Work and Social assistance Act

Strategy for the alternative solutions

Students: Qushal Bansraj and Shabir Mahtab Studentsnumbers: 09074708 and 09066705 Course: Policy Making Processes Lecturer: Miss Vegelin Date: 9-7-2010

Index
Introduction 3

Objectives and goals of new policies

New approaches New ideas New actors

4
4 4 6

Target groups
Assistance Allowances WSAA norms Target groups new policy

6
6 6 7

Relevant stakeholders
Ministry of Social affairs and Employment Municipalities Beneficiaries Newly founded agency Working people

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7 7 7 7 7

List of recommendations

Make work financially more attractive 9 Offering child care facilities 9 Focus on control of beneficiaries, sharpen it on municipal level and aggravate measures 10

Ethical Concerns

10

Bibliography

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Introduction
This paper WSAA strategy for the alternative solutions is the second part of our previous paper WSAA alternative solutions for the Netherlands. The previous paper was all about introducing the WSAA and the related problems. We tried to accomplish this by starting with an brief explanation about Problems of the WSAA. In short the problems that we recognized in the WSAA are: Lack of affective regulations and control, High unemployment rates , and the cut in costs in the government costs due to the economic crisis. The second chapter History of the WSAA as the name already implies deals with the history of the WSAA. As it may not be straightforward on the first hand, this chapter served as a basis for both Papers. In short, The welfare state is a concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. An important feature of a welfare state is social insurance (or social security). This feature provided by the government provides the citizens important protection against various economical risks like unemployment, old-age or sickness. This paper recognizes this and with the strategy for the alternative solutions for the WSAA this paper tries to better the social welfare and the related principles of equality, opportunity, equitable distribution of wealth and public responsibility. The third chapter of the previous paper what needs to be solved of the WSAA is going to be further briefly explained in the objectives and goals of new policies in this strategy paper. This brings us to the purpose of this paper which is to outline the strategy we have set up to achieve our goals stated in the previous paper. Having mentioned the purpose of this paper, we are now going to look at the structure of this paper. The first Chapter of this paper as mentioned previously is the objectives and goals of new policies. This chapter is divided in three main sections: new approaches, new actors, and new ideas. The New approaches sections deals with policy models and is divided in two sub sections: the Institutional and the rational model. The new actor section is in short about an agency that will be set up by the Ministries of Internal Affairs and Social Affairs and Employment. This agency will be dealing with child care facilities. Finally, in the new ideas section we will briefly explain the following ideas: Make Work financially more attractive, Rewarding people for working, Offering supplementary loan when working and Offering child care facilities. At the Government level; authorize municipalities to control more often, Focus on control of beneficiaries, sharpen it on municipal level and aggravate measures and Registration of persistent offenders and introduce measures. The second chapter is about the target groups, as mentioned in the previous paper the WSAA affects all groups in the Society, this way we dived this chapter in three sections based on age. The third chapter is about relevant Stakeholders, the following stakeholders are going to be briefly explained: Ministry of Social affairs and Employment, Ministry of Internal affairs, Ministry of Finance, Municipalities, UWV, Tax office, Employers organizations and newly founded agency.

The fourth Chapter is about the list of recommendations this chapter made three recommendations: Make work financially more attractive, Offering child care facilities and Focus on control of beneficiaries, sharpen it on municipal level and aggravate measures. The fifth and last chapter is about the ethical concerns. In short this chapter is about that people should (and do) care about the problems of the WSAA it because it concerns every Dutch citizen. The costs of the WSAA are being covered by tax payers as it is paid by tax money. The more people that are using the WSAA, the more taxes the working people have to pay. Finally, This is not a good way to stimulate the working people and eventually there will be strong polarization between the citizens.

Objectives and goals of new policies

Approaches The approach of this policy is rather difficult. One of the main problems is the vagueness of the delegated power from the national government to the local government (municipalities). An approach of this policy is setting up a new and stable balance between national and local government. This means that there must be a better communication between them and more clear division of tasks and responsibilities set up for the local government. Every municipality now has the freedom to set up an own plan of action against for example fraud within the WSAA. By involving the national government more in decision making concerning these plans of action, altercations regarding for example legal issues due to a lack of communication can be avoided. Another approach is a more economic approach. As mentioned in the introduction and the previous paper, the current economic crisis forces the Dutch government to cut in government expenses. One budget they really want to cut is the one for the WSAA. But as more companies and governments are forced to redundancies. There are less jobs available and more people getting unemployed so the WSAA is a policy that is very much needed at the moment. The proposed strategies below will have a positive effect on the economy as one of the aims is getting more people to work and earn more money. This way purchasing power will rise again and the economy starts running again.

New ideas This section is a summary of all strategies this policy will introduce. The section "list of recommendations" will contain more detailed information (where possible) about the ideas below. Make work more attractive

Ways to motivate people is for instance rewarding them with an additional allowance. Instead of completing the income of people who actually work to minimum wage (see chapter target groups), the government should provide them an additional allowance. The formula for calculating the additional allowance is the following: [2,50 x hours that are worked a week] x 4 = additional allowance.

This way people are willing to work because they earn more and other people who sit at home will see that the working people have more to spend. The governmental costs for the WSAA will descent and this way the government can spend the money on training the lower educated people or create more jobs to stimulate the labor market. People should be motivated to start working again, if not full-time then part-time. This way people start earning more money which they can spend again. This is very important for the national economy because the purchasing power will rise. When people purchase more, national production will rise and for example prizes can go down. This has the effect that people will buy more and so on. Offering child care facilities

Child care facilities are a point of discussion in the Netherlands. Often people complain that the costs are too high and rather choose to stay home and take care of the child. Research shows that the costs of child care for a parent below minimum wage rose between 2008 and 2009 with 15%. In 2010 this amount rose with 4% resulting in an average of 523 a month for day care for one child five days a week. Currently, the government offers people who work and have their children in child care a refund. The government pays the childcare till 6,25 an hour. All costs above 6,25 have to paid by the parents. This is a very important arrangement from the government on which this strategy wants to build. We want to set up an agency which will monitor child care costs and offer child care. This organization will follow the example of the Central Administration Office (CAK) for medical care at home. Government level; authorize municipalities to control more often

Currently, municipalities are regulating the WSAA and the national government is the

legislative organization and is not directly involved in regulating, some terms may differ between municipalities. One can be more strict to the rules than the other. As the government is already on a distance they should give the municipalities more authorization in controlling and retention. This strategy forces the municipalities to control more often. Consequences will be introduced for municipalities when not controlling enough but with this more duties and responsibilities will be given to them.
Focus on control of beneficiaries, sharpen it on municipal level and aggravate measures

This measure is more directed to the municipal - beneficiary relation. The beneficiary has a duty towards the municipal social service. The duty to seek is one of those duties. Currently a beneficiary is forced to apply for a job once every week. This strategy aims at a minimum of three applications per week. Control and retention as stated in the previous idea should be sharpened. But the consequences for fraudsters should be aggravated. There should be a clear registration of persistent offenders at social service Jurisprudence shows that often just the money unlawfully taken from the government has to be paid back but this strategy advocates for possible community service or even temporary imprisonment as measures against fraud.

New actors There will be only one new actor getting involved with the implementation of this strategy plan. As previously mentioned, a new agency will be founded by the Ministry of Social Affairs and Employment which will focus on facilitating child care facilities. This agency will not be a governmental agency nor a privatized organization. The purpose of this agency is to arrange child care facilities for the minimum hour costs. These facilities will be spread throughout the country offering day care for the minimum price. The day care facilities will contain the basic supplies and well trained personnel but are not as expanded as the more privatized and expensive day care facilities. This way the people who cannot afford the more expensive day care can go to these basic facilities.

Target groups
Assistance allowances The target group of the WSAA are citizens aged between 27-65 but there is one group of citizens that does not fall under the WSAA because of their profession. Artists receive a special for of allowance only meant for them named the WWIK. Citizens aged between 18 -27 and 65 or older receive a different kind of allowance. The youth between 18-27 did received the WSAA but Since October 2009, this group receives a special allowance for the youth called the WIJ. Citizens older than 65 are separated in two forms of allowances the IOAW which is for the older unemployed employers and the IOAZ which is for the older formal independents. WSAA norms The WSAA has to arrange allowances for citizens aged between 27-65 that are separated in three groups: married/unmarried/cohabiting people, single parents and singles. The minimum wages change twice a year and on July the first 2010 the minimum wage is going to increase from 1407.60 euro to 1416.00 euro. Because of this the allowances are also going to increase between 2.67 and 5.33 euro a month which gives us the following amounts. Married/un married/cohabiting people Monthly Holiday-allowance Total Single parents Monthly Holiday-allowance Total Singles Monthly Holiday-allowance Total

1239,15 65,22 ________ 1304,37

867,41 45,65 ________ 913,06

619,58 32,61 ________ 652,19 6

Target group new policy The target group that our policy deals with is the same as the target group of the WSAA. Our policy wants to reform the WSAA but were are not going to reform the target groups. First off all, one of our major goals is to make the WSAA more affective and in order to do that we have to deal with that particular group were we think our policy is needed the most. For example, we could choose to reform the IOAW or the IOAZ but are new policy is not needed and it would be less affective. Our policy is meant for the group in the society aged between 27-65 because it deals with the issues that occur in this particular group. If we look at the childcare, the working group, unemployment and fraud we have to conclude that our policy is needed in this group the most. Second, the recommendations we made to change the WSAA like making work financially more attractive, and Offering child care facilities matches the best with the issues of this group. Moreover, we did not change in our policy the previous groups of the WSAA because we belief that the groups as how they are now are fine. The group between 18-27 can be re educated with the WIJ so that they can find a new job and 65 is a good age to stop working and a good line to separate the WSAA with the IOAW and the IOAZ.

Relevant stakeholders
Ministry of Social Affairs and Employment The Ministry of Social Affairs and Employment is the most important stakeholder for the creation and implementation of this policy. The ministry will become more involved in local decision-making and in prosecuting fraudsters. It will also set up the agency which will organize the basic child care facilities. The ministry will monitor the agency, not getting internally involved, and will stay in close contact with the agency to gain information about the situation and changes regarding child care and WSAA beneficiaries. Municipalities The municipalities, and especially the social service department, are very important executive actors. They will get more responsibilities regarding the WSAA and providing it, but they will have to communicate more with the national government, especially with the Ministry of Social Affairs and Employment. They are responsible for controlling and retention of the beneficiaries and they will set up a register which will keep track of persistent offenders and fraudsters. Beneficiaries The beneficiaries are the most direct stakeholders because every strategy and policy in this paper is based on them. Newly founded agency The newly found agency is a secondary stakeholder. The agency will be found with the purpose of facilitating child care. But in time more ministries might delegate a task or power to this agency. Working people The working people are a secondary stakeholder as this policy will reach them indirectly. As the purpose of this policy is getting more people to work, taxes can be reduced again because of lower 7

governmental costs. This way the working people do not have to spend that much money on taxes and have more money to spend on leisure. Purchasing power will rise and along with that supply&demand will rise.

List of recommendations
(Empirical data) and statistics
One of the purposes of our strategy paper is to show that our new policy is better than the policy that exists currently. In order to do so we can use the empirical data and statistics as facts to show what the problems are(what we did in the previous paper) and we can also use it to tell us the failure of the current policy. Finally, the statistics can help clarify and strengthening the goals and objectives of our policy new policy. Unemployment rates

If we look at the statistic on the right we see that there are 379.000 people in Holland unemployed according to the CBS in 2009. Out of this , 281.000 people receive allowance from the WSAA. This High unemployment rates can partly be explained by the effects of the worldwide economic crisis. Though, a part of the people that are unemployed choose to be unemployed because the Social Assistance Act does not motivate them to work. This can be found in the fact that the Social Assistance that people receive is almost just as high or even the same as the minimum wage. So what does this statistic tell us about the current policy?
Figure 1: Number of people receiving allowance from WSAA from 19982009. Source: CBS Totaal = Total people, Mannen = men, Vrouwen = women

The statistic tells us that the current policy contributed to the high unemployment rates because people tend to stay in the WSAA instead of finding an job. Second, the current policy showed that it is vulnerable and not flexible. If the current WSAA was more flexible and creative and innovative they could motivate people to reeducate or stimulate them to perform another profession than their own ones. Fraud

As discussed in the previous paper the local governments are entitled with the task to control the WSAA and the related fraud that occurs with it. We also discussed that the Local governments do not have the resources to perform these tasks . another failure of the current policy not discussed before is 8

their method to report the fraud that occur. Strangely, the fraud statistics of the Local governments does not show how much fraud occurs within each area of the local governments. The fraud statistics are used to explain only the local government activities referring to fraud. So what does this tell us? This tells us that the current policy does not know if their policy is affective or not because they do not have the resources to control the policy.

Elaborate descriptions of ideas

Make work more attractive

In order to make work more attractive the government will offer working people who receive WSAA an additional allowance. Below is are two example on how this would look like. Example 1 current situation: A 42 year old single mother of one child receives WSAA. She has a part-time job at the Albert Hein working 30 hours a week. Her monthly wage is around 720. The minimum wage for a single mother is 913,06. This means the mother will get (913,06 - 720=) 193,06 added to her wage from the WSAA. As can be seen in example 1 the parent works, has to take care of her child and has to pay housing etcetera to suffice. To keep these people motivated to work and not to fall back on the WSAA totally we want to offer them additional allowance. The formula for calculating the additional allowance is the following: [2,50 x hours that are worked a week] x 4 = additional allowance. Example 2 additional allowance: A 42 year old single mother of one child receives WSAA. She has a part-time job at the Albert Hein working 30 hours a week. Her monthly wage is around 720. The minimum wage for a single mother is 913,06. This means the mother will get (913,06 - 720=) 193,06 added to her wage from the WSAA. Besides this, we want to give her 2,50 extra for every hour that she works. This means that at the end of the month, the mother will receive 300 as additional allowance. Offering child care facilities

The Ministry of Social Affairs and Employment will reserve a start up budget of 10 million to set up an agency and several child care facilities across the Netherlands. The Hague, Amsterdam and Rotterdam are the cities with the most beneficiaries so the first facilities will be installed there. By renewing old buildings or installing prefab buildings is the cheapest way for building the facilities. The agency will be situated in The Hague near the Ministry of Social Affairs and Employment. By setting up the child care facilities and agency, job vacancies will become available and the municipalities must inform everyone who receives the WSAA but who has the right job requirements to apply for a job in one of the day care facilities or the agency.

The set up of the agency have the same structure as the Central Administration Office (CAK). This is a "quasi-autonomous non-governmental organization" (Qango) or a "non departmental public body". A Qango is an organization or agency that is financed by a government but that acts independently of it. It also has the function of watchdog, monitoring the public and private sector regarding child care facilities. The ministry will reserve an annual budget for the Qango (the amount will depend on the situation in a year). The expenses of the Qango will mainly be wages of the personnel and the maintenance of the facilities. In time, this Qango can be used by other ministries which want to delegate their work to an independent body.

Focus on control of beneficiaries, sharpen it on municipal level and aggravate measures

Control and retention of the WSAA is a very sensitive subject. As mentioned in the section target groups, the control is not organized well enough. This has multiple reasons.

Policies and responsibilities are not clear towards the local government Not enough man power A lack of clear administration

The communication between national and local government has to be more transparent. The Dutch system includes the provincial departments which are a very good bridge between national and local level. This department should be involved more in communication about plans of action etcetera. Due to the economic crisis municipalities receive less budget for personnel. The lack of a clear administration results in underestimation of the problem regarding fraud in the WSAA. This underestimation causes the municipalities to cut in salaries and personnel (civil servants) which are required for the fight against fraud. As soon as there will be more money available for the municipalities, they have to spend it on the retention department. Them and social service will get the responsibility of setting up an register in which beneficiaries and offenders will be registered. Control at houses will have to occur more frequently so people are forced to cooperate.

Ethical concerns
This is the last part of this paper, in this final chapter we will discuss who should be concerned about the WSAA and what ethical issues our policy is addressing. As mentioned several times during this and the previous paper everyone is eventually going to be affected by the payments for the WSAA. So, there is a reason that everyone should(and do) care about the problems of the WSAA because it concerns every Dutch Citizen. We all have to pay taxes and the taxes in Holland comparing to most of the counties in the world are already very high. The costs of the WSAA are being covered by the tax payers as it is paid by the tax money. This means that the more people that are using WSAA the more taxes the working people have to pay. Higher taxes is not a good evolvement in Holland as it brings allot of problems with it. The problem we see as one to pay be concerned of is that WSAA does not stimulate people enough, which we belief 10

would eventually lead to a strong polarization between the citizens. This polarization between citizens can happen in every level of society and between all groups in the society. The problems of the WSAA as discussed briefly in the previous paper and this problems play a big role in strengthening the polarization. In short the problems of the WSAA that also lead to polarization are: lack of control by the local governments and high unemployment rates. People tend to fraud more if there is the ability to do so. Local governments have difficulties with controlling which strengthening the feeling of people do fraud. On the other hand, people that dont fraud even if there is an ability to do so may feel forgotten by the government and threatened by the growing people that dont pay taxes which leads to polarization. The high unemployment rates can lead to polarization when it can be found in an particular group or groups in society. For example, allot of Dutch people say that foreign people that life in Holland are to ones to be blamed because of the high unemployment rates which also leads to polarization. On top of this, the current crisis which Holland tries to recover of, asks everyone to pay more for social benefits because of the high unemployment rates. The state debts are also rising every year partly due to the employment stimulation plan of the government which also affects the treasury which is reducing. Our new WSAA policy will stimulate people to work, this will result in rising purchase power and an reduction in state expenses. This will first off all lead to that the financial market will eventually become more stable and Second the tax payer will not have to pay this much additional taxes.

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