Reform in the Netherlands. Going Dutch

The polder model is under attack

IN FEW countries would you see a 200,000-strong demonstration in favour of something as abstract as a “model”. But this is the Netherlands. The people who took to the streets of Amsterdam last weekend, in the biggest protest in the capital for two decades, had come to fight against reforms that the government is making and against its attempt to bulldoze them through the country's “polder model” of economic change by consensus.

The focus of their ire is a set of economic and social changes planned by the Christian Democrat-led coalition government, which it has branded under the label “taking responsibility for oneself”. It offers cover for proposals to trim welfare benefits and to liberalise the labour market. Trade-union opponents use a different term: “arrogance and lack of compassion”. Opinion polls suggest that three out of four voters think the same. Approval ratings for Jan Peter Balkenende, the prime minister, have reached record lows. Yet Mr Balkenende seems determined to continue with reform, in an effort to improve a stuttering economy.

After a period of rapid growth in the 1990s, Dutch GDP has since moved at a snail's pace. The week before the Amsterdam protests, the government adopted further measures, including scrapping tax breaks for early retirement and cutting unemployment and disability benefits. Perhaps surprisingly, Dutch voters seem to agree that reforms of their beloved welfare state are necessary. But what they (and the protesters) object to is the way the government has gone about them.

Under the polder model, named after the Dutch habit of working together to reclaim bits of land from the sea, big reforms are supposed to be negotiated between the government, trade unions and employers. The three parties try to find a compromise; and, after many weeks of talks, a binding consensus is normally arrived at, guaranteeing eventual acceptance of the measures. Foreign luminaries such as Bill Clinton and Tony Blair once praised the polder model as a nifty way of combining the liberal economy with a functioning welfare state. In the 1990s it was the subject of fulsome praise for helping to foster the “Dutch miracle ” - -until the miracle's shine wore off.

Yet the polder model endured until this year, when the government refused to accept a deal on pension reform that unions and employers had made, despite an earlier promise that it would. Instead, it put forward its own plan. This antagonised the unions and led to a trading of insults in place of normal Dutch politeness. The leader of the biggest union, Lodewijk de Waal, called one minister a “liar” and a “conman”, and talked of taking “the arrogant smirk off the face” of another.

The unions are now flexing their muscles more openly. Besides last weekend's street protests, Rotterdam, the world's largest port, has been hit by a 24-hour strike. Mr de Waal says this is just the beginning: he has announced a new wave of strikes, and hopes to organise a referendum on the government's policies by the end of the year. But the government is unwavering. “The polder model may have been good in the fat years,” says the (liberal) economics minister, Laurens Jan Brinkhorst, “but it is unable to offer efficient solutions to the acute problems the country is now facing.”

The Dutch protesters may be reluctant, but they now seem determined to fight. Having discovered their attachment to the polder model, they are eager to defend it. Too late, many think. But the head of a government advisory think-tank, Anton Hemerijck, says the model has not lived its last. “Sooner or later the Dutch will return to negotiating with each other again,” he says. “After all, that's what they do best.”