[Opinion] Sad Story of the Netherlands

On its Internet edition of “Radio Netherlands,” an independent press in the Netherlands, an article released last week titled “Very Sad Story” quoted, “The unemployment rate is on a steep rise, and economic growth has never been lower. Welfare benefits should not be decreased,” according to the president of FNV, the Netherlands’ largest labor union, in his interview. Offended by the government’s decision regarding reducing the allowance for the unemployed and disabled, and raising the retirement age to 67, the chairman announced plans to stage a large-scale demonstration in October. However, this is not the only sad reality. What perhaps is sadder is the truth that the era of the “Polder Model” of the Netherlands, which has long been believed as an exemplary system of the unity between labor, management, and government, is now over.

Three months ago, the Netherlands’ Minister of Economy wrote a letter to his people, saying, “We need to work more and longer.” In other words, this is the only solution to compete with the cheap labor force of Europe and Asia, to increase the national productivity to that of the international level, and to revitalize the country’s aging society. The nation’s growth rate recorded a minus 0.9 percent last year and dropped to nearly one percent in the second quarter of this year. Its unemployment rate is as high as seven percent. The Wassenaar Agreement of 1982, in which the labor community’s voluntary decision to hold wages, management’s determination to expand job opportunities, and the government’s promise to cut taxes were all guaranteed, was once the envy of all the nations of the world. Since then, the nation has grown consistently and shared its gains fairly. But now it has become an economic white elephant, even in Europe.

“The era of the Polder Model will soon disappear into history,” said Economics Professor Arjen of the University of Groningen. The wage increase the nation had enjoyed in the 1990s led to inflation and weakened national competitiveness. As more and more labor and management personnel tried to take advantage of the generous welfare system, hardworking taxpayers have received all the burdens. In 1997, a McKinsey & Company report warned of the nation’s excessive regulation on the labor market and unfavorable conditions for businesses, but it was unaccepted. The country was already overcome with the economic boom.

The Netherlands’ model is one that Korean politicians suggested as a solution to the problems concerning the labor situation. Perhaps, they forgot 2001 already and witnessed the ending of the Netherlands’ feast. The prestigious British economic weekly “The Economist” viewed that the success of the Netherlands was the result of sound financial policies, not because of the Polder Model. Now, the model teaches us a sad lesson that ignoring the trend of changes and asking for too much might cost us the national economy.

Kim Sun-deok, Editorial writer, yuri@donga.com