By Sara Webb and Gilbert Kreijger
AMSTERDAM, April 3 (Reuters) – Child psychologist Denise
Dulcic has suffered first-hand the economic downturn and fiscal
squeeze that is gripping the Netherlands and says she is “just
surviving”.
When the government cut back on subsidies for the disabled
in a package of austerity measures intended to bring a bloated
budget deficit under control, Dulcic’s contract working with
disabled youths at a secondary school was not renewed.
“It is really difficult to make a living,” she said. “I cut
back on food. I’m not going out. Holidays? Forget about it.”
With the economy in recession, unemployment has crept up to
6 percent, the highest since early 2006, while disposable
household income has fallen for the fourth year in a row.
One in eight Dutch households barely manages to make ends
meet, statistics show, compared with six out of 10 in Greece.
Dulcic, 32, says she survives on the proceeds from her small
catering business and by cooking for a neighbourhood
food-sharing programme called “Tweetje Mee” or “Table for Two”.
Set up to help people save time and money – a food portion
costs between 2.50 and 6.00 euros, while a three-course meal is
about 15 euros – Tweetje Mee has signed up more than 1,000
members and has spawned imitators.
“I am a single mother of two, so the idea of starting a
food-sharing programme came from my personal situation,” founder
Manette Zeelenberg, told Reuters.
“It’s just as easy to make six portions of spaghetti when I
cook for my family, so why not sell the other three meals, then
effectively we eat for free?”
Zeelenberg said she learned as a child not to waste food.
Her mother told her how little she ate during World War Two,
when food was so scarce that some people survived by eating
tulip bulbs, potato peelings, and leaves.
The Dutch are legendary at home and around Europe for their
frugal habits, such as taking their own food with them when they
go on holiday to avoid spending money abroad.
The language abounds with expressions about saving money
such as “pile up your nickels and you will build a house”.
So it is no surprise they are meeting the current adversity
with penny-pinching ingenuity.
CORE OR NON-CORE?
The Netherlands has long been considered a core member of
the euro zone and a virtual proxy for Germany because of its
fiscally conservative ways.
Dutch government bonds typically traded in sync with German
Bunds, commanding only a slightly higher yield. The Netherlands,
along with Germany, Finland and Luxembourg, was one of just four
euro zone countries to keep a precious triple-A credit rating
when France and Austria were stripped of theirs this year.
Dutch Finance Minister Jan Kees de Jager is a firm believer
in sticking to the euro zone’s targets, like his predecessors,
and has been an outspoken critic of budget “sinners” such as
Greece and Portugal.
Now the Netherlands finds itself in a similar predicament to
peripheral economies with the same arduous task of pushing
through another round of unpalatable austerity measures. The
fact the Dutch have to eat humble pie has not gone unnoticed, at
home or abroad.
The minority centre-right coalition government is struggling
to win support from its key political ally to lop as much as an
extra 16 billion euros off the annual budget, on top of the 18
billion euros already agreed in annual reductions by 2015.
Up for discussion: an across-the-board pay freeze, raising
Value Added Tax on goods and services, more cuts in welfare
benefits and the phasing out of tax breaks on mortgages.
But clinching a deal with Geert Wilders, leader of the
populist Freedom Party which is not in the government but has a
pact to support it in parliament, will prove difficult.
The Freedom Party is anti-immigrant, anti-Islam and
anti-euro, and appeals to voters tired of the political elite.
The typical supporter “is a cleaner, a construction worker,
a house painter, not very well educated but very hard-working,
self-made, middle class,” said pollster Maurice de Hond. They
tend to be against handouts for foreigners – whether in the form
of benefits for immigrants or aid to developing countries.
Wilders’ view is that benefits funded by Dutch taxpayers
should be enjoyed by the Dutch themselves. He opposes euro zone
bailouts and says Greece should leave the single currency area.
He wants to slash spending on development aid to 600 million
euros from 4.6 billion currently. The Netherlands spent 0.75
percent of GDP on development last year and has cut it to 0.7
percent this year as part of the cabinet’s saving plan.
While Prime Minister Mark Rutte has relied so far on the
opposition Labour Party to secure a parliamentary majority for
bailouts, that support is no longer guaranteed. Labour has a new
leader, Diederik Samsom, who wants the Netherlands to soften its
stance on Europe.
Samson and Labour’s financial spokesman Ronald Plasterk said
last month they could block ratification of an EU fiscal compact
treaty, which sets stricter budget rules, unless the Netherlands
is given more time to lower its deficit.
That public deficit is forecast to hit 4.6 percent of gross
domestic product in 2013, well above the 3 percent agreed with
the European Commission. If the Dutch do not cut spending they
risk breaking EU budget rules and losing their triple-A status.
The level of state debt has risen to 65.2 percent of GDP at
the end of 2011, from 62.9 percent in 2010, Statistics
Netherlands said last month.
In a report last month, Citibank went as far as to say the
Netherlands no longer deserved to be considered a core member of
the euro zone because of its fiscal woes.
GENEROUS SUBSIDIES
Outwardly, the Netherlands still exudes an air of sober
prosperity. But in a country accustomed to generous benefits –
whether for child care, unemployment, social housing, education,
or funding for the arts – austerity is starting to hurt.
“Economic changes impact on people’s lives with a time lag.
Someone who loses their job does not immediately give up sport
or voluntary work, for example, and is also not forced to leave
their home straight away,” the Netherlands Institute for Social
Research said in a report.
“The consequences of the austerity measures taken by the
present Dutch government will only take effect from 2012
onwards. The biggest blows are, in other words, yet to fall.”
Unemployment remains low by European standards, thanks
partly to the large number of Dutch who work part-time.
One area where the downturn is most noticeable is in house
prices, which have fallen about 13 percent from their 2008 peak.
Generous tax breaks on mortgages have distorted the property
market, encouraging home ownership and high levels of household
debt, which Citibank ranks among the highest in Europe given a
gross household debt to GDP ratio of about 133 percent.
That makes it harder for the government to phase out the tax
breaks, which would most likely depress house prices and further
erode consumer confidence.
Such reforms would be highly unpopular with voters. About 55
percent of Dutch households are homeowners, with the right to
deduct mortgage interest costs from their income up to a level
of 50 percent, lowering the net amount they pay for housing.
Wilders has said this is a no-go area, tweeting “Hands off
mortgage interest deductibility!”.
Home owners complain that with so much property on the
market, sales are stagnant.
“My home has been on the market for more than two years now,
and I’ve already dropped the price by 100,000 euros,” said one
seller in Amsterdam’s elegant canal belt, with its gabled houses
and converted warehouses that once stored spices from the Dutch
East Indies. He asked not to be named.
A popular television series called “Stay of Execution” helps
members of the public to clear their debts and sell their homes.
For example, if someone is at risk of having their home
repossessed by the bank, they may get help with redecorating the
property so it fetches a better price on the open market.
LESS DISPOSABLE INCOME
Many Dutch have had to find ways to spend less. More are now
turning to the Food Bank, which hands out grocery parcels to the
poor and needy, including people who are heavily in debt.
“We had about 900 to 1,000 households a year ago in
Amsterdam. Now it is more than 1,300. The growth primarily took
place in the last few months,” Piet van Diepen, spokesman for
Food Bank Amsterdam, told Reuters.
“Some people who had some reserves have now used them. In
addition, a large number of our user group are people with
loans. More than 80 percent have loans,” Van Diepen said.
At the Basis Bar on one of Amsterdam’s canals, customers can
bring their own food and heat it in a microwave oven so they can
enjoy a social evening without paying steep restaurant prices.
On a recent evening, it was bursting with customers. Two
young women stepped up to the counter to order beers, then
handed their ready-to-cook supermarket meals to bar co-owner
Michiel Zwart who popped them in the microwave.
“It’s much more affordable to go out for an evening when we
bring our own food,” said unemployed social worker Janis Breed.
“Going to a restaurant would cost three or four times what we
pay for the food we brought and this is a very nice atmosphere.”
(Reporting by Gilbert Kreijger, Sara Webb, Roberta Cowan and
Svebor Kranjc in Amsterdam, additional reporting by Renee
Maltezou in Athens; Writing by Sara Webb; Editing by Paul
Taylor)
