CPB finds shortening Dutch unemployment benefits has limited employment impact

The CPB Netherlands Bureau for Economic Policy Analysis has determined that shortening the maximum duration of unemployment benefits (WW) would have a “limited” effect on employment. An investigation requested by the Ministry of Social Affairs examined reducing the benefit period from 24 months to either 18 or 12 months. In both scenarios, the CPB calculated a mere 0.1 percent increase in employment, equivalent to approximately 8,000 full-time jobs.

While reducing benefits decreases income protection and creates a financial incentive for the long-term unemployed to accept work more quickly, the projected job gain is small relative to the total number of unemployed individuals. As of late August, the UWV reported 194,780 unemployment benefits, while the total number of unemployed people stood at 408,000.

From a fiscal perspective, halving the benefit duration could reduce government spending by up to 1.3 billion euros annually. The Dutch government has decided to postpone plans to shorten the WW duration and adjust initial benefit amounts until January 1, 2029. This delay is part of broader social security austerity measures intended to secure political support, though opposition parties like PRO and various labor unions continue to resist the proposals.