A proposal to cut down on unemployment benefits in the Netherlands would only have a “limited” impact where a small amount of people who lost their job find new work faster, the Netherlands Bureau for Economic Policy Analysis (CPB) calculated. A Cabinet plan containing such a measure was recently delayed following strong criticism from labor unions and several opposition parties.

Experts from the CPB investigated the effect of shortening the maximum duration of WW unemployment benefits down from 24 months to a maximum of either 18 months or 12 months. In both cases, this was projected to result in a 0.1 percent increase in additional employment in the Netherlands, according to the study commissioned by the Ministry of Social Affairs.

This impact corresponds to approximately 8,000 additional full-time jobs. The result is due to the fact that cutting the WW reduces the income protection for long-term unemployed people, creating a financial incentive for affected people to accept a new job sooner. The benefit cut means some unemployed workers will search for a now role with more intensity, and thus agree to an offer more rapidly, said the CPB, a key policy think tank and advisory.

The result would be measured as a “limited increase in structural employment.” But at the end of August, the benefits agency UWV said a total of 194,780 were receiving the WW payment, while there were 408,000 unemployed people that month. The disparity between the two groups will prevent the policy measure from having a real economic impact, even though it would cut government spending by a maximum of 1.3 billion euros annually if the WW duration was halved to a one-year time limit.

Further, changing to the amount of money paid in unemployment benefits would have an even lower effect on employment, such as lowering the amount of money a worker receives in the first two months after losing their job. Other situations also had a lower positive impact than the Cabinet had posited.

Prime Minister Rob Jetten’s Cabinet, which does not command majority support in either Parliamentary house, has since decided to postpone its plans to cut down on the duration of unemployment benefits. It has also delayed a measure to reduce the higher benefit payout people receive during the for the first two months of the year.

These proposals have not been scrapped, but rather delayed by two years to the start of 2029. The coalition government consisting of Jetten’s D66, the VVD and the CDA, pushed those plans as part of a package of measures cutting social security in the Netherlands.

The minority coalition was angling to secure support from left-wing faction PRO by adjusting their plans, which would earn a majority of support in the Tweede Kamer, the lower house of Parliament. They would then be two votes shy of a certain majority in the Eerste Kamer, the upper house, where 75 senators hold office.

To the annoyance of both PRO and the labor unions, the Cabinet only modified its plan, but did not scrap the unpopular measures. Tweede Kamer PRO leader Jesse Klaver reiterated after Budget Day that his party would not support this plan.

The labor unions have also put up fierce resistance. In protest, they recently organized a nationwide public transport strike, and labor actions in several other sectors. The public transport strike led to the stoppage of nearly all trains, trams, buses, and metros in the country for an entire day. The unions said they are only willing to start negotiations if the Cabinet drops the plans and begins from a clean slate.