Low-income households hit hardest by Cabinet’s plans, Dutch economic bureau warns

The Jetten Cabinet’s plans will hit low-income households hardest in terms of purchasing power, according to calculations by the Centraal Planbureau. Without policy changes, they would have seen their purchasing power rise by 0.5 percent per year. Instead, under the incoming administration’s proposals, their purchasing power is set to stagnate.

Compared with the present situation, every income group will see a decline. The highest-earning 20 percent stand to benefit the most, improving by 0.3 percent each year. For an average household, the annual gain comes to 0.2 percent.

The Centraal Planbureau attributes the drop in purchasing power in part to an increase in the mandatory deductible and a reduction in the healthcare allowance. Because lower-income households typically incur higher medical expenses, they end up paying more toward the deductible. In addition, they gain less from the revised child benefit arrangement.

Recipients of unemployment (WW) and disability (WIA) benefits are likewise expected to experience what is described as a strongly negative impact on purchasing power. The coalition aims to reduce the maximum length of unemployment benefits to 1 year and tighten the conditions for qualifying for the full entitlement period. It also proposes lowering the maximum daily WIA payment, effectively reducing the overall level of disability benefits.

With just 66 seats in the Tweede Kamer, the lower house of Dutch parliament, the coalition lacks a majority and must rely on backing from opposition parties to advance its agenda. GroenLinks-PvdA, a party capable of tipping the balance, has already voiced strong criticism of the plans.

The calculations also show that the policies would lead to a rise in poverty. If policy were left unchanged, 2.5 percent of the population would be below the poverty line in 2030; under the coalition plans of D66, VVD, and CDA, that share would edge up to 2.7 percent. Data from Statistics Netherlands indicate that 3.1 percent of residents were classified as poor in 2024.

The projected rise stems largely from higher taxes on earned income and reductions in benefits. The Centraal Planbureau reports that the rise is concentrated among those who face a monthly shortfall of up to 10 percent. It sees little change in the number of people in severe poverty. Child poverty is expected to remain stable, in part because of increased support provided through the revised child benefit program.

CNV argues that low-income households and benefit claimants are bearing the brunt of the new Cabinet’s proposals. “It is unprecedented that the coalition is placing the bill largely on the shoulders of those least able to bear it,” said Piet Fortuin, chairman of CNV union. “Low-income groups feel this most acutely. But for people affected by the WW and WIA measures, this is an additional blow.”

Earlier, CNV had already expressed opposition to the coalition’s proposals regarding benefits. The trade union is urging that the plans be abandoned entirely.