The Liberal Road to High Employment and Low Inequality? The Dutch and Swiss Social Models in the Crisis

This chapter analyzes patterns of policy change and employment performance in the social models of the Netherlands and Switzerland over the past 25 years. The chapter outlines how these countries have been able to reconcile high employment, lean welfare states, and moderate income inequalities. These are underpinned by high employment rates enabled by cooperative institutions for wage moderation, coupled with a series of entry routes into work for groups often marginalized in Bismarckian models, such as young workers and women. Divergent performance during the crisis, however, reveals the importance of domestic demand-side factors. In Switzerland, high immigration stimulated demand and compensated for an adverse environment for exports. In the Netherlands, the debt-driven boom and bust in private consumption related to volatile housing prices was aggravated by the turn to austerity during the crisis.