Public Governance in the Dutch Welfare State: The Consequences of Privatisation for Securing Public Interests in the History of the Dutch Welfare State

Abstract

Since the foundation of the Dutch welfare state in the nineteenth century, the distinction between government and market has been object of discussion. In the first welfare arrangements, the role of the government was subsidiary to that of private initiatives. The churches looked after the poor and the employers and employees developed funds to cover employment related risks. The main idea was that state regulation should not stand in the way of these private initiatives. During the twentieth century the government increased its role in the provision of welfare. The public welfare state reached its peak at the end of the twentieth century. Currently, the Dutch welfare state is confronted with a process of privatisation. We witness the development of a regulatory welfare state.Discussions regarding the optimal mix between public and private elements in the welfare state have played an important role in the design of the Dutch welfare state up until today. Although nowadays the government is the most important provider of social security benefits, private elements are introduced by the privatisation of, for example, the reintegration market and employment related risks. The idea behind this process of privatisation is that it makes private actors more aware of the costs involved with illness and inactivity, which induces them to take preventive measures. In other words, the introduction of private elements in the welfare state is believed to increase the effectiveness and efficiency of the system. The shift in balance from government to market does, however, raise questions with regard to the extent to which other public interests are secured. For example, to what extent is the solidarity between employees with a high and low risk of getting ill guaranteed?The consequences of the development of the regulatory welfare state for the securing of public interests are the object of this research. We investigated the development of the Dutch welfare sector into a regulatory welfare state and the public interests that justified the intervention of the government. The question we want to answer is whether or not the regulatory welfare state is capable of securing these public interests.One of the results of our research is that the development of the welfare state is based on conflicting public interests. The public interest that dominates the debate, changes over the years. In the early years of the welfare state, the realisation of income protection was an important public interest. Nowadays the effectiveness and efficiency of public expenses, combined with a high value that is attached to labour participation, dominate government regulation.The development of the regulatory welfare state can be regarded as a response to this shift in public interests. Although in theory, the introduction of private elements in a formerly public welfare system does not have to impair the securing of a wide range of public interests, we show that that the regulatory welfare state is not fully capable of correcting the perverse effects of the private market.