental reconsideration of the role of Christian democracy and the labor union movement in the postwar development of European welfare states. To illustrate this, the book will make numerous references to the situation in countries other than the Netherlands.

The rapid and relatively smooth expansion of the Dutch welfare state from the early 1960s onwards was not only made possible by the collapse of the guided wage policy and dwindling confessional aversion to state interference and preoccupation with personal responsibility and self-help in this period; moreover, it was also strongly important that there does not seem to have been particularly powerful resistance to the redistributive consequences of this expansion. On various occasions, the previous chapters have already highlighted these consequences. As benefit generosity gradually increased and entitlement conditions also became more lenient over time, risk redistribution among groups that were more and less exposed to major labor market risks such as sickness and unemployment naturally also increased. Moreover, in order to ensure that the welfare system not only adequately catered to middle-class groups with a relatively strong position on the labor market, but also for those who were unable to obtain sufficient protection against labor market risks through a purely actuarial approach, governments of various political persuasions adopted specific measures to improve matters for the latter group. An excellent example of this is the aforementioned mid-1950s decision to introduce a state old-age pension that combined flat-rate benefits with contributions that were graduated according to income up to a threshold set at just below twice the average income level in manufacturing industry. In future years, many more of these measures were to follow.

As the postwar period progressed and “regular” workers were increasingly well catered to, policy-makers gradually came to focus more on improving matters for society's most vulnerable groups. For instance, the realization that a substantial minority of mostly low-paid workers would not be able to obtain access to supplementary occupational pension provision in the foreseeable future motivated parliament to raise the level of the old-age pension benefit to that of the “social minimum” during the mid-1960s. In consecutive years, it also decided that most other major insurance programs as well as the social assistance scheme were to hand out benefits that were at least equal to the social minimum level. This among others led to the introduction of minimum benefit rates into the “Bismarckian” state unemployment and disability insurance programs.

By the mid-1970s, the Dutch welfare state had undoubtedly become one of the most generous in the world. With the possible exception of some of the Scandinavian countries, it offered more cradle-to-the-grave protection to its citizens – and on more lenient terms – compared to any of its foreign counterparts. Whereas major labor market risks such as disability, old-age, sickness, and unemployment continued to be major sources of poverty and income reduction in many Western countries, this was no longer the case in the Netherlands. Of most importance to this was the generosity of the social insurance system, whose high coverage rates, lenient eligibility criteria, high benefit rates and preferential treatment of lower-paid contributors increasingly began to draw attention among policy-makers in other countries. At the same time, other forms of state help and provision had also come to compare favorably to their foreign equivalents in terms of their ability to provide care and assistance to those in need. Given the poor state of these programs in the immediate postwar period, this can be viewed as a remarkable achievement. Within a period of only two to three decades, Dutch policy-makers had managed to radically transform the functioning of the national welfare system, thereby succeeding in lifting large groups of citizens out of poverty as well as greatly increasing their citizens’ ability to deal with major socioeconomic uncertainties in life.

To do so, it had of course been necessary to commit an ever-larger amount of financial resources to the social insurance system. In the ten years between the introduction of the General Assistance Act and that of the net-net link, total spending on income transfer programs in the Netherlands increased from roughly fourteen to twenty-four percent of gross national product. By the mid-1970s, Dutch spending on social benefits exceeded that of any other country in the world. At the same time, as we have seen in the last two chapters, the various governments responsible for the postwar expansion of the welfare state had paid very little attention to the possible consequences of high benefit generosity on labor supply. While these consequences had remained limited during the 1960s and early 1970s, when economic circumstances were quite favorable, this rapidly changed following the outbreak of the first oil crisis in 1973.

In 1986, the Swedish-born sociologist Goran Therborn published a critical analysis of European policy-makers’ response to the return of mass and long-term unemployment, titled Why Some People Are More Unemployed Than Others, in which he described the Netherlands as “perhaps the most spectacular employment failure in the advanced capitalist world”. In his book, Therborn among others pointed to the importance of hidden employment in the Netherlands as a result of the mass use of the disability insurance scheme for redundancy purposes. Indeed, if this were to be taken into account, the official unemployment rate – which peaked at 10.7 percent in 1983 – would have been significantly higher. Even more worrisome than the high level of either official or “real” unemployment was the increasingly uneven ratio between active and inactive members of society in the country. Between 1970 and 1980, this ratio increased from 50 to 68 benefit recipients for every one hundred active workers. By 1985, there were as many as 85 benefit recipients per 100 workers, of which just over half belonged to the working population. In that year, only about 45 percent of the Dutch population over the age of fifteen was actually employed, compared to over 70 percent in Sweden, the country with the highest employment rate in the advanced industrialized world at the time. In other words, during the 1970s and 1980s, the Netherlands developed into one of the most extreme examples of a continental European “welfare state without work”. Increasingly, the term Dutch Disease was no longer only used to describe the loss of international competitiveness experienced by the Netherlands as a result of the steady increase in the value of the Dutch guilder due to the discovery of natural gas resources, but also to emphasize the unsustainability of Dutch social policy expenditure.

While the increasing dependence on state benefits in the country resulted from a variety of factors – some of which were beyond the government’s direct control – there could be no doubt that the combination of generous benefits and lenient eligibility criteria strongly contributed to this. Moreover – and independent of the causes of increased benefit dependency – the increases in government spending and non-wage labor costs that accompanied the emerging inactivity crisis raised serious questions about the sustainability of the Dutch welfare state in its present form.

In late 1989, the Labor Party returned to government as a junior partner in a grand coalition with the Christian-democrats, following a campaign in which it had taken a firm stance against austerity. In little over a year after the new government came to power, the party nevertheless lent its support to a major overhaul of the public disability and sickness insurance programs. The overhaul was much more radical than anything to which the social insurance system had been subjected thus far, having particularly strong consequences for the country's disabled. Furthermore, it was also deeply unpopular among voters. In October 1991, about one quarter of a million people came out in protest against the government's reform proposals, which made it the largest union protest ever organized. The Labor Party itself was deeply divided over the matter, whereby internal protests eventually led to the resignation of the party's chair, Marjanne Sint, and its Secretary at the Department of Social Affairs and Employment, Elske ter Veld, while party leader Wim Kok only managed to hold on to his position after organizing a special party congress in which he demanded (and eventually received) support from its members. The party eventually lost about one third of its members as a result of the internal crisis that ensued. Moreover, during the subsequent elections of May 1994, it lost almost one quarter of its seats. While this number was unprecedented, it was also much less than what the party had feared at the peak of the crisis. Another consolation was that the CDA lost even more seats, which enabled the Labor Party to hold on to power and form a “purple” coalition with the liberal VVD and liberal-social D66.

Even though its massive electoral loss could clearly be attributed to the unpopularity of social insurance reform, the party continued to support a reformist course during the next eight years in which it was to act as a senior partner to the country's first-ever socialist-liberal government. As long-term unemployment and inactivity due to sickness and disability, respectively, continued to remain high and even increased in absolute numbers, it was under enormous political pressure to do so.

By the early 1950s, the necessity of postwar reconstruction no longer functioned as a major restraint on the social welfare ambitions of Dutch policymakers. Despite the extensive material damage inflicted on the country under German occupation, the postwar recovery of the Dutch economy was more or less completed by the beginning of the decade. By 1948, industrial production had already exceeded prewar levels, while by 1950, exports had increased by one fifth compared to their prewar rate. In subsequent years, the Dutch economy was to grow at a yearly average rate of almost five percent – far exceeding the European average – and it would continue to display impressive growth rates until the early 1970s. As a result – and despite an almost doubling of the labor force in this period – unemployment also remained quite low. With the exception of 1952, when events related to the Korean War created a mild recession in the Netherlands, the average yearly unemployment rate did not exceed three percent up to the mid-1970s.

In the long term, these economic conditions obviously facilitated the postwar expansion of the welfare state. Like in other European countries, greater prosperity not only permitted but also led to stronger pressure for increases in welfare generosity. However, during most of the 1950s, all major actors – including the labor union movement and most leftist parties – continued to formulate their welfare demands with great caution. One reason for this can be found in the remarkable longevity of the guided wage policy and the resulting preoccupation with wage and price restraint among policy-makers in this period. While this policy functioned in a somewhat less strict manner after 1953 (from then onwards, wage increases were no longer limited to compensation for loss of purchasing power, but rather were tied to productivity increases), there can be no doubt that it continued to limit the scope for increases in the generosity of welfare arrangements in the Netherlands. After all, as pointed out earlier, social costs constituted an integral part of total payroll costs, which meant that the need for austerity also extended to the area of welfare reform.

In addition to these material considerations, the expansion of the welfare state was also severely constrained by confessional notions of personal responsibility and self-reliance, as well as the resulting wariness of most confessional forces to state intervention.

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.