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Political Economy

Parental-leave in Germany

Economy of the Netherlands

what I plan to contribute to this article:

- the Dutch social security system (including employment and unemployment laws)

The Social Security System:

The Dutch social security is very comprehensive, covering Dutch residents in an encompassing manner and is divided into the national security (Volksverekeringen) and the employee insurance (Werknemersverekeringen). Whereas the first covers all living in the Netherlands and the social benefits provided, the latter regards itself with employment-related benefits . All living in the Netherlands are required to pay into the social security system, including residents from outside the Netherlands, with a few exceptions.

The Volksverekeringen is compulsory for all and covers the residents under different forms of national insurance:

•  Long term care under the Long-Term Care Act (Wet Langdurige Zorg (WLZ)) (formerly known as The Exceptional Medical Expenses Act (Algemen Wet Bijzondere Ziektekosten (AWBZ)))
• Pension care under the General Old Age Pensions Act (Algemene Ouderdomswet (AOW))
• Survivor benefits under the General Surviving Relatives Act (Algemene nabestaandenwet( ANW)) (formerly known as  The General Widow’s and Orphans’ Act (Algemene Weduwen-en Wezenwet (AWW)))
• Child benefits under the General Family Allowances Act (Algemene Kinderbijslagwet (AKW))

It is overseen by the Social Insurance Bank (Sociale Verzekeringsbank (SVB)) and financed through earning-related contributions of employers and employees up until a maximum income-ceiling. Whilst employed persons get their contribution deducted automatically from their wage, the unemployed pay by themselves. The AKW is financed by employers, whereas the AOW is financed by the employees. The AOW, additionally, is financed by a small government subsidy.

The Werknemersverekeringen is compulsory for all employed people within the Netherlands. It includes the coverage of employees in the following areas:

• Unemployment benefits under the Unemployment Insurance Act (Werkloosheidswet (WW))
• Sick leave under the Sickness Benefits Act (Ziektewet (ZW))
• Disability benefits under the Disablement Insurance Act (Wet werk en inkomen naar arbeidsvermogen (WIA))

The financing for the Werknemersverkeringen is automatically deducted from the employee's income by the employer.

Coverage:

The unemployment benefits in the Netherlands, as set out under the WW, covers almost all employees, that are employees based on a working-contract. Excluded from the WW are the following: self-employed, nationally employed, persons working less than four days a week, heads of stockholders and voluntary workers that earn up to 150€ per year.

Right to benefits:

To profit from the benefit the unemployed has to submit an application to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen (UWV)) within one week of becoming unemployed and additionally has to register as job-seeker. The WW only covers employees with a sufficient work history, meaning that an applicant has to have been working for at least 26 weeks in the past 36 weeks before becoming unemployed. If so, the working-weeks requirement is met. Moreover, the employee is only eligible to unemployment benefits if the unemployment has not been due to his own fault (e.g. own termination of the job contract).

Benefits:

The benefits received through the WW are earnings-related and amount to a sum of 75% percent of the previous earnings per day (which is based on 5 working days per week) for the duration of two months. After those two months the benefits amount to 70%. Part-time work is taken into account with a calculation of parts of the working hours. If this benefit is less than the minimum income, the unemployed has the possibility of supplementation through the Additional Allowances Act (Toeslagenwet) to sum up the amount. All jobs in the previous twelve months are counted in to the calculation of the benefits, if a change of work has taken place. To obtain the benefits for a continued time, the unemployed needs to be actively looking for work. Moreover, he needs to participate in e-coaching three and twelve months after the start of unemployment. After one year of unemployment one must register with an employment agency.

The Social-Welfare System:

Inequality and Redistribution:

With a Gini coefficient of 25.1 (2013) the income inequality is relatively low in the Netherlands. However, the inequality when measured in distributions of household wealth is high, where the top 1% owns 24% of all net wealth, and the top 10% own 60%. Moreover, rather large wealth disparities persist in the Netherlands in relation to wealth, where the those under 35 years-of-age own 10% as much as older workers. This is a consequence from the low taxation of home ownership and a generous mortgage interest deductibility, which benefit the wealthier households. Due to the generous pensions the pension-related savings are the most important part of wealth in the Netherlands, yet are not subject to capital income taxation, which increases the inequality.

Add to the controversies:

Moreover, the self-employed individuals (zelfstandingen zonder personnel (ZZZ)) are not automatically covered under the Werknemersverkeringen, and are not obligated to enroll into unemployment, sickness or disabilities insurance. Self-employed individuals, hence, are required to enroll themselves with private insurance companies.