2012 Social Affairs and Employment Budget: Balancing the budget
The government’s expenditure is greater than its revenue. That is why we are taking measures to limit expenditure and stop the national debt growing. This means introducing measures to ensure that social security remains affordable in years to come. People will also be given greater personal responsibility, for example in finding work. This is set out in the 2012 budget policy agenda drawn up by the Minister of, and State Secretary for, Social Affairs and Employment, Henk Kamp and Paul de Krom.
In line with the coalition agreement, the Ministry of Social Affairs and Employment will be cutting its budget by €940 million in 2012. The Ministry needs to make cuts totalling €2.4 billion during this government’s term in office. Some of these cuts are new, while others were announced in the 2011 budget. Purchasing power will fall by an average of 1%. Total expenditure on the labour market and social security will remain unchanged during this government’s period in office, despite a sharp increase in expenditure on pensions. In 2012 expenditure will be reduced to €68.6 billion. In the long term, the raising of the retirement age and the introduction of the Employment Capacity Act will make the greatest contribution to putting government finances in order.
In 2012, the most significant cuts will affect childcare and reintegration. Expenditure on childcare will be reduced by €420 million. The 2011 budget envisaged a €310 million reduction, and the additional €110 million is required by the coalition agreement. Expenditure on the reintegration of jobseekers will be reduced by €690 million in 2012. This consists of a €400 million cut in central government payments to municipalities, as set out in the coalition agreement, plus savings of €100 million by the Employee Insurance Agency (UWV). This is on top of the reduction of €190 million envisaged in the 2011 budget.
More people in work, and for longer
The government is taking a number of measures to increase participation in the labour market. Half a million people in receipt of benefits, plus one million without benefits, are not in work but are in fact capable of it. The guiding principles are that anyone who can work should work, and that work must pay. That is why steps have been taken to change social assistance so it does more to encourage people to seek work. The general tax credit for those receiving social assistance will be abolished, as it already has been for those in work. This will remove a financial disincentive for those on benefits to return to work.
We need to ensure that as many older employees as possible continue working. Fewer young people are entering the labour market, while more and more older people are retiring. That is why all those who can work should participate in the labour market for as long as possible. The fact that fewer people are working means there are greater opportunities for those who are not in work and are receiving benefits. Reducing benefits will also contribute to the recovery of public finances. Everyone who can work should participate, as this will help keep social services affordable.
The government is reluctant to issue employment permits to employees from outside the European Union, or from Bulgaria and Romania while the transitional regime is in place, and very closely monitors their use. Employers must first demonstrate that vacancies cannot be filled by Dutch citizens or citizens of other EU countries who are free to work in the Netherlands.
The Employment Capacity Act should ensure that people who are able to work but who are currently dependent on social assistance, the work and employment support scheme for young disabled persons, or sheltered employment are reintegrated by 2013. In the future, the young disabled persons scheme and sheltered employment will only be open to people who cannot work, or who can only work in a sheltered environment. The government is keen that no-one be written off before they have been given a chance.
People will need to continue working to keep pension schemes affordable, for current and future generations alike. There are fewer and fewer young people, and more and more pensioners. This means a smaller group of people in work will be paying for a larger group of pensioners. In accordance with the pension agreement, as of 2020 the retirement age will be linked to life expectancy. In 2020 the state pension age will accordingly be raised to 66, with the expectation of a further increase to 67 in 2025.
There will be heavy penalties for individuals or companies committing fraud. The guiding principle is that fraud must never pay. Sanctions for fraud will increase considerably as of 1 July 2012, particularly for repeat offenders. Benefit fraud constitutes theft of public money and undermines public support for social services. If people who are not entitled to benefits receive them, they will have no motivation to work and will disadvantage others, who will have to pay unnecessarily high taxes and social insurance contributions.
As of 1 January 2012, implementing organisations will have greater scope to visit the home of benefit claimants. Inspectors will be able to assess the situation at any given address at the request of any implementing organisation lacking the information required to determine the correct benefits. Mala fide employment agencies will also be dealt with more severely, as employers that evade employment laws create unfair competition. On 1 January 2012 the Labour Inspectorate, the Social Security Intelligence and Investigation Service, and the Work and Income Inspectorate will merge to form the Inspection and Information Service of the Ministry of Social Affairs and Employment.
The costs of childcare provision have risen sharply in recent years. Between 2005 and 2010 annual costs rose from €7 billion to €10 billion. If the government does not act now, the situation will worsen. That is why government spending on childcare benefit will be cut as of 2012. Parents will pay more, although there will be special rules for those on lower incomes. The government’s contribution towards childcare will be linked to the working hours of the partner working the fewest hours per week. The means-tested child allowance will be limited to two children and will not be index-linked.