Countries Responses to Crisis

8/12/2019 Countries Responses to Crisis

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Web Appendix to Peter Starke, Alexandra Kaasch and Franca van Hooren: Political

Parties and Social Policy Responses to Global Economic Crises: Constrained

Partisanship in Mature Welfare States , Journ al of Social Policy , 43:2.

In this appendix, the characterizations of domestic responses of Australia, Belgium, the

Netherlands and Sweden to four global economic shocks are described in detail. These

characterizations are based on the available secondary literature as well as on some primary

sources. A more extensive discussion of social policy responses in these countries can be

found in our bookThe Welfare State as Crisis Manager (Starke et al., 2013). Social policy

responses to crisis refers to legislative changes in the fields of pensions, passive and active

labour market policy, social assistance, family policy and health care which were linked to the

economic downturn. In a few cases, changes were implemented in the aftermath of shocks

that had already been planned before the downturn or responded to developments largely

unconnected to the crisis. We focus on one dimension of social policy change, namely,

changes in social rights of citizenship (see Stephens, 2010 for an overview), in other words,

eligibility and entitlement rules for benefits (transfers and social services). This excludes

changes in funding and administration of welfare state schemes. All crisis reactions are coded

as expansion (+), retrenchment ( ) or non-reaction (0). The codings are indicated at the end of

each country subsection.

Reactions to the first oil shock

Social policy reactions to the first oil shock were clearly expansionary, at first, in Belgium

and in the Netherlands. Both countries set up early retirement schemes (De Deken, 2002;


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Kohli et al., 1991) and expanded some other labour market programmes, both in close

cooperation with the social partners. In Belgium , early retirement started in 1975, with the

introduction of the bridge pension ( prpension conventionnelle ), based on a national

collective agreement between trade unions and employers. Workers above the age of 60 years

(55 for women) who were made redundant would not only get the usual unemployment

benefits, but also a top-up designed to compensate for half the gap between the benefit and

their former earnings. Recipients would not have to be available for work. The funding

normally came from their former employers or sectoral employer funds (Gieselink et al.,

2002: 583). The law allowed for more favourable rules to be agreed upon in sectoral

agreements, which meant that in some sectors, individual workers could retire from the age of

48 (De Deken, 2002: 30). The direct fiscal impact of early retirement for the government was

relatively moderate at first, due to co-funding from employers. This changed from 1976/77,

when the early retirement option was expanded to cover not just workers recently made

redundant but also older long-term unemployed and invalidity beneficiaries above the age of

60. New benefits, such as the prpension lgale were funded out of the unemployment

insurance and from 1977, real early retirement on pension benefits was made possible

(Gieselink et al., 2002). Early exit from the labour market was an explicit crisis response

measure, more specifically, an instrument to deal with rising youth unemployment. The

various schemes became extremely popular with both workers and employers who used

them to shed less productive workers in their attempt to adapt to global competition and,

despite significant retrenchment over the years, are still in place, today. Consequently,

Belgian employment rates for older workers are among the lowest in the OECD. (+)

In the Netherlands , expansion was followed by a brief period that can be characterised

as non-response. There were a number of initial expansionary measures that should not be

seen as crisis responses, because they were planned by the centre-left Den Uyl government


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already before the advent of the first oil shock. These include an increase in the level of public

pensions1 so that the pension benefit for married couples became equal to the minimum wage;

expansion of social services, including home care services for families; and the introduction

of a universal social insurance for disabled adults (AAW) in 1975. More directly related to the

economic downturn were experiments with voluntary early retirement (VUT) in 1976.2

Quickly after that, early retirement schemes were included in collective agreements in many

different sectors. In the Netherlands, these early retirement schemes were entirely financed by

employers and employees (De Vroom and Blomsma, 1991). Due to high inflation and

increasing budget deficits (van Zanden, 1998: 68) doubts emerged about the feasibility of

expansionary social policy measures after 1975 (Toirkens, 1988: 32-4). In June 1976 a plan

was introduced to keep public expenses under control. It included cuts in childcare and

disability benefits (WAO) and in healthcare provision. Yet most of these proposed cuts were

never implemented. The last years (up to 1977) of the Den Uyl government can therefore be

characterised as non-response. The subsequent centre-right Van Agt I government proposed

more cutbacks (Nobelen, 1983: 118). Again, only few of them were implemented, such as a

cut in childcare benefits in 1979.3 Meanwhile, the centre-right government continued to

support early retirement as a way to fight unemployment4, but, in contrast to Belgium, early

retirement continued to be at the discretion of the social partners. Overall, we characterise the

Dutch response to the first oil shock as expansion followed by a mixture of small expansion

and retrenchment measures which together effectively constituted a non-response. (+, 0)

Non-response was initially also the dominant theme in Australia . The reformist

government of Gough Whitlam (Australian Labor Party, ALP) greatly expanded a number of

core welfare state programmes and set up a new, universal health care system in the early

1 Tweede Kamer, Zitting 1973-1974, 12 600 XV, Nr. 2.2

Tweede Kamer, Zitting 1975-1976, 13 686, Nr. 1.3 Tweede Kamer, Zitting 1979-1980, 15 800 XV, Nr. 2.4 See e.g. Bestek 81, Tweede Kamer, Zitting 1977-1978, 15 081, Nr. 2; Zitting 1978-1979, 15 726, Nr. 1; Zitting1979-1980, 15 800 XV, Nr. 2.


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1970s (Manning, 1981; Scotton, 2000), but this had been largely announced and partly

implemented prior to the crisis and occurreddespite rather than because of the first oil shock

(Whitwell, 1986: 64). A genuine crisis response, particularly in social policy, was lacking

(Saunders and Deeming, 2011: 379). On the peak of a constitutional crisis, in 1975, Whitlam

was dismissed by the Governor-General. After elections and a change in government in 1975,

a number of incremental cutbacks were introduced, including in unemployment benefits and

the minimum pension (Manning, 1985). Universal health care suffered a death by a thousand

cuts between 1976 and 1981. This was in line with a clear change in rhetoric, away from the

Keynesianism of the Whitlam years. Famously, the new governments slogan was Fight

Inflation First. (0, )

Sweden decided to wait and see at first and relied on classical Keynesian stabilisation

as a response to the first oil shock, which meant that Swedish governments followed a

Keynesian strategy of bridging the crisis by introducing expansive policies

(verbryggningspolitiken ) (Lundberg, 1984), in the expectation that growth would soon

return. In addition, the government and central labour market organisations tried to prevent

stagflation by negotiating the Haga Agreements (1974-75), a form of incomes policy (Erixon,

2008: 380; Immergut and Jochem, 2006: 119). However, the centre-right coalition

government, in office from 1979 until 1982 faced a mounting crisis. Apart from devaluation

in 1977, the centre-right government used tax policies, labour market policies, and the

expansion of child benefits, amongst other things, in an attempt to meet the growing

problems. In order to protect families with children, the child benefit was increased (Prop.

1977/78: 61)5 and pensioners received automatic compensation through the indexation of

pensions. A stabilisation programme in October 1977 (Prop. 1977/78: 45) focused on

supporting national demand, protecting employment and reducing inflation. Related labour

5 All government propositions can be accessed via the Swedish governments websitehttp://www.sweden.gov.se/sb/d/574.


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market policies were enacted by means of two separate employment packages (January 1977

and November 1977), which included an expansion of educational programmes for young

people and women, and specific support for the steel industry. Overall, these reactions to the

crisis were considered intentionally expansive(Mjoset, 1987: 430). (0, +)

Reactions to the second oil shock

Reactions to the second oil shock were more diverse and, in some countries, restrictive for the

first time. Australia , by contrast, increased welfare state benefits as part of a quasi-corporatist

bargain. Elections took place at the height of the crisis, in 1983, which brought the ALP back

to power. The central pillar of the new governments macroeconomic and social policy

response to the economic difficulties was the Prices and Incomes Accord (known as the

Accord), a series of eight quasi-corporatist agreements that ran until 1996 (Ahlquist, 2011;

Archer, 1988; Stilwell, 1986). At the heart of this agreement between the ALP leadership and

trade unions but without the participation of employers was an exchange of wage

moderation for improvements in the social wage, including the reintroduction of universal

health care and a general lift in social benefits (Edwards and Whiteford, 1988: 68). The only

exception to these expansionary policies was the tightening of the pensions means test. (+)

Belgium and the Netherlands chose selective and incremental retrenchment to counter

rising deficits and high inflation. In Belgium , retrenchment entered the agenda when the

second oil shock arrived, but no significant measures were taken until the Christian

democratic-Liberal government of Wilfried Martens (Martens V) took office in late 1981. The

government introduced a devaluation of the Belgian franc and intervened heavily in wage

setting in the early 1980s, by suspending automatic wage indexation (an important element of


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Belgian wage policy). Since social welfare benefits are linked to wages, this was effectively a

benefit cutback. Some cutbacks were also introduced in early retirement schemes and for

higher-income recipients of unemployment benefits (Gieselink et al., 2002; Marx, 2007: 129).

The government used special powers to issue emergency decrees to push through these

changes unilaterally (Smits, 1983), while the trade unions were weakened by internal

conflicts, as the Christian wing of the trade union movement refrained from active opposition

against its Christian-democratic allies in government (Anderson et al., 2007: 321). ( )

In the Netherlands , in 1980 the centre-right Van Agt I government froze wage

increases and thereby in a manner similar to what happened in Belgium it automatically

also froze benefit levels which were linked to private sector wages (Kuipers, 2006: 140;

Nobelen, 1983: 124). It also tightened eligibility criteria for disability benefits. In the

elections held in 1982, the economic situation had become a main issue and all parties agreed

that cuts in government expenditure were necessary (Irwin, 1983: 71). After the elections, the

new centre-right Lubbers I government saw it as one of its main objectives to decrease the

costs of social security. From 1983 until 1989 social benefits unemployment and disability

benefits as well as social assistance, old age, and child benefits were again not indexed for

inflation and wage increases.6 These benefits included. In 1984 these benefits were cut by an

additional 3 per cent.7 In 1985 replacement rates for disability and unemployment benefits

were cut from 80 to 70 per cent; followed by a similar cut in sickness benefits one year later.8

Retrenchment was also enacted in social care services (Maessen, 1989). In 1986, full

disability benefits were abolished for persons that were only partially disabled.9 In sum, we

can characterise the Dutch response to the second oil shock as retrenchment. ( )

6 Tweede Kamer, Vergaderjaar 2009-2010, 24 515, Nr. 175, Brief van de Minister van Sociale Zaken en

Werkgelegenheid.7 Tweede Kamer, Zitting 1983-1984, 18 100 XV, Nr. 2.8 Tweede Kamer, Zitting 1985-1986, 19 200 XV, Nr. 2.9 Tweede Kamer, Zitting 1986-1987, 19 700 XV, Nr. 2.


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Sweden introduced some minor cutbacks, but these were overshadowed by investment

in labour market measures. More concretely, in 1981 the centre-right governments focus

shifted towards fiscal restraint and at a time when welfare policies were becoming more

contentious (Olson, 1986: 86), this had an impact on social policies, including cutbacks in

pensions and student grants. In addition, changes to the system of job protection were

introduced, including a new probationary category ( provanstllning ) (Prop. 1981/82: 30).

The Health Care Act of 1982 led to a more decentralised system, a trend that was further

reinforced by the Dagmar Reform of 1985 (Bergmark, 2008). An austerity package

introduced in December 1981 did not target social policies, and still included expansionary

employment support policies. Although the government did announce cuts to sickness

benefits and introduced two waiting days (Olson, 1986), it refrained from imposing

significant cuts on most other social policy schemes (see also Immergut and Jochem, 2006:

119). Soon thereafter, the concept of a third way (den tredje vgen ), introduced by the

Social Democrats in September 1982 (detailed in Prop. 1982/83:150), entered political

debates. It proposed an alternative macroeconomic policy strategy somewhere between the

Thatcher-Reagan neoliberal doctrines and the traditional Keynesian approach. Economic

balance, it maintained, should be restored without giving up the commitment to full

employment and comprehensive public social services (Ryner, 1994). Even though (apart

from the Krona devaluation) this was approached with restrictive fiscal and monetary policy,

the welfare state was not fundamentally affected. (+)


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Crisis reactions in the early 1990s

Crisis reactions to the 1990s recession which hit some of the countries hard,

especially Sweden and Australia range from significant retrenchment in Sweden to

expansion in Australia.Sweden for the first time introduced cutbacks in virtually all transfer

programmes under the impression of deep recession, a fiscal crisis, a banking and currency

crisis and high price inflation. Already in February 1990, the Social Democratic government

under Ingvar Carlsson initially responded by proposing an austerity package, including afreeze on all wages, prices and dividends for two years, combined with restrictions on the

right to strike (Jonung et al., 2009), which proved however difficult to enact. Concrete social

policy reforms were already part of crisis management measures introduced in early 1990.

The Carlsson Social Democratic government reduced public spending in numerous ways.

Retrenchment occurred in the fields of education, care for the elderly, child care and the

health system. Sick pay, for example, was lowered (for the first three days from 90 to 65 per

cent, and to 80 per cent for the following days). Pensions and labour market policies were also

addressed, but were not yet considered to be in urgent need of reform. The initial measures

were taken further in several steps. Particularly from September 1992 onwards,

comprehensive and explicit crisis responses importantly included social benefit cutbacks. This

strategy was declared the only way (den enda vgen ) to manage the crisis. More

concretely, the years of the Bildt government saw a reduction of income replacement rates for

unemployment benefits, and a five-day waiting period for unemployment benefits. With

regard to pensions, there were also benefit cuts, as the basis for calculating benefits was

reduced by two per cent from January 1993 onwards (Feltenius, 2008). These short-term cuts

affected retirees, but did not mark such a fundamental change to the overall system. Until

1994 further retrenchment measures were carried out in various benefit schemes. Apart from


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removing some special support to, for example, schools and child care, child allowances were

affected, as earnings-related benefits were cut from 90 to 75 per cent. Overall, the spending

reductions imposed by the Bildt government between 1991 and 1994 were almost exclusively

on social security, and amounted to SEK 9.4 billion. From this, 2.2 billion were cut in

pensions, 0.6 billion in sickness insurance, and 0.9 billion in family policy (Palme et al.,

2000). When the Social Democrats came back to government in 1994, they continued the path

of restrictive reform, following aTINA logic (Steinmo, 2002: 841). In the first budget

proposal of the Social Democratic government (Prop. 1994/95:100), a substantial programme

was announced to further reduce public expenditure, and to fight unemployment. The

consolidation programme, designed for the period of 1995 to 1998, comprised tax increases

and cuts in expenditure. For pensions, for example, this meant that the adjustment of pensions

was linked to the size of the budget deficit (Anderson, 2001). Regarding unemployment

benefits, it was no longer possible to re-qualify by just taking part in training programmes and

relief work. ( )

Australia was also struck by a deep economic downturn but, in stark contrast to

Sweden, chose an expansionary course. The strategy centred on three core initiatives: a new

occupational pension scheme (Superannuation), a massive fiscal stimulus programme (One

Nation) and a comprehensive active labour market programme (Working Nation). The

pension initiative was tightly linked with a new Accord with the trade unions, negotiated in

1991. As in the early 1980s, the Accord included wage moderation in exchange for social

benefits. This time round, the social policy component was Superannuation, ade facto

mandatory, fully funded occupational pension financed by employers. Superannuation,

phased-in from 1992, was a key element of the governments response to the recession

(Saunders and Deeming, 2011: 381) as it allowed to expand benefits for average workers

without adding to current wages or public expenditure. It has become an important pillar of


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the Australian pension system and one of the largest second-pillar schemes worldwide

(Bateman and Piggott, 1998; OECD, 2009b). The secondelement, One Nation, came shortly

afterwards, in 1992, and was announced by Prime Minister Keating as a strategy of spending

on substantial and necessary public investments now while private investment is weak and

bringing the Federal Budget back into surplus when private investment is strong(Keating,

1992: 5). Almost half of the volume consisted of social and labour market measures,

including lump-sum family payments and training schemes. As the situation on the labour

market did not markedly improve, even when economic growth picked up, the government set

up a massive active labour market scheme called Working Nation in 1994. The government

set out to bring down unemployment to 5 per cent by the year 2000 (from around 10 per cent)

through massive investment in activation schemes, founded on the principle that every

Australian has a right to a job (Keating, 1994: 30). In contrast to the workfare approach

followed by other English-speaking countries at the time, Working Nation included a so-

called Job Compact, a guarantee of a job offer or placement in a training programme or public

employment scheme for the long-term unemployed. The government introduced a mix of

individual case management, direct job creation and wage subsidies, without lowering benefit

rates (Finn, 1997). (+)

Both Belgium and the Netherlands range somewhere in between these two poles. The

Netherlands saw some important cutbacks, yet since the economic downturn of the 1990s was

very mild in the Netherlands, they can hardly be linked to economic crisis. Instead, these

cutbacks should be understood in the context of a crisis of disability, due to the very high

number of people reliant on disability benefits (De Jong, 1999: 262). A reform of disability

benefits was already announced by the centre-left Lubbers III government in 1991. It was met

by strong objections from the trade unions and in October 1991, 250,000 people demonstrated

against the plan (Lucardie et al., 1991: 18). Nonetheless, the government stuck to its


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intentions and in July 1993 disability benefits were limited in duration and made dependent

on age (Van der Veen and Trommel, 1999: 301). The criteria for receiving benefits were

tightened from being unable to do similar work to being unable to do any type of work

(Kuipers, 2006: 154). In December 1993, employers were made responsible for continued

wage payment in the first six weeks of sickness, while the entitlement was reduced from 100

to 70 per cent of previously earned wages. After elections in 1994, the new Labour/Liberal

Kok I government tightened eligibility criteria for unemployment insurance10 and, in 1996,

employers became responsible for continuous wage payment for sick employees for a full

year instead of the previous six weeks. In conclusion, although it is questionable whether

these policy changes were related to economic crisis, social policy developments in the 1990s

were characterised by retrenchment. ( )

Belgium , while significantly affected by the downturn and the ensuing exchange rate

troubles in Europe (the EMS [European Monetary System] crisis of 1992/93), introduced

only few changes in the social policy sector, some of which were restrictive and others

expansionary. Especially compared to the other countries, the Belgian reaction in the early

1990s qualifies as a non-reaction. The Dehaene government tried to forge a new social pact

for the welfare state in 1993 (building on the historic social pact of 1944), but the talks

failed when the socialist trade unions walked out. Some measures were still implemented,

including cutbacks by way of less generous benefit indexation (Hemerijck et al., 2000: 242)

as well as, again, cutbacks for some categories of unemployed people. At the same time, early

retirement remained popular and a new early exit route, the partial early retirement pension,

was introduced. Another important labour market measure of the early 1990s was the

significant expansion of the complex system of targeted wage subsidies via reduced employer

social security contributions (Lhoest, 2010). This is why the overall crisis response in

Belgium must be characterized as highly ambivalent, hence the coding as a non-response. (0)

10 Tweede Kamer, Vergaderjaar 1994-1995, 23 985, Nr. 3.


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Reactions to the financial crisis of 2008

The Australian reaction in 2008 was swift and consisted of a huge fiscal stimulus programme

of which a large part was devoted to social policy schemes (especially pensions and family

benefits) (Saunders and Deeming, 2011). Even though, with hindsight, Australia had a

relatively good crisis, it was seen as a real danger by the government at the time and

described in an earlystatement as the economic equivalent of a rolling national security

crisis (Rudd and Swan, 2008). The fiscal stimulus was introduced in two legislative

packages, the first announced as early as in October 2008 and implemented in December, the

second from early 2009 onwards. The total volume of the fiscal stimulus in Australia has been

estimated as 7 per cent of GDP, making it the third largest in the OECD, behind only the

United States and Korea. Moreover, The Australian stimulus also consisted of an

exceptionally high share of extra spending (as opposed to tax cuts) (OECD, 2009a: 109). The

2008 package worth A$ 10.4 billion centred on social policy measures, including lump

sum payments to pensioners and low-income families, while the second emphasized

infrastructure spending. The first payments came in December, just in time for the Christmas

shopping. This was a lesson learnt from the 1992 One Nation package mentioned above,

which was criticized by economists of having come too late, at a time when the economy was

already picking up speed again (Gruen, 2009; Gruen and Stevens, 2000). Further

expansionary policy changes came in the years following the 2008 shock, but their causal

relationship to the crisis is much weaker, if not entirely absent. For example, in 2009, the

benefit levels of the Age Pension, the minimum pension, were increased, especially for single

pensioners and the long-term eligibility age was raised to 67. Yet, this reform was based on a

review of the pension system (Department of Families, 2009) and had been discussed for


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some time. In a similar vein, a new paid parental leave scheme was introduced from 2011,

which had been an election promise predating the crisis (Brennan, 2009). The genuine crisis

responses in Australia were all introduced on a temporary basis and mostly in the form of

lump sum payments. (+)

Sweden also saw an expansionary response but it was much smaller than in Australia,

and focused, again, on central welfare state schemes, including activation and training. The

welfare state was used as a central instrument of crisis management; however this was

performed in a rather different way compared to the 1990s. The centre-right coalition

government relied on the Swedish system of automatic stabilisers. The social policy

adjustments that did take place were expansionary. These concerned ALMPs, the protection

of pension levels, investments in education, and various tax cuts. The expansions were

incremental, while the measures also clearly reflected the aims expressed by the centre-right

government from their electoral campaigns even before the elections in 2006. In the long-

term, the series of changes to the Swedish unemployment system (activation measures) may

lead to a change in policy direction, but it is questionable whether this is due to the crisis or

due to the general reform plans of the centre-right parties (with the crisis possibly even

preventing more far-reaching plans). The measures comprised, apart from various tax cuts,

support to regional and local levels with additional financial means to run social protection

schemes, and through expanding and adjusting ALMPs. (+)

The Netherlands and Belgium followed a particular dynamic from initial expansion to

retrenchment later on. In the Netherlands , the first crisis response was concerned only with

the financial sector: the state nationalised ABN AMRO bank and part of Fortis, while other

banks received massive capital support. Subsequently, in terms of social policy, in late 2008

crisis response consisted of temporary and targeted expansionary measures, including the

creation of mobility centres for redundant employees the introduction of a short-time work


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scheme (Werktijdverkorting ).11 In early 2009, a crisis response package included both short-

term expansionary social policy measures and long-term cutbacks. The short-term

expansionary measures were again targeted and temporary, including investments in

education and training to prevent youth unemployment ( Actieplan Jeugdwerkloosheid )12 and

the replacement of the existing short time work scheme by a more encompassing part-time

unemployment benefit ( Deeltijd WW ). The cutbacks announced in spring 2009 included cuts

in pensions, health care and childcare. Most of these cuts were eventually only implemented

by the subsequent Liberal-Christian Rutte I government, which took office in 2010. Upon

taking office, this new government committed to even more extensive cutbacks. A decrease of

childcare subsidies was implemented repeatedly in 2011, 2012 and 2013, and the universal

child benefit (kinderbijslag ) was frozen in 2010 and 2011.13 After a long period of debate

with the social partners, an increase in the retirement age was finally enacted in 2012.

Cutbacks were also enacted in the area of ALMP, affecting in particular resources for the

reintegration of recipients of unemployment benefits back to work.14 Eligibility criteria for

social assistance were tightened for people under 27 years of age.15 Finally, health and long-

term care saw some incremental cutbacks. For example, the out-of-pocket contribution for

mental health care was increased16 and a (minor) wealth test was introduced for out-of-pocket

contributions for long-term care services.17 In April 2012, the Rutte I government fell.

Subsequently, the Liberals and Christian Democrats struck a deal on the 2013 budget with

former opposition parties, the Liberal Democrats, GreenLeft and Christian Union.18 In this

budget deal, some of the more controversial cutbacks of the previous government were

11 Tweede Kamer, Vergaderjaar 2008 2009, 31 371, Nr. 56.12 See also: Tweede Kamer, Vergaderjaar 2009-2010, 32 123 XV, Nr. 2.13 Staatsblad van het Koninkrijk der Nederlanden, Jaargang 2011, Nr. 424.14 Tweede Kamer, Vergaderjaar 2011-2012, 33 065, Nr. 3.15 Eerste Kamer, progress report of bill 32815,http://www.eerstekamer.nl/wetsvoorstel/32815_wijziging_van_de_wet_werk_en [accessed on 15 June 2012].16

Tweede Kamer, Vergaderjaar 2011-2012, 33 000 XVI, Nr. 2.17 Eerste Kamer, progress report of bill 33024,http://www.eerstekamer.nl/wetsvoorstel/33024_wijziging_wet_op_de [accessed on 15 June 2012].18 Tweede Kamer, Vergaderjaar 2011-2012, 21501-07, Nr. 910.
http://www.eerstekamer.nl/wetsvoorstel/32815_wijziging_van_de_wet_werk_enhttp://www.eerstekamer.nl/wetsvoorstel/32815_wijziging_van_de_wet_werk_enhttp://www.eerstekamer.nl/wetsvoorstel/33024_wijziging_wet_op_dehttp://www.eerstekamer.nl/wetsvoorstel/33024_wijziging_wet_op_dehttp://www.eerstekamer.nl/wetsvoorstel/33024_wijziging_wet_op_dehttp://www.eerstekamer.nl/wetsvoorstel/32815_wijziging_van_de_wet_werk_en


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reversed, such as the higher out-of-pocket payments for mental healthcare, but the general line

of cutting back social policy was continued. The same applies for the new Liberal/Labour

Rutte II government that took office in November 2012. Overall, therefore, the Dutch crisis

response can be summarised as a short period of expansion followed by extensive cutbacks.

(+, )

While cutbacks were planned and announced from the beginning in the Netherlands,

Belgium only reluctantly turned to (incremental) retrenchment, and only after a government

could be formed at the end of a record 541-day post-electoral hiatus. However, the first crisis

responses were implemented by a coalition of Christian democrats, Liberals and (French-

speaking) Socialists, headed by Prime Minister Herman Van Rompuy and, from November

2009, by Yves Leterme. The most important expansionary measures were enacted in June

2009 on a temporary basis and renewed several times. They included working-time reductions

via various short-time work schemes, a Crisis Bonus payment of 1666 for unemployed

made redundant during the crisis, and active labour market measures. Short-time work

participation became particularly important but had already been important prior to the

crisis, as comparative analyses show (Hijzen and Venn, 2011; Vandaele, 2009). Active labour

market policy took place mostly at the regional level and was targeted at particular, for

example, young people (OECD, 2011: 72). The second phase of Belgiums crisis response

began in late 2011. No coalition had been formed since the June 2010 elections and financial

markets as well as the European Commission had become increasingly nervous. Belgium

was downgraded by several ratings agencies in November 2011. In December, Elio Di Rupo,

a Socialist, managed to form a six-party government between Socialists, Christian democrats

and Liberal parties (each from both linguistic camps). The government came in with the

announcement of a pension reform and cutbacks to unemployment benefits. In pensions, the

eligibility rules for early retirement were, again, made stricter and special pensions for


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certain occupations and the public sector further aligned with the general scheme. In labour

market policies, a benefit used mostly by graduates was linked with work experience (through

mandatory internships) and access to sabbatical schemes which had become very popular, was

restricted. While there was a clear change in direction between the early and the later

response, the cutbacks were far from radical and followed a pattern of incremental

adjustments that had effectively started in the early 1980s. (+, )

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Countries Responses to Crisis

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