POLDER MODEL
“God created the world but the Dutch created Holland”
Popular Dutch saying
A ‘polder’ is a section of land developed after dikes have been built around a marsh or lake and the water has been pumped out. Windmills were once used for this process but have been replaced by motorised pumps.
*The ‘Polder Model’ is a term now used around the world to mean a system of consultation and working together to reach consensus – first used in the Netherlands by the water boards of the 17th century who cooperated with each other during floods – and sometimes called ‘the politics of wet feet’.
**The polder model (Dutch: poldermodel) is consensus decision-making, based on the acclaimed Dutch version of consensus-based economic and social policy making in the 1980s and 1990s. Thepolder model has been described as "a pragmatic recognition of pluriformity" and "cooperation despite differences".
Special report: The Netherlands
Model makers
For two decades, the Netherlands' “polder model” seemed to be working miracles. Now the shine has worn off. But the Dutch still have plenty going for them, argues John Peet
May 2nd 2002
DRIVE a few kilometres north-east out of Amsterdam and you gradually notice that the landscape has changed. It is, inevitably, flat. But the fields, roads and ditches start to look almost too manicured; the settlements and towns too planned; and the trees become notable mostly for their absence. And then you realise that this area was until recently under water: until 1968, in fact, when it was drained to become Flevoland, the largest and newest Dutch “polder” (land reclaimed from the sea), situated at the foot of the Ijsselmeer.
Every schoolchild knows that water is critical to the Netherlands. Fully one-quarter of the country is below sea level, and much of it has been reclaimed over the centuries: as people say, “God made the world, but the Dutch made the Netherlands.” Although the landscape looks solid enough today, dangers still lurk. As recently as 1953 the southern dikes were breached, inundating part of Zeeland and killing some 2,000 people. One of the more poignant places in the country is just south-east of Dordrecht, where on November 18th 1421 the dikes gave way and a medieval polder was flooded, with the loss of 73 villages and as many as 100,000 lives. This former polder has never been reclaimed: today its marshes and lakes make up the Biesbosch national park.
Water has been crucial to Dutch survival in war, too: whenever the country has been under threat, the last-ditch option, literally, has been to open the sluices. A turning-point in the nascent Dutch republic's revolt against Spanish rule came with a breach of the dikes that made possible the relief of Leiden. A century later, the same weapon held off the marauding soldiers of Louis XIV. It did not, however, keep out Napoleon, who contemptuously referred to the country as “alluvium deposited by the principal rivers of my empire” and unceremoniously abolished the 300-year-old republic. (The Netherlands is a rare example of a country that has switched from republic to monarchy, rather than the other way round.)
For the Dutch, water has a significance beyond the past. To take on a project as ambitious as the making of a polder requires two important attributes, besides capital and property rights. One is a strong governing authority; the other an ingrained habit of co-operation and consultation. It is these twin attributes that lie at the heart of the “polder model”, the popular name for the Dutch practice of policymaking by consensus between government, employers and trade unions.
Dutch disease, miracle cure
Over the past decade, the polder model has attracted a lot of interest from abroad. Much of Europe has been struggling with high unemployment, low growth, rigid labour markets, excessive regulation and an overgenerous welfare state. The obvious and unflattering comparison has been with the United States, whose economy has repeatedly proved itself more flexible, more innovative and more resilient than Europe's. Yet not all of Europe has fallen behind. Several smaller countries, such as Denmark and Ireland, have prospered mightily. And so too has the Netherlands.
As the 1990s progressed, the Netherlands seemed to have hit on a winning combination of high growth, low unemployment, low inflation and a budget surplus—all without dismantling its generous welfare system. Such luminaries as Bill Clinton and Tony Blair hailed Wim Kok, the Dutch prime minister, as an unsung hero of their “third way”. Mr Kok's government resigned last month, ahead of the election later this month, after a report criticised the Dutch over the 1995 Srebrenica massacre. But the true legacy of his eight years in office will be the revival of the country's economic confidence.
Kok took the rap
The Netherlands has, admittedly, long been prosperous: in the 17th century, the Dutch republic was twice as rich as any rival. But by the 19th century it had fallen back; it came late to industrialisation, and well into the 20th century was still primarily agrarian and less well off than its neighbours. After the dark period of German occupation in the second world war, however, the Netherlands quickly joined in Europe's economic revival, and in 1959 it received a boost from the discovery of large gas reserves off its northern coast.
Yet things soon started to go wrong. Gas fuelled a massive expansion of public spending, especially the construction of a ludicrously generous welfare state. By pushing up the exchange rate, gas also helped to eat away at Dutch competitiveness. The two oil shocks of the 1970s made matters worse, especially when the government responded with reflation rather than retrenchment. Soon the rest of the world was talking of the Dutch disease, of “welfare without work”. The budget deficit touched over 7% of GDP in 1982.
Then came a big and, at first, largely unheralded change of direction. In 1982 representatives of business and trade unions (the unions' leader at the time being the durable Mr Kok) signed an accord in a suburb of The Hague called Wassenaar. Under this accord, later endorsed by the government, the unions promised to deliver pay restraint, including more decentralised wage bargaining, in exchange for a new emphasis on jobs. For its part, the government undertook to sort out its fiscal mess and to lower taxes. The Wassenaar accord laid the foundations for the economic renaissance of the late 1980s and 1990s, when the talk turned from Dutch disease to Dutch miracle.
Advocates of the Dutch way like to claim that this miracle was a direct consequence of the polder model. The more fervent even urge the rest of Europe (and maybe the world) to learn from it and to adopt a similar model themselves. This survey will try to assess whether they are right to be so enthusiastic. Yet from the outset it is worth noting three objections to their claims—quite apart from the obvious difficulty of transplanting any model that is designed to suit one particular small country and its culture.
The first is whether there has really been a miracle at all: still a matter of some controversy, especially over employment. The second is whether, if there has indeed been a miracle, it had any particular connection to the polder model. These two points will be considered in the next article. Before then, though, a third objection should be answered: that the exact definition of the model remains unclear.
So what exactly is the polder model? Some say it means no more than a strong desire for consensus. But the more rigorous answer includes the institutional arrangements that long predate the Wassenaar agreement. Immediately after the war, the private Labour Foundation, which consists of representatives of both employers and employees (the “social partners”), was established; five years later, in 1950, the government set up the public Social and Economic Council, or SER, which has government representatives on it as well. Two ex-officio members of the council are the governor of the Dutch central bank and the director of the CPB, a semi-autonomous office for economic policy analysis that also prepares official forecasts.
The SER is supposedly nothing more than an advisory body. Even so, as Hermann Wijffels, its chairman, puts it, if its members agree on a policy, for example on social security or health-care reform, it is not easy for the government to ignore it. More generally, the SER mechanism encourages wide consultation between employers and unions, and not only over wages. This is made much easier by the country's small size, and by its traditionally sensible trade unions. Lodewijk de Waal, head of the unions' federation, talks openly of the need for higher profits and more labour-market flexibility, for example (though he also says he was against the Wassenaar accord at the time). Mr de Waal is in close touch with his counterpart at the employers' federation, Jacques Schraven.
But there is also a second, less widely noted component of the polder model: the Dutch political system. The Dutch republic was itself based on consensus, among the seven provinces that initially made up the United Provinces. Although the main province, Holland, was overwhelmingly dominant, big decisions required the approval of all: the 1648 treaty that finally ended the war with Spain was almost blocked by Zeeland, for instance. Thus consensus and decentralisation are built into the fabric of Dutch government.
Today's parliament reflects this. Proportional representation, the lack of any threshold before a party can gain parliamentary seats and the roots of most political parties in the religious “pillars” of Dutch society mean that there are many parties in parliament. All governments therefore have to be coalitions. Mr Kok's government was a left-right “purple” coalition of his own Labour party with the right-wing Liberal party and the small, left-wing D66 party. In one sense, this coalition can be seen as symbolic of the consensus-building that underlies the polder model. Such a broad coalition is more likely to adopt compromise policies.
Evaluation time
This is a particularly opportune moment to re-examine the apparent success of the polder model, for three reasons. The first is that, after nearly two decades of healthy performance, the economy has suddenly begun to look a lot less bouncy. Growth has slowed sharply, inflation has reappeared and unemployment is rising. Some critics have suggested that the economic wheels have come off the polder model. The more sober OECD, in its latest country report, notes merely that “these are undoubtedly testing times for the Netherlands, with the economy moving away from sustained non-inflationary growth.”
The second reason is that the normally predictable Dutch politics is under attack. The upheaval does not stem from the government's resignation on April 15th, which made little real difference, since an election was anyway scheduled for May 15th, after which Mr Kok had promised to step down. But it had long been assumed that the next government would be just another variation on the familiar theme, perhaps this time including the Christian Democrats. However, a new actor has burst on to the stage in the shape of the populist Pim Fortuyn. Mr Fortuyn is leading his own party into the election and may, say the polls, win so many seats that it will be hard to keep him out of the government.
Mr Fortuyn's arrival may be more than a coincidence. For the third reason for reappraising the polder model is that he reflects a growing dissatisfaction with the whole system. Despite their economy's success, Dutch voters, like those in France who recently backed Jean-Marie Le Pen, seem strangely disgruntled. Many are unhappy over their country's reputation for excessive tolerance—whether of immigrants, soft drugs, prostitutes or even gays (paradoxically, Mr Fortuyn is openly gay himself). There are particular worries over a practice known as gedogen, an untranslatable term that signifies acceptance of mild law-breaking: in effect, the opposite of New York's policy of zero tolerance.
The malaise that is showing in support for Mr Fortuyn is also strengthening the criticisms that some leading Dutch figures have been making of the cosy and consensual polder model itself. In recent months, both the governor of the central bank, Nout Wellink, and the finance minister, Gerrit Zalm, have suggested that the polder model may be past its best. Why do they feel this? A big part of the answer is to be found in their country's recent economic performance, which has not been quite as good as enthusiasts like to maintain. Nor, on closer examination, does it owe all that much to the polder model.
THE POLDER MODEL IN ACTION
March 4, 2007
A small windmill like this was used to pump water up from a lower to a higher level body of water. The land that is drained in this way is called a “polder.”
Have you ever heard of the Dutch polder model? It’s a political term referring to consensus decision-making. However, here in Holland, it is used within organizations as well. The idea is that everybody in the organization (yes, including the cleaning staff) gets a say in any decision that will have any effect on them. The leaders have to make the final decision, but they will not announce a decision until everyone has had their chance to discuss it, propose changes, etc.
As you can imagine, such a decision-making model can be extremely time-consuming. It can take years to get anything done. On the other hand, because everyone has felt that they had some influence on the decision, they’re more likely to feel some ownership of it, once it’s made, which means less resistance.
What’s been happening slowly, over the last decade, I would guess, is that Holland is increasingly being influenced in its organizational models by the American/British way of doing things, i.e. like-it-or-lump-it top-down decision-making.
I saw a great example of this change at my school a couple of weeks ago:
Our lessons are 45 minutes long, and sometimes they get combined into block hours of 90 minutes. Some subject departments, such as science, have requested block hours for labs or other longer activities. The school leadership has been mentioning for several years the idea of moving to longer block hours for all subjects.
A couple of months ago, in team meetings, the teachers were asked if they preferred 60 minute or 70 minute lessons next year. Well, the teachers went ballistic! When was this decision made? Who says we want longer hours? Why weren’t we consulted?
The school leaders were obviously surprised at this reaction. A whole-staff meeting was called. Well, I’ll tell you, I normally hate these whole-afternoon meetings and often struggle not to nod off. This one was the best meeting I’d ever been to! The teachers were furious, and not at all afraid to let the school leaders know it!
The school leader presented his arguments for longer hours. His main argument seemed to be that longer lesson hours allow teachers to vary their teaching style more, so that in a given lesson students are engaged in several different activities.
What was fascinating was that the teachers didn’t necessarily disagree with that (although there was a certain amount of scepticism that a teacher who drones on for 45 minutes isn’t just as likely to drone on in the same way, only for 60 minutes!). Rather, the teachers were outraged that they hadn’t been asked if they even wanted longer lessons. One actually shouted at the school leader!
I have to admit I, from my American point of view, found it all more amusing than anything else. Not that I found my colleagues’ concerns unimportant; just that it was such a clear illustration of this unique aspect of the Dutch culture. In an American high school, the teachers would have to just accept the decision. I’m not saying that’s better at all; it creates a lot of resentment. But it sure is a lot quicker!
Now, in response to that anger, the question has been sent back to the teams to discuss and make a recommendation. A ballot was also held a few days later. The decision has not yet been finalized.
It all came down to the Polder Model. The school leaders had broken the rules. All they would have had to do to avoid all of this anger was to send out a questionnaire ahead of making the decision, or ask each team to make a recommendation. Then they could have gone ahead with whatever they decided. Instead, resentment will simmer no matter what happens.[:]
Dutch 'Polder Model' of sharing pain helps country agree on austerity in economic downturn
TOBY STERLING / THE ASSOCIATED PRESS
JANUARY 25, 2013
FILE - In this Oct. 11, 2007 file photo a Dutch man rides his bike in front of windmills in Kinderdijk, Netherlands. While tax hikes and budget cuts have led to partisan warfare in the U.S. and widespread strikes in Southern Europe, in 2013 the Netherlands is weathering "austerity" with relative grace. Some say that's because the country is experiencing a renaissance of its famed "Polder Model," a compromise system in which a centrist government works with labor unions and employers' associations to ensure the burden of painful economic reforms are shared across society. Poldering is deeply rooted in Dutch society: Historically the population had to cooperate to maintain a costly system of windmills and dikes to prevent floods and turn marshes into dry farmland known as polders.(AP Photo/ Evert-Jan Daniels, File)
AMSTERDAM - In the U.S., tax hikes have been the subject of partisan warfare that brought the country to the very edge of a "fiscal cliff." In southern Europe, spending cuts have led to mass protests and labour strikes.
Maybe both could learn from the Dutch — whose compromise culture has kept the country afloat throughout the economic storm.
In the Netherlands, hits from the global financial crisis have so far been absorbed in a more relaxed way, as political parties, trade unions and officials have been more focused on cutting deals than in fighting over principles — and sharing pain as well as prosperity.
After all, the pragmatic Dutch outlook says, we're all in this together.
The Dutch system, known as the "Polder Model," seeks to divvy up the inevitable suffering from a downturn in a way that feels fair to all. Employers agree not to slash as many jobs as they otherwise might in exchange for workers agreeing to take pay cuts and not go on strike. The government, meanwhile, attempts to build public support for tax hikes and spending cuts by distributing them evenly across groups.
"Everyone is going to feel the pinch," Prime Minister Mark Rutte said after a recent meeting with industry and union leaders, while adding: "We're going to share the burdens as equally as possible. As a united country we're strong."
The idea of "Poldering" resonates deeply with the Dutch populace. Historically, dwellers of the low-lying country had to co-operate across social classes to share the costs of maintaining the system of windmills and dikes that protected them from floods and turned marshes into dry farmland known as "polders."
It was a matter of life and death.
Now, with the economy in the doldrums, the housing market in decline and unemployment at a 10-year high of 7.2 per cent, Poldering is back in vogue.
The new Dutch coalition government that took office in November consists of two parties who had been bitter foes for a decade: the conservative VVD party under Rutte, together with the leftist Labor party. Their governing pact was designed to put the Netherlands on firmer financial footing by combining, for instance, the spending cuts on welfare desired by the conservatives with the tax increases on homeowners desired by Labor.
It's as if the Republicans and Democrats had sat down together in Washington, hashed out their differences, and adopted the bulk of recommendations for long-term budget reform in America.
Another source of Holland's compromise culture is its long history of international commerce stretching all the way back to the Dutch East India Company — which dominated trade between Europe and Asia in the 17th and 18th centuries and was the first corporation to issue stock.
"Compromise is really in the nature of a nation that depends on international trade for its prosperity," said Randall Filer, economics professor at Hunter College in New York.
"The intangible benefit is that outsiders — whether it be investors, or trade partners or political allies — trust it's going to remain a stable country, with open markets and social stability."
A sign of the benefits such openness can bring: The Netherlands is the world's second-largest agricultural exporter, after the United States.
The origin of the Polder Model in its modern form was an economic crisis in 1982: Amid high unemployment and stagflation, government ministers sat down with unions and industry leaders, and brokered a deal in which unions agreed to wage restraints and ended strikes in exchange for employment guarantees.
The Dutch economy, the fifth largest among the 17 eurozone countries, has been among the best-performing among industrial nations since then. According to IMF figures, it grew more than 1 per cent per year faster than Sweden, France or Germany from 1990-2007, and slightly faster than the U.S. — but not quite as fast as Britain. Greece and Spain grew faster initially buoyed by the introduction of the euro, but their economies have since collapsed.
Major credit rating agencies say the Netherlands remains one of Europe's few triple-A rated economies, although Standard & Poor's this month repeated a negative outlook.
To help the Dutch government keep a handle on its finances, the first meeting between labour unions, employers' associations and the new Cabinet in December yielded at least one concrete agreement.
The government said it would devote €100 million ($133.5 million) to job retraining programs mostly for laid-off adults 55 years and older, currently the group having the most difficulty finding work, but also for unemployed youth and workers in the hard-hit construction sector.
Jose Kager, spokeswoman for an umbrella group of Dutch labour unions, said that the move was partly symbolic, given that workers stand to lose 10 times that much in long-term unemployment benefits under the governments' current plans. But she said the talks will continue. Unions are not seeking to preserve all jobs, but rather to get the government and employers to agree to stop over-use of temporary contracts — which she said deprives workers of their shrinking safety net.
"It's always better to have a seat at the table," she said.
Business in The Netherlands: understanding the Dutch Polder Model
by Claudia Schalkx | Apr 11, 2014 | Business, International Business |
In the line of work I have chosen, I frequently find myself explaining Mediterranean cultures to Northern Europeans. However the market forces are shifting and the billion inhabitants market of Europe is seeing more business people approaching the continent to close multimillion euro deals. Time to explain the other side of the equation.
In the training “Living & Working in The Netherlands” I usually start asking my clients, what has struck them the most in dealing with the Dutch. In the one I gave recently to professionals transferred from South Africa, my participant sighed in disbelief “the incredible lengthy meetings!”
This is most contradictory with the perception other people have from the Dutch. Foreign visitors never fail to notice the extensive degree of organisation and planning in the Netherlands at all levels, from assiduous environmental impact studies to holidays booked far in advance. Also, their experience is that the Dutch get straight to business and spend practically no time in niceties. Both are different sides of a coin we can call Polder Model.
The polder model is a term with uncertain origin that was first used to describe the internationally acclaimed Dutch version of consensus policy in economics, specifically in the 1980s and 1990s. However, the term was quickly adopted for a much wider meaning, for similar cases of consensus decision-making, which are supposedly typically Dutch.
To understand how the polder model came to be and its influence in how the Dutch approach all aspects of life, including that of business, we need to look at two important elements in the Dutch life: landscape and Calvinism.
First, the landscape. A ‘polder’ in Dutch refers to a piece of land below sea level that is completely surrounded by a dike to protect it against high water levels. Polders are central to the Dutch water management system.
These are the sections of land developed after dikes have been built around the marsh or lake and the water pumped out (by windmill before motorized pumps.) If the dikes aren’t well maintained and water isn’t constantly pumped out, the polder would revert back to a marsh or lake.
Maintaining this extensive system of 30,000 polders and the intricate web of canals can only happen with a huge amount of cooperation. You can’t keep your property dry by yourself. Everyone needs to cooperate. Ever since the Middle Ages, when this was started, different societies living in the same polder were forced to cooperate because without unanimous agreement on shared responsibility for maintenance of the dikes and pumping stations, the polders would have flooded and everyone would have suffered. Crucially, even when different cities in the same polder were at war, they still had to cooperate in this respect.
Though life behind the dikes has undoubtedly influenced Dutch culture, it would be going too far to say that the landscape alone is responsible for making the Dutch the way they are. The other element of influence in the way they approach life, business, politics & economics is Calvinism.
In the second half of the 16th century, king Philip II, who was a staunch Roman Catholic, imposed a powerful central authority and wanted the same procedures to be adhered to throughout his domains. This meant eliminating the existing privileges of the local prominent families and the persecution of Protestants. Philip’s ideas therefore provoked opposition.
William of Orange, the founder of the Dutch royal family, was Philip’s representative in Holland, Zeeland and Utrecht. He disagreed with the king’s decision. By then, there was much sympathy in The Netherlands for the doctrines of John Calvin. This played a central role in a successful uprising against Philip, which ultimately resulted in the creation of the Republic of the United Provinces.
The Republic was a loose federation of autonomous provinces, something like the European Union, where independent states work together closely without giving up their sovereignty. In such a system, no one individual or province could muster enough power to dominate the rest of the Republic. Arrogant behaviour or excessive displays of wealth and power only created enemies.
To get something done in the Republic it was necessary to form coalitions and not to offend one’s opponents unnecessarily. The key conditions for success were: respect for others, a modest lifestyle, a willingness to listen and a capacity for self-restraint. These were typically Calvinist qualities. Calvinism was embraced by a majority of the elite, and was very influential.
Even though Dutch society has become quite secular, it is still greatly influenced by Calvinist values: a strong protestant work ethic; moderation in all aspects of life; decision-making by consensus. Decisions are not taken without giving all those involved a chance to voice their opinion, hence the lengthy meetings. In many houses, the curtains are left open after dark, signifying there is nothing to hide. The Dutch regard secretiveness with suspicion, therefore their directness in communication.
Sources:https://en.wikipedia.org/wiki/Polder_model/http://www.dutchcare.com.au/index.php/en/about-us/polder-model/http://www.economist.com/node/1098153/http://rachelheller.org/the-polder-model-in-action/http://www.timescolonist.com/business/dutch-polder-model-of-sharing-pain-helps-country-agree-on-austerity-in-economic-downturn-1.56156/http://bridge2more.com/doing-business-in-the-netherlands/
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