Policy Initiatives of the New Netherlands Government
Policy Initiatives of the New Netherlands Government
In August 1998, a new cabinet was presented to the Dutch parliament. After about three months of discussions and negotiations, the Social Democrats (PvdA) and the left- and right-wing Liberals (D66 and VVD) reached an agreement regarding the Constitutive Document for a new "purple" coalition cabinet. This document has paved the way for the second "lib-lab" cabinet led by Prime Minister Wim Kok. The Constitutive Document (some 100 pages) describes general policy aims as well as the more concrete policy initiatives the new government has agreed to take in the next four years. The following paragraphs contain a summary of the policy aims and the proposed new policy measures in the area of employment.
2.5.1.1. Policy aims
The "preface" of the Constitutive Document starts by stating that the Netherlands can enter the next century with confidence. The country has a strong economy, an elaborate social security system and a culture of freedom, responsibility, tolerance and solidarity. The central aims of the last government's Constitutive Document of 1994 (i.e. to create employment and rebalance the welfare state) have largely been realised. However, the preface goes on, we should take care not to become sluggish or self-satisfied. Structural improvements have been carried out, but the currently favourable economic climate may change again.
The Constitutive Document of 1998 sees as the most important task of government in the years ahead that of finding a responsible balance between economic forces and protection of the environment, between economic dynamism and social justice, between individual self-realisation and mutual responsibility. Another important task is to bridge the gap between the ever-increasing demands made of employees and the failure to modernise the necessary skills and qualifications of many employees and the (long-term) unemployed. The new cabinet intends to promote a combination of - on the one hand - liberty and the development of individual talents and - on the other - solidarity and mutual responsibility. Thus, economic élan, social responsibility and sustainability can exist together. Also, the involvement of citizens can be stimulated and the tide of societal fragmentation stemmed.
According to the preface, a vital economy is essential as a basis for employment and prosperity. At this point in time, the performance of the Dutch economy is outstanding, thanks to the efforts and quality of entrepreneurs and employees and a government policy directed at economic dynamism and financial solidity. Nevertheless, there are still serious shortcomings, both in fiscal-economic and social terms. In the years ahead, attention will again be focused on the necessary growth of employment, innovation of the economy, investment in the environment and care of social groups at risk. These aims converge in what is sometimes called the "polder model".
A strong economy demands substantial investment in the physical, economic and knowledge infrastructures. Working together is one of the most important factors binding people. Therefore it will be necessary to create sufficient employment for the great number of people who wish to participate in the labour market. The new government expects that - in addition to dependent employment - work will also increasingly be found in entrepreneurial activities.
The vitality of a society will be determined by the degree to which individual citizens and groups in the population are prepared - and in a position - to participate in economic and social organisations and structures. By far the majority of the population has no problems in this respect. They are well educated, active in employment, receive a satisfactory to good income, and are healthy and well integrated into society. However, too many people in the country do not - or do not sufficiently - enjoy such a situation. Because of lack of education, low labour productivity or bad health, they cannot live up to the ever-increasing demands of working life and have become marginalised. Consequently, they often become socially excluded as well.
The present government considers it a central task to either prevent or bring to an end this type of social disadvantage. At the same time, it believes that individuals should be stimulated and offered possibilities to contribute to this end themselves as well. In this respect, the policy of the first "purple" cabinet (1994-1998) will be continued. Social programmes and facilities have already become more oriented towards activation to stimulate benefit recipients to participate in the labour market and thus to reduce the risk of exclusion. However, these programmes will initially remain solidarity-based in order to help those who are not yet capable of succeeding in life on the basis of personal strength. The government will try to find the right balance between personal responsibility and self-management (for the socially disadvantaged as well) and a collective responsibility for those who are really in need of support.
2.5.1.2. Proposed policy measures
The paragraph on "Financial-economic policies and the budgetary framework" of the Constitutive Document considers an increase in the number of people in paid employment as one of the spearheads of the policies of the new cabinet. In line with this, some major policy expansions for the next four years have been put forward. These will be elaborated in the following areas:
The participation in employment of those in an unfavourable labour market situation will be increased by means of specific employment policies. The budget line for these policies will cumulatively increase over the next four years by approx. NLG 250 million per year (i.e. an additional NLG 950 million by 2002).
Some 21% of the additional funding will be used to increase the number of sheltered workshop placements (cf. WSW Act) in order to offer more occupationally disabled people a chance to enter employment.
Approximately 42% of the extra resources (i.e. NLG 400 million) are intended to increase the number of additional jobs in the public sector under the EWLW programme from 40,000 to 60,000 by 2002. Thus, the EWLW programme for the long-term unemployed will be continued and extended (also see article on page 17). And for a specified number of EWLW participants, the possibility will be created to move up into higher-qualified jobs (the so-called "flow jobs") within the framework of the programme. These flow jobs can be paid at up to 150% of the statutory minimum wage.
Some 26% of the additional budget has been earmarked to realise the so-called "offer for all (long-term) unemployed" (NLG 250 million) in accordance with EU Directive 2. The scheduled budget for the "offer for all (long-term) unemployed" may even increase because of additional ESF funds. The intention is to realise a coherent set of measures aimed at providing training, work experience and integration into employment.
Some 11% of the policy expansions regarding specific employment policies will be in the area of improving working conditions in enterprises (in order to prevent sickness, absenteeism and disability).
To further increase labour force participation, an additional financial impetus will be given to child-care facilities. The capacity of these facilities will be extended in order to accommodate the growing demand for child care. The state subsidies for child care will increase gradually (but on a structural basis), requiring additional funding of NLG 250 million in the year 2002. In addition, fiscal measures (NLG 150 million on a structural basis) will be taken with the intention of lowering the threshold to parents for paid child care and stimulating employers to provide child-care facilities for their employees.
In order to realise the ambitions of the new government concerning policy expansions, reductions of tax and social security contributions, and the lowering of budget deficits, the Constitutive Document has also announced a set of cutbacks. These focus essentially on more effectiveness in the government sector and the social security agencies (i.e. implementing bodies). The cuts also stem in part from policy expansions.
Some of the cutbacks - especially those relevant with respect to employment and labour market policies - are:
- Government departments will have to slim down their personnel volume by approx. 5% before the year 2002.
- The realisation of the "Centres for Work and Income" (CWIs) (also see article on page 14) and the accompanying changes in the organisation of training and counselling activities (including more contracting out of these activities) are expected to increase efficiency and will therefore lead to cuts in the government grant to the Public Employment Service (structurally NLG 90 million in 2002).
- The financial responsibility for carrying out the National Assistance Act (ABW) will be shifted away from central government towards the local communities. This is expected to create an incentive for local communities to reinforce their activation policies regarding social assistance beneficiaries (possible savings: NLG 500 million in 2002).
- Reduction of the inflow into and increase of outflow from the Disability Insurance Act (WAO) by paying more attention to preventive policies and reintegration (on the basis of the REA Act 1998), more frequent assessments of disability and qualitative improvements in the assessment procedures (structurally NLG 300 million in 2002).
- Reduction of waiting lists/waiting time in the care sector. As a consequence, this will lead to less outlays under the Sickness Benefits Acts (ZW) and the Disability Insurance Act (WAO) (structurally NLG 200 million in 2002).
- Strengthening activation policies in the Unemployment Insurance Act (WW) in order to promote the labour force participation of older workers. A decline of the WW volume is expected from an increase in the financial interest of employers, from changes in the years-of-service stipulations, from a more strict implementation of sanctions policies and from a change in the regulation regarding suitable employment for ageing workers (structurally NLG 100 million in 2002).
- A decline in the volumes of the National Assistance Act (ABW) and the Disability Insurance Act (WAO) due to intensification of the sheltered workshop programme (WSW).
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