The Netherlands - Domestic policy

At the top of the Dutch domestic agenda is the deteriorating economic situation with implications for the central government budget and social security system. In spite of continuing reform of the country's social security system, an unacceptably large proportion of the working-age population lives on disability. Although benefit levels were cut, around 15% of the working-age population was receiving government disability allowances as of 2003. During the 1980s, nonwage costs, such as social welfare contributions, were reduced. Real wages rose after 1995, however, in the wake of a tight labor market, after unemployment dropped to 2%. Manufacturing costs have risen by 15% since 1995 compared to an average of 2% in other European Union (EU) countries. At the same time, a slowdown in growth has led to rising unemployment, lower tax revenues, and a modest budget deficit. The Dutch government therefore faces the challenge of implementing structural reforms of social programs while coping with a cyclical economic downturn.

The sudden appearance (and disappearance) of an anti-immigration party has put some new issues on the domestic agenda, which all future governments will have to address. The immigrant population makes up almost 10% of the Dutch population. Their presence has stimulated a new debate on the difficulties of assimilation and the resulting isolation of certain ethnic communities. In addition, among certain groups, the lack of job skills and education combine to contribute to a corresponding rise in crime and urban decay. Moreover, the popularity of LPF was indicative of the depth of discontent felt by the electorate about consensus politics, the colorless technocratic background of most politicians, and secretive backroom deals. Disenchantment with "politics as usual" contributed much to the popularity of LPF and its party platform (despite the fact that the platform was relatively vague), and to a renewed interest in the nature of Dutch culture.