In their original design, welfare states were set up to protect workers of the industrial age by providing risk-pooling social insurances for risks encountered in the social system of production: unemployment, disability and the need for a pension during old age. European welfare states, after recovering from the Great Depression and World War II, expanded these policies as their economies thrived and employment expanded, allowing a generous welfare state response to social risks. But generous welfare state schemes came under increased pressure during the 1970s, as the oil crises, stagflation and rising unemployment weakened their financial viability. Over time, the generous disability benefits provided by the Dutch welfare state slowly became the target of such welfare state pressures, as overuse and abuse of the scheme led to a welfare state crisis by the early 1990s (Yerkes and van der Veen, 2011). Disability insurance became a means to an end for dealing with the long-term unemployed as well as a means for employers to dispose of obsolete or unwanted older workers while avoiding strict dismissal rules (Van Oorschot, 2000). This led to a disproportionate number of benefit claimants during the early 1990s. The dramatic increase in benefit claimants and subsequent increase in benefit expenditure (as a percentage of GDP; see Figure 3.1) (CBS, 2010) caused a welfare state crisis and led to reform. Despite a subsequent decline in benefit claimants, by the late 1990s this number was on the rise again and by the year 2002, the number of benefit claimants equalled nearly 10% of the Dutch working population.

In essence, the generous benefits scheme provided by disability insurance had become a visible smudge on the successful reputation of the Dutch polder model of the 1990s (Becker, 2001). The continued reform of Dutch disability and sickness policy is not a simple case of welfare state retrenchment, however. Retrenchment, or the rolling back of welfare state policies expanded during the golden era of welfare states, refers mainly to financial reform of long-standing welfare state policies. While there has certainly been a decrease in benefit expenditure in disability and sickness policy, disability reform has not been limited to financial retrenchment in the Netherlands.