In typical Dutch bluntness that can wilt tulips, the country's second largest bank recently reported: "While 1980 should have produced the inital fruits of the economic policy pursued in the Netherlands in recent years, it proved to be an almost total disappointment."
Stark declarations such as this, from the annual report of the Algemene Bank Nederland (ABN) have been heard frequently in Holland of late.
After more than three decades of industrial rebuilding, galloping economic growth, and sweeping social advances, time seems to have caught up with the Netherlands.
As a result, the nation has entered a period of reassessment in which it will have to decide how much it can continue to pay for expensive social programs, high wages, and generous unemployment benefits. Government officials, private economists, corporate executives, union leaders, and bankers now seem to agree that the seemingly endless financial stream that flowed from a once-booming economy and large natural gas reserves does indeed have periods of reduced flow.
Even the myraid political parties that ran in last month's election know it is time for a new apppoach.
On May 26 the center-right coalition of Premier Andries Van Agt lost its slender parliamentary majority. But the effect of this -- though likely to result in a more leftist-liberal coalition -- will not be seen for several months. After the last election in 1977, it took five months for the 10 leading political parties to work out a ruling coalition. With all the compromises the Dutch traditionally make when forming a new government, no one is guessing what policies might emerge when a new premier is named.
"Most political parties are aware that after years of increasing wages and wealth and welfare, that period has ended," said Albert J. van Stratten, deputy director of the Dutch central bank and head of its study department. "We have to start to keep wage increases as low as possible.
In the United States, the Reagan administration has been leading Congress through rounds of budget-cutting to reduce government spending and eliminate or lessen programs -- some 50 years old -- it feels the nation can no longer afford. But in this much smaller country, the Dutch government gets to find out even more quickly how fast heavy social spending can affect the overall economy.
Starting after World War II, the Dutch economy produced one of the most impressive rebuilding efforts in Europe by taking advantage of early wage restraint by workers, Marshall Plan funds, a gross national product that grew by 6 to 8 percent a year in the 1950's and 1960s, and finally, the discovery of abundant reserves of natural gas.
As a result, while their leaders talk of hard economic times, the Dutch people are among the most affluent in Europe. Although the upper classes are relatively small, the huge middle class earns a minimum wage of at least $850 to Even if they have only worked a few months, all laid-off Dutch workers receive 90 percent of their last wage levels in unemployment benefits for long periods.
Yet the cold statistics of recent years, while not telling the entire story, show why Dutch leaders are concerned.
* Unemployment, which had stayed around 4 percent for many years and one year ago was under 5 percent, is over 8 percent today, and may reach 10 percent by the end of the year. Nearly 400,000 people in the country of 14 million are officially listed as unemployed, compared with 205,000 in May 1980. Layoffs are heaviest in metal working, textiles, clothing, leather, and the housing industries.
In addition, perhaps another 500,000 meet Holland's liberal definition of "disabled," and receive generous compensation from the government.
* That once-burgeoning gross national product grew less than 1 percent last year, as industry, starved for investment capital, was unable to expand.
* While the government strictly controls housing development to reserve precious farmland, a severe housing shortage worsens. In Amsterdam alone, more than 50,000 people are on waiting lists for housing, with similar situations in other large cities. With tight rent controls, incentives to build new housing are small. Pitched battles between police and squatters flare up occasionally.
Although the overall inflation rate was low in international terms at 6.5 percent, it was 2 percent higher than the previous year.
The Netherlands trade deficit of some $2.1 billion was not out of line compared with other countries, except that without more than $5 billion in revenues from gas exports, this country that has been a leader in international trade since the Middle Ages would have had an even larger deficit.
Much of the blame for these troubles can be attributed to a worldwide recession and rapidly rising oil prices. And because the Netherlands has pegged the price of its gas to the price of oil, as a conservation measure, all it receives is the certainty of supply but not cheap energy. A large share of the responsibility for fiscal woes is also being laid to the growing costs of social welfare programs and labor.
To help pay for these services, the nation's industrial base is required to pay hefty income and social security taxes. As a result, it lacks the money it says it needs to pay for investment in new plant and equipment that would put more people to work and replace older manufacturing firms that are closing.
Business investment in 1981 will decline 7 percent from 1980, according to W.A. Kimmon of the economics policy staff in the Economic Ministry. And 1980 was 4 percent lower than 1979.
"There is a great deal of uncertainty and a wait-and-see attitude on the part of business," he adds.
The amount of money available for business investment has also been cut because the extensive social security system helps keep individual savings rates down. Why save for a rainy day, the thinking seems to be, if the government guarantees everyone an umbrella?
In addition, individual income taxes, social security taxes, and other levies account for more than 60 percent of national income, on top of the 90 percent government share for gas exports.
These and other problems moved suddenly into the spotlight a couple of years ago when the Economics Ministry released a report on international attitudes toward Holland as a place for outside investment.
Because of high wages, high social security contributions, a small domestic market, and the difficulty of laying off workers, many foreign executives felt the Netherlands was not a good place for foreign investment, the report's authors stated. They compared Holland unfavorably with West Germany.
An immediate effect of the report was the creation of an industrial commissioners office, charged with correcting what the Dutch felt was a false impression. It has bureaus in Tokyo and New York.
"Our largest single foreign investor is the United States," said Dr. A. J. M. Weebers, foreign investment commissioner. "The US has over $7 billion invested in the Netherlands." There are approximately 1,000 US firms with factories or offices in the Netherlands, he added.
Like most countries vying for foreign investment, Dr. Weebers noted, the Netherlands offers incentives to foreign companies which locate there. One incentive provides the company with a cash grant to help continue operating if there is no profit, and reduced taxes for profitable, new firms.
One US executive who is bullish on the Netherlands is Daniel J. Piliero, managing director of Chevron Petroleum Nederland, and chairman of the American Chamber of Commerce here. He has lived in Holland for over 11 years.
"The Dutch government has seen extremely knowledgable about what the problems are and have taken steps to correct them," he said. Among the steps, Mr. Piliero listed reduced government spending, efforts to convince unions to exercise restraints in wage demands. But most important, he says, is the reduction in the country's wage costs per unit of production. These costs are expected to go up only about 10 percent this year, compared with nearly 10 percent in Holland's major Common Market competitors.
As to those labor costs, Mr. Piliero agrees they are high, but not entirely undeserved.
"The Dutch worker is flexible, easily trained, speaks many languages, is highly educated, and is generally quite productive." he maintains.