Sadet Karabulut, member of the Dutch parliament for the Socialist Party, published a report this week to fight youth unemployment. One of the proposed features of policy interventions is to reintroduce the “VUT” – a measure that stimulates early retirement.
It is a crazy plan. The VUT was initially introduced in the 1970s to indeed fight (youth) unemployment. For every older worker leaving the workforce, a young one was to be hired. For starters, one may seriously doubt the effectiveness of such a plan – do young, inexperienced and older, more experienced workers really have the same jobs?
From the onset it was argued that it would become unaffordable when the population would age, which is what has happened ever since, and which will intensify in upcoming years. When you start handing out benefits, people will get used to them, and start to feel entitled to them. Organised interest groups thus came into being, which successfully fought for retaining and expanding the early retirement programme. When, indeed, the programme became too expensive, it was abolished during the 2000s.
As I argued before, pension systems are already put under increasing pressure because of the increasing ratio of retirees to workers. Karabulut seems to ignore this entirely, perhaps for electoral reasons, since both (unemployed) young people and elderly are highly visible beneficiaries of early retirement plans. The rest, being the general tax-payer, who will have to pay for this measure, is less clearly identified, which is why it seems a win-win situation for the party that can claim the ‘success’ of the implementation of early retirement measures. Except of course if people understand that the SP risks destroying the welfare state altogether by making it financially unsustainable.
Luckily and as may be expected, Minister of Social Affairs and Employment Lodewijk Asscher does not find it an option. What is perhaps more alarming is the rhetoric used by Karabulut. Similar to politicians in the 1970s, she poses that “for every older worker leaving the workforce, a young one has to be hired.” How does one see this happen? She apparently sees the economy as some kind of government-led firm that can be perfectly controlled, and where the government can decide who is hired and who is fired – a traditional socialist delusion (well, perhaps nobody gets fired in Karabulut’s ideas). In the (early) 1970s, many believed that the economy could indeed be controlled to a large extent; those were the heydays of Keynesianism – something completely different from and less radical than socialism, of course. But even this faith was largely destroyed by the stagflation that would occur later on. I suggest Karabulut to take a look at history, and learn from it.