The Netherlands is a rich country. On a global, even European scale, it is extremely wealthy. It consistently ranks high in quality of life, education, and happiness, as well as GDP per capita and income. As a result, the idea of people living in poverty here is often deemed a non-issue, both by Dutch people and those from outside. And yet, 1 in 20 residents live in poverty, and 3 in 20 have an insecure income. Poverty carries heavy social stigma, and governmental attempts to reduce it have led to an impossibly complex bureaucracy. Measures meaning to do good and help people escape poverty have the unintended effect of keeping people poor.
After world war two, as is the case in most Northern European countries, the Netherlands expanded its welfare state. In the period from 1950-1970, citizens gained the right to unemployment benefits, childcare benefits, benefits for the elderly, disabled, and permanently sick, as well as a minimum wage and social welfare benefits. When in 1980 more than 20% of national GDP was being spent on these various subsidies, the government felt that this was too heavy of a burden and started rolling back certain measures, not removing them entirely but reducing them or placing higher requirements upon recipients. A person would either need to apply for the benefits or receive them automatically. Some, like the student or elderly benefits apply automatically, based on your status or age. Others, like the unemployment benefits, general welfare benefits, and disability benefits, require applications and further proof of necessity.
The individual had to make sure they applied for the correct benefits if they believed they were entitled to them, and the government bodies would then confirm that they indeed deserved it. This, however, was not without its problems. Citizens would miss out on benefits, and it could both be confusing to know what they could receive, and be embarrassing to have to demand it at their local benefits office, keeping them from applying. Furthermore, this system required a lot of bureaucracy to keep intact, which was expensive. Sadly, this is only the beginning of the woes the Netherlands has with its welfare bureaucracy.
In 2005, reforms to the system were announced, with the good intentions of making the system more transparent as well as cheaper. From now on in the 3 key areas of rental, childcare and healthcare subsidies, citizens would no longer need to apply but would instead receive the benefits automatically if they met the required criteria. In Dutch, this type of benefit would be called a ‘toeslag’. The tax authorities, the infamous Belastingdienst, would check for citizens if they were eligible. Age, income, the composition of a household, or your rent are among the many different criteria. Citizens previously ashamed of holding out a hand for help would now receive it automatically, thus increasing their living standards.
Things immediately went wrong in 2006. The Belastingdienst was unprepared for the new workload, as its IT system was not up to the task. By law, in case of inability to determine if a person would have a right to a certain toeslag, the Belastingdienst was to pay out anyway, and demand unrightful payments back in the future. Already at that time, warnings were issued that this could have negative impacts upon the most vulnerable recipients, since they would probably already have used up this money they had to pay back. Things improved with a new IT system, but in 2012 a total of 2.1 million demands for return of toeslag payments were still on the table, accounting for a total of 1.3 billion euro. So far, nobody was receiving much more clarity about their benefits than before the reforms.
Then, in 2013, the story starts taking a more tragic twist. Large-scale fraud by Bulgarian criminal gangs, where the Bulgarians were able to get up to 8000 euro by registering in the Netherlands and unlawfully demanding retroactive benefits, and immediately leaving to Bulgaria upon receiving them. This prompted politicians to impose a much stricter fraud-fighting policy in the Belastingdienst. Accordingly, the tax service started to demand repayment of technically illegal benefits, deemed to be wrongful as a result of small mistakes. These were often very bureaucratic, and in some cases based on the discriminatory assumption that dual nationality citizens were more likely to commit fraud. Resources for in-depth investigations were not available. The majority of these repayments were demanded for childcare benefits, and in many cases the amount to be paid back was in the tens of thousands, with the median debt to the government being 30,000 euro. The impacted families had to sell their houses, go into debt, and many affected people still struggle with psychological issues as a result. Over 70,000 children were directly impacted. This scandal, the toeslagenaffaire, led to the collapse of the government coalition in 2021.
The impact of this governmental mismanagement is still felt to this day. The impacted persons are to be compensated for the suffering they went through, but the process of determining how much they are to be compensated is also riddled with issues. In this case, the governmental bureaucracy directly kept people in poverty, or brought them down into it. By direct fault of its complex systems, it was unable to do the duty it was assigned to do in the 2005 reforms, which was to provide people with the benefits they had a right to. However, also indirectly the bureaucratic systems keep people poor. This is due to two things. Firstly, the current availability of benefits following the post-covid inflation has increased to a point where it is extremely confusing for the average citizen to know what they have a right to. Secondly, people are disincentivized to work because by doing so, they might lose their right to a benefit, meaning a lower monthly income.
After the cost of living crisis, many municipal and national schemes were implemented to support Dutch people struggling financially. Here, one can think of initiatives like free lunches at schools, free public transport, but also compensation for higher food prices or gas costs. In order for the least privileged to make ends meet, these extra income sources are essential. The only issue is that, in order to benefit from them, individuals must apply for each initiative separately. It is not done automatically, resulting in many people who have a right to receive these supplements, do not know they could get them. This has created a maze of benefits, subsidies, and so forth, that people are easily lost in and confused by. Not only that, but needing to individually apply for each solution is time-consuming, and according to researchers is complex to the degree that one needs to be academically educated to adequately fill in the forms.
As previously mentioned, the different toeslagen are based on criteria like age, income, rent, and so forth. These criteria are not completely clear to most laymen, meaning it becomes hard to take them into account. For example, a person receiving disability benefits monthly, who decides to start working from home, might end up with less money in the bank at the end of the month because their income goes over a certain threshold. So, even though they want to work, it becomes disincentived to do, since it is hard to predict what will happen to one’s benefits. Trying to figure out what the results of starting to work would be is a complex task, that also creates stress and confusion for many. Perversely, the system meant to help people while they can’t work, doesn’t allow them to work with ease.
The debate surrounding benefits, toeslagen, social welfare and how to fairly and equally distribute them will always be at the core of Dutch politics. However, what is clear now is that action needs to be taken to help those who are suffering, directly or indirectly, as a result of exactly the policies that are meant to help them thrive. It is sad that Dutch politicians now, instead of calling for a poverty crisis, call for an asylum crisis, without adequately addressing either societal issues.
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