5 - Continental Welfare at a Crossroads: The Choice between Activation and Minimum Income Protection in Belgium and the Netherlands

Summary

Introduction

Belgium and the Netherlands represent excellent prima facie cases for a comparative study of social policy reform and redirection in Continental welfare systems and this is for several reasons (Hemerijck, Unger and Visser 2000). First, Belgium and the Netherlands are small, open economies that share a tradition of social partnership in the areas of wage bargaining and social insurance administration. Employers and workers are well organized, especially among large and medium-sized firms, and collective bargaining occurs predominantly at the sectoral level. At the same time, however, the two countries are distinct in terms of the institutional frameworks of the political system within which their welfare states and industrial-relations systems are embedded, suggesting possible explanatory variables for divergent policy outcomes. Compared to the Netherlands, Belgian federalism and linguistic regionalism have decisively constrained the scope of government intervention not only in wage bargaining but also in a host of other social and economic policy areas. Also social partnership is more fragmented, making it difficult to establish and enact broad corporatist social pacts. As a result, the mechanisms through which Belgian governments have pushed for social policy reform have tended to be more informal and subtle than in the Netherlands, although recent Belgian governments have been far from passive observers of social and economic change. During the past fifteen years, the Dutch and Belgian governments have been instrumental in promoting social reform and compensating for the policy failures of Continental policy legacies and corporatist institutions, as we shall see below. The nationally distinct trajectories of reform provide clear support for the central argument of our contribution to this volume. They demonstrate that Continental welfare systems are dynamic and evolving entities, rather than fixed institutions with a unique policy legacy producing stable and predictable path-dependent, regime-specific policy reform trajectories, even in a period of fiscal austerity, economic internationalization, slowed economic growth, demographic aging, and revolutionary family change.

In our chapter, we compare sequences of reforms in core areas of the Dutch and Belgian welfare systems, focusing on wage policy, social security ‘active’ and ‘passive ‘ labor market policy and pensions. We are unable to cover health insurance because of the limits with respect to the chapter length of our two country comparison.