The Dutch Employment Miracle ?

In the 1980s, the Netherlands had one of the highest unemployment rates in the European Community, Germany one of the lowest. Today, the reverse is true. Is there a Dutch employment miracle? If so, how can it be explained? This essay is an attempt to answer these questions in seven steps. Beginning with the development of an analytical framework within which employment systems are compared, the author measures the performance of the two labour markets and economies, paying particular attention to the role of labour market policy in the process of adapting to structural change. It is shown that the Netherlands has an interesting new configuration in which the advantages of competitive and coordinated capitalism are combined with a modernised form of the welfare state. A key shortcoming of both employment systems remains the hitherto highly passive character of employment redistribution. Transitional labour markets would be a more appropriate strategy for redistributing employment in order to link long-term social needs and economic efficiency. On the whole, however, developments in the Netherlands point much more clearly than those in Germany to a path along which the European model could move.