Welfare state reform and in-work poverty in the Netherlands

This paper describes the development of in-work poverty in the Netherlands from 1996 until 2005 and examines whether in-work poverty is related to recent social security and welfare state reforms (a new ideology of an ‘activating welfare state’ and numerous policy measures to reduce the number of social benefit claimants and to promote work). Using large-scale administrative data (from the Dutch tax services) we found that the in-work poverty risk in the Netherlands was quite constant (fluctuating between 5.3 and 6.6 percent). We expected that because of the social security reforms more individuals with vulnerable labour market positions are pushed into the labour market but are nevertheless unable to escape from poverty. This would result in more working individuals below the poverty line. However, this is not the case. But even with a constant in-work poverty risk the number of working poor individuals increases over the years. As a result, there is a gradual shift within the Dutch poverty population from non-working to working poor. We conclude that in-work poverty – once the typical face of poverty in liberal welfare states such as the USA – also became a familiar phenomenon in the Netherlands. The majority of the Dutch working poor belongs to this category for only one year. However, a limited but significant number of individuals is working poor for three years or more. In-work poverty occurs relatively often after individuals experience a transition from social benefits (particularly social assistance) to work.