Safety net of last resort: the evolution, determinants and adequacy of Dutch minimum income support

Dutch minimum income support provides a generous social safety net compared to most other European Union (EU) member states but has not been able to structurally reduce poverty. This inadequacy did not come about overnight but is the result of six decades of policy decisions. In this article, we aim to explain the current income shortfalls of people on minimum income support by studying the historical evolution and determinants of the Dutch minimum income scheme. We demonstrate that it has on average maintained a constant level of purchasing power over the period 1980–2023. This fits well with the notion that poverty is of an absolute nature, and that a social minimum should guarantee a stable level of purchasing power. It fits less well with relative or contextual approaches to poverty, and the view that a social minimum should adapt to changing norms when a society grows richer. To uncover the reasons for the growing gap between general prosperity and the minimum income benefit, we decompose it into smaller gaps by illustrating the evolution of prosperity, labour productivity, gross wages, collectively agreed wages, the minimum wage and the minimum income benefit. We show that each of these gaps matters and argue that this provides valuable insights into the structural, institutional and political forces that have shaped Dutch minimum income support since its introduction in 1965. Based on these results, we argue against the current ad hoc measures of the government and in favour of a more structural approach to supporting low-income households.