All is not well in the Netherlands. That was obvious in the June referendum vote, and it is also obvious in the recent economic data. The Dutch economy has been struggling to gain traction of late with poor growth and an actual contraction of 0.5% in the first quarter of 2005. Unemployment too has risen alarmingly for an economy which is often regarded as fairly open and ‘liberal’, from 2% or so at the end of the 90s to around 7% today.
Poverty is also on the rise:
“The most recent preliminary figures from the government’s Bureau for Social and Cultural Planning indicate that at least 11 percent of the Dutch population, or between 700,000 and 800,000 households, lived in poverty in 2004, after the figure had declined steadily in the late 1990s to a low of 10.1 percent in 2000.”
Perhaps not the alarming and dramatic increase the AP writer wants to suggest, but hardly encouraging. Actually I’m not sure I buy the entire slant our journalist/author wants to place on the story either:
“It’s all a sign of economic troubles in a country that is shifting from a traditionally strong social welfare system toward a more free-market approach, with rising health insurance premiums and housing costs. Premiums for health insurance have risen by more than 50 percent on average in the past three years, and are expected to rise by around 10 percent in 2006.
Those trends, combined with government cuts in social spending, have led experts to predict that poverty will worsen in coming years“.
The suggestion here would seem to be that the increase in poverty is a result of the reforms. But don’t demographic factors play a part? If all-over the OECD poverty and old age have a strong correlation, and we now have more old people as a percentage of our society, shouldn’t we, unfortunately, expect poverty to rise? Mightn’t it be that without the reforms things would be worse, not better? And didn’t I read something in the Economist about a soft-landing to the housing boom in the Netherlands, might this not be connected (or be becoming harder)? Any Dutch readers got anything to add?
Actually, in the US, old people (but not the extremely old) are the richest group. They are far wealthier than children or people in their 20s, 30s, or 40s.
Hmmm…the SCP has a number of definitions to classify it. Low income is in general use. So I suppose the journalist has used this one. It’s actually quite a science how to define poverty and how to measure it properly. But I digress…
Anyway, in 2000 the households on low income (the minimum income level) the number of households on a lowincome was 11,9% of a total of 6547.000 households. The estimate by the SCP for 2004 was 11% so it seems they were right on with their earlier estimates. I would have been surprised if it had been substantially above that level.
And for comparison….
During the 1980’s the low income in 1981 was 13% and 1985 it had risen to 22%. I must add that this rise was the result of economic recession in the 80’s, the ending of the linkage of benefits to pay trends, and the reduction in benefit levels. After 1985 purchasing power improved and the number of people claiming unemployment benefit fell, also pushing down the number of households on low incomes. Between 1990 and 1997 this number fluctuated between at least 850,000 and 970,000, before falling sharply to less than 640,000 in 2001. These results at the end of the 90’s were chiefly the result of the favourable economic climate at the time.
Which meant that, at the time the number of people leaving poverty (the ?outflow?) was higher than those entering it (the ?inflow?). In 2001, tax reforms led to a further improvement in purchasing power. But a lot of that purchasing power was initially lost during a short bout of high inflation.
“The Netherlands’ economy showed the worst performance in the 25-country European Union in the first quarter of 2005, contracting 0.5 percent. While still under the double digit jobless rates of France and Germany, Dutch unemployment has risen to nearly 7 percent from just under 2 percent in the late 1990s”
What a beautiful example in how to play around with numbers! Round down everything to single digits! Forget to mention that in the 2nd quarter the growth was +1,3%; Unemployment for may-july stands at 6,7% and unemployment never ever stood “under 2%”. Depending on the definition you use the lowest number was around 2,3% a month or so in 2001. Certainly not in the 1990’s!
The scary part is I *know* and *recognize* this journalist hasn’t done his job (as a journalist). but what about the rest of the public? What about other issues? Do other journos work the same way?
@ CapTVK
Thanks.
@ Hektor
“old people (but not the extremely old)”
Yes, you are obviously right, I should have specified oldest old, who, as a % of population are growing.
Actually, the conventional wisdom about an ageing Europe doesn’t really apply to areas of the Netherlands like Amsterdam, where the (dare I say it) virility of the Turkish and Moroccans has an effect on demographics. Not too many native Dutch young people around, though.
Don’t forget the Netherlands high rate of “invalids”, it may be another reason for the increased health insurance premiums and welfare expenses.
In the Netherlands, the poverty threshold is calculated as a % of the net minimum wage, with different percentages for different sized households.
As it happens, Eurostat just did a comparison of minimum wages across Europe (Click here for 8 page pdf). And lo an’ behold, the Dutch minimum wage is the second highest of the EU (after Luxembourg).
My guess is that in the near future we’ll witness the strange phenomenon of a (relative) drop in minimum wage causing a drop in Dutch poverty rates.
@ CurlyWurly – The “invalids” draw disability benefits. This makes payroll taxes for social insurance more expensive, but not health insurance.
Ewl,
It is more the marriagebility than virility. Number of kids they now get per child-bearing woman isn’t that much higher than the average but they are much more likely to marriage and get kids
Jasper Emmering and “c” are right: Immigrant families (from the 2nd generation on) are like Dutch ones: 2 children maximum in general. On a population of roughly 16 million, more than 800.000 people are enjoying lifelong benefits for “incapacity to work” (WAO – “Wet op de Arbeidsongeschiktheid”). A large percentage of those 800.000 represent “hidden unemployment”. Under the Dutch “tripartite” system (employers-unions-government) of social security, the “WAO” has been an easy vehicle to sofltly eliminate a large number of redundant employees from the labour market (and from the unemployment statistics). During the nineties, the number of WAO-beneficiaries fell from nearly one million to just under 900.000, due to better economic circumstances and some measures to limit the “instroom” (inflow) into this system. In recent years, Government has been trying, with some effect, to generate an “uitstroom” (outfow) by reevaluating individually WAO-beneficiaries under 55 of age. Most of the outflowers are not able to reintegrate the labour market and many of them are gettting income from the “grey circuit” (non-declared income), so that both categories join the number of people on social benefit (“Bijstand”). This might be true for about 150.000 people during the last three or four years, i.e.: the outflowers plus those who did not flow in, due to the stricter conditions. The fact that poverty remains more or less stable in spite of this considerable extra inflow into social benefit, shows, that the Dutch economy is not doing so badly as it seems to do. It is a sort of “agonizing readjustment”.
Huib Riethof, Brussels.