Poverty and Politics in the Netherlands

During the last two decades, the Dutch government has cut about 40 billion guilders (ca. 18 billion Euro) from its social welfare budget (child support, unemployment benefit, old-age pensions, etc.) and public services, such as health-care, education, and legal aid. The aim of these cuts has been to relieve the tax burden on both individual citizens and on companies. However, the people to benefit the most have been those in the higher income brackets and the gap between rich and poor has become larger. In addition, in order to further »reduce the tax burden« on companies, a youth minimum wage has been introduced which means young people earn less than their older colleagues.

Only a fraction of the savings from these budget cuts have gone towards a reduction in the national debt. In fact, the national debt has risen by an estimated 10% over the last ten years. This means that the interest rates for paying back the loans have also increased. However, the Dutch Government is still well within the limits of the Maastricht regulations on maximum allowed debt, due to the subsantatial growth over the last decade in national prosperity.



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Needless to say, Dutch companies have profited enormously from this economic situation. Tax reductions, flexibility in labour relations, government subsidies and high investments have put them in a strong position over their foreign rivals. This strong position was even supported by the Trade Unions who agreed to a policy of voluntary reduction in income (called the »Polder model«). Because of this, and an increase in exports, income from taxation has grown faster than government spending on welfare and public services and paying off the national debt. This means that, paradoxical as it sounds, in spite of the budgetary cuts, government spending on e.g. health and education has in fact gone up. In general there has been a trend to curb the scope and freedom of the people in order to meet the budgets, whilst at the same time more money is being spent in order to simply maintain the standard of living we currently have.

Other ways of cuting expenditure over the last two decades have been to increase the scale of operations (e.g. in hospitals and schools) and to introduce privatisation. Public services (transport, energy) have been sold off and the income has been used to re-invest in a new infrastructure of e.g. roads to facilitate commuter mobility, and ports. As for housing, investment in rented housing has virtually come to a standstill.

Budgetary cuts, privatisation and expansion have not prevented a sharp rise in government spending in general. However, the government's desire to cut public spending has resulted in longer waiting lists in both hospitals and schools, administrative chaos in many public services, a lower standard of service provided by e.g. call-centres and a shortage in the workforce due to lower wages, etc. Bureauocracy has therefore also increased (despite its already high level) since more people have had to be taken on to cope with the results of the cuts, and in the private sector it has been necessary to introduce complicated administrative procedures to get things moving. In short: the Netherlands is a prosperous, well-organized country, where everybody has his colour television and mobile phone, etc., but where in the not-too-distant future thousands of people will not have a doctor and will need to go to Belgium for an operation. This gives an idea of the paradox of the Netherlands: materially very rich, especially those in the higher income brackets, but collectively becoming poorer, not in the financial sense of collective spending, but in the sense of reduced public services and facilities. Privatisation has increased this trend since companies have in turn introduced their own limitations on people. There are now fewer post-offices, more call-centre workers whose purpose in is to be as quick and unhelpful as possible, and longer queues at railway station ticket-counters due to budgetary cuts made by the NS, the national railways.

It is actually this paradox which led to the recent election. The economic mismanagement of the preceding governments (PvdA, VVD and CCD) was only a side issue. More striking were the problems such as the administrative chaos in many organizations, inability of the Employment Office to get people back to work, increased waiting-lists, concerns about safety on the streets and all other kinds of bureaucratic and practical bottlenecks. The politicians did not regard these problems as being caused by the collective reduction in standards, but rather as a question of morals, a cultural issue, or a result of bad individual behaviour. The blame has been put on foreigners being unwilling to integrate, the unemployed not being willing to work, etc. This is »correct political thinking«: not admitting that the real causes of social problems have arisen from the general decrease in welfare and services.

It is now time to tell the truth, however, about these foreigners, criminals, and layabouts: they all voted for the party of Pim Fortuin which was clever enough to use the frustration and discontent of the people for their own political purposes. The government was thus given a dose of its own medicine: Fortuin used the moral, cultutral and individual behaviour argument much more than the current politicians had done. People who had followed this kind of argumentation for the last twenty were all for it. The Social-Democrats were startled by the election results: the Dutch had it so good, national debt had been reduced thanks to the PvdA, unemployment had dropped, income levels had remain stable - why then all of a sudden this discontent?

In view of the above, it is not surprising that standards of living in the Netherlands, in terms of income, have gone down slightly. But in line with these developments, the Netherlands has become for the time being a very comfortable, orderly country where everbody has his mobile phone and other mass-produced goods and where you can eat hamburger and chips every day, but where in the near future there will be no more doctors. People in the lowest income bracket have hardly profited at all from this increased prosperity, however. In 1995 a link was made between salaries and the minimum wage. From 1996 onwards the purchasing power of the poorest groups has gone down. According to the Poverty Survey of 2001 average household prosperity increased between 1990 and 1999 by 0.8%; but this this was only 0.3% for the lowest income bracket which constituted about 15% of all households in the 1990s. Since 1998, however, there has been a decrease in number, first of all to 13.7% of all households because of reduced tax on pensioners, which also meant that the increase in pensions rose more sharply than than in unemployment allowance or minimum wage. By 1999 the percentage of poorest people had gone down to 13.2%, as had the number of households that had been on the lowest level income for four or more years. This latter group had constituted about 7% of households during the 90s (down to 5.9% by 1999, or one in 28 households).

There is of course a fluctuation within the poorest bracket - both into and out of this group. Every year about one third of poorer people become better off, a move to a higher-paid job or marriage to a wealthier partner being the main reasons for this change in income. Also about 36% of people who have been on the poverty line for two years manage to climb above this level. In spite of these encouraging figures, however, the opportunity to climb out of the poverty trap decreases by about 20% per year. Out of the 235,000 households on or below the minimum income, about one third will have no chance at all of improving their lot. In particular, one-parent and immigrant families find it extremely difficult. In 1999 there were 425,000 households of non-Western people, of which 40% were living off the lowest income. There is also a particularly strong link between young people with little education and poverty. Pension possibilities for this group are minimal.

The above picture may be slightly distorted in that we are talking about households which may consist of several people, e.g. where one person's high income compensates for the lower income of another. And or course »illegal immigrants« are not taken into consideration at all in the above statistics.

This picture of government policy and income development has various consequences. To start with, the Dutch economy has become heavily dependent on fluctuations in the market and on exports. Whenever we have economic decline, national debts fall back like a boomerang on the government's shoulders. These continued expenses remain in place while income from tax decreases and the resulting financial deficit necessitates yet another round of budget cuts. These are not used to reduce the tax burden on the individual, however, but rather to contribute towards paying off the national debt or to keeping public services up to scratch. This is obviously the trend for the future with the new Balkenende cabinet (CDA, VVD, and LPF). Hand in hand with economic slump comes an even greater deficit and we are going to see this happen despite plans for drastic reductions in public spending.

On the other hand, both for middle and lower income groups, an increase in material wealth has hardly been noticable. In other words, the government will become trapped in its own paradox. Income cuts on a large scale will result in an irreversible impoverishment of large groups of the population, whilst at the same time poverty in the public sector will also remain the same or get worse.

Massive protest against the disastrous political policies of the last decades, of which we are only now seeing the results, is essential. We must strive to ensure both income (salaried and unemployment) and public spending are maintained.







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