The Liberal Road to High Employment and Low Inequality? Continuity and Change in the Swiss and Dutch Social Models

In this chapter, we outline the combination of supply-side and demand-side factors which have allowed these countries to reconcile high employment with comparatively low inequality, and outline the trade-offs associated with them. We discuss the combination of negotiated policy-making, continuous wage moderation, and flexibility through part-time employment and other entry routes into employment (on the supply side), combined with a number of measures that have supported domestic consumption, such as immigration and tax incentives (on the demand side), with diverging impacts throughout the crisis. We begin with a brief presentation of some basic facts and features of the social models of the two countries and their development during the past two decades. Next, we summarize and explain the key reforms undertaken in the social models, and then outline their impact on labor market outcomes in the lead-up to the crisis. Finally, we assess the performance of the social models during the latest economic crisis and outline their limits.