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A comparative historical analysis of the development of the welfare state in the Netherlands and Indonesia 18502009. By: Annet Wapenaar Master thesis Comparative History University of Utrecht - November 2009 0419281 21,582 words Supervised by: Prof. Dr. Lex Heerma van Voss, Prof. Dr. Maarten Prak 2 TABLE OF CONTENTS Introduction ........................................................................................................................................... 4 Chapter one: Education ...................................................................................................................... 12 1.1 Education in the Netherlands from 1850 to 1960. .................................................................. 12 1.2 Education in the Netherlands from 1960 TO present ............................................................ 16 1.3 Education in Indonesia from 1850 to 1960 .............................................................................. 19 1.4 Education in Indonesia from 1960 to present ......................................................................... 21 1.5 Conclusion .................................................................................................................................. 25 1.1 The Netherlands from 1850 to 1960 ......................................................................................... 27 2.2 The Netherlands from 1960 to present .................................................................................... 31 2.3 Indonesia from 1850 to 1960..................................................................................................... 35 2.4 Indonesia from 1960 to present ................................................................................................ 37 2.4 Conclusion .................................................................................................................................. 39 Chapter three: Water Supplies .......................................................................................................... 41 3.1 The Netherlands from 1870 to 1960 ......................................................................................... 41 3.2 The Netherlands from 1960 to present .................................................................................... 46 3.3 Indonesia from 1960 to present ................................................................................................ 48 3.4 Conclusion .................................................................................................................................. 51 Chapter four: Conclusion ................................................................................................................... 54 4.1 The Netherlands from 1850 to 1960 ......................................................................................... 55 4.2 The Netherlands from 1960 to present .................................................................................... 56 4.3 Indonesia from 1850 to 1960.................................................................................................... 57 4.4 Indonesia 1960-present ............................................................................................................. 57 4.5 General analysis......................................................................................................................... 61 Bibliography ........................................................................................................................................ 61 3 INTRODUCTION The welfare state is a concept that was first practiced in the second half of the nineteenth century through arrangements made by Bismarck in Germany. These arrangements spread through the rest of Western Europe and in the second half of the twentieth century the concept was widely known as the welfare state. The welfare state takes primary responsibility for the welfare of its citizens by providing welfare services such as education, social security and water supplies. According to De Swaan ‘The contemporary welfare state has become a vast conglomerate of nationwide, compulsory and collective arrangements to remedy and control the external effects of adversity and deficiency. This collectivizing process occurred in the course of the modern era against the background of state formation and the rise of capitalism in the West.’1 The main impetus of collectivization came from an increasing interdependence between the rich and the poor that resulted in a struggle between those groups. The poor represented both danger and opportunities for society, danger because of the threat of violence and vagrancy for the estates of the elite while on the other hand the poor provided a cheap and vast workforce and an army for contesting elite.2 Cholera is a good example of the increasing interdependence between rich and poor. The outbursts of mass epidemics were soon recognized as the consequence of living conditions among the urban poor. The citizens who were better off could individually decide to move to healthier quarters, which they did in great numbers. As a –largely unintended aggregate result of individual moves, urban space was partitioned into socially more homogenous neighbourhoods, ranging from residential areas to slums. But if the well-to-do wished to prevent epidemics from spreading beyond the poverty areas and paralyzing the city in its entirety, a collective effort at sanitation was still indispensable.3 Against the background of state formation the opportunities the poor offered were eventually also recognized by the state itself and the government realized that in order to guarantee the 1 Abram de Swaan, In care of the state; Health Care, Education and Welfare in Europe and the USA in the modern era (Oxford 1988) 218. 2 Ibidem. 3 Ibidem, 3. 4 reproduction of resources and military strength their citizens should be at least disease-free, reasonably educated and properly fed.4 The collectivism within society increased as the individual user of collective arrangements became more dependent on its benefits. Finally the arrangements were increasingly carried by the state or some public body, thus providing them with the authority necessary to exact compliance and the bureaucratic apparatus needed for their implementation. The Netherlands is a perfect example of a welfare state. Collective arrangements started on a local and regional scale and through the course of the nineteenth and twentieth century the Dutch government slowly started to take responsibility over collectivizing processes such as education, social security and water supplies. The Netherlands is a constitutional parliamentary monarchy. In 1848 Thorbecke installed a new constitution which turned the Netherlands into a constitutional monarchy. From then on the Netherlands gradually became more democratic. In 1917 the parliamentary democracy was official. The Netherlands had witnessed a particularly prosperous period in the seventeenth century and were relatively rich. In the nineteenth century their prosperity mainly came from colonies oversees, of which Indonesia was one. Due to this source of income the Netherlands could afford to industrialize quite late in comparison with other Western European countries. The industrialization caused a period of economic growth and a growth of the working class. At the end of the nineteenth century a pillarization of society occurred that lasted until the 1960s. In the First World War the Netherlands remained neutral. In the 1930s the Dutch suffered from an economic crisis followed by German occupation in the Second World War. After the war Indonesia became independent, however a new period of economic growth began. The Netherlands turned into a modern consumer society and the period after the Second World War is characterized by the welfare state which radically enhanced the standard of living and emphasis was put on increasing democratization. Since 1945 Indonesia has been an independent republic after having been a Dutch colony for 350 years and after being under Japanese occupation for two and a half years during the Second World War. On august 17, 1945 Sukarno and Hatta declared independence. Four years of violent struggle followed before on December 27, 1949 the Dutch accepted independence. In 2005 the Dutch finally accepted that august 17, 1945 is the official date of Indonesian independence. Sukarno became Indonesia’s first president and the Indonesian 4 C.A.Bayly, The birth of the modern world, 1780-1914: global connections and comparisons (Oxford 2004) 271. 5 government became a constitutional democracy, however President Sukarno soon turned into an authoritarian leader. The early years of Sukarno’s term were characterized by economic decay, bureaucratic inefficiency and major political cleavages. The young state struggled and failed to keep an elected government in office during this transition.5 In 1965 a coup was attempted to overthrow the regime of President Sukarno. In 1967 General Suharto became president and started the New Order. He led the country into a period of political stability and substantial economic progress and development, especially after the oil crises of the 1970s. The industrialization and the expansion of the government in the 1970s caused the demand for skilled personnel to rise which led to a growing educational system and urbanization.6 However, the regime of Suharto is widely criticized because of corruption and the oppression of political opponents. In 1998 an economic crisis hit Indonesia. Along with this crisis there was political turmoil; critics of the New Order stood up and accused the regime of corruption, collusion and nepotism. This caused the president to resign in 1998.7 After that a period of ‘reformasi’ commenced in Indonesia and the country became a democracy. Nonetheless, the period before the democratization has left its mark on the political, economic and social development of Indonesia. Collective arrangements have developed in Indonesia however it has not yet become a welfare state. This thesis is a comparison between the welfare states of the Netherlands and Indonesia. As indicated above, the Netherlands and Indonesia have little in common and this thesis tries to find out what the instigators are for the development of a welfare state. The main question this study sets out to answer is: How and why did the Netherlands came to develop a modern welfare state and did Indonesia not succeed in creating a modern welfare state? This thesis is written according to the methodology of comparative history. Since this methodology relies mainly on secondary sources an adequate body of literature is desirable. I chose to examine the Netherlands as an example of a welfare state since I had relatively easy access to the literature, being from the Netherlands myself. The developing country that immediately came to mind is Indonesia for it has been colonized by the Netherlands during 350 years which adds an extra dimension to a comparison between these two countries. The thesis follows both countries from the second half of the nineteenth century up until now. This 5 Iris N. Keasberry, Elder care, Old-Age Security and Social Change in Rural Yogyakarta, Indonesia (PhD thesis University of Wageningen, Wageningen 2002) 18. 6 Ibidem. 7 Ibidem, 19. 6 is a long period of time and therefore the period is divided into two sections: the period from 1850 to1960 and the period after 1960. To make a clear-cut comparison the thesis focuses on three basic elements of the welfare state. These three elements are education, disability insurance and collective water supplies. They are chosen because all three elements are inherent to the welfare state. By looking at the historical development of these elements a broad overview will be given of the welfare state and eventually an attempt will be made to answer the main question. The reasons to instigate collective arrangements will be explored by means of six variables which will be explained later in the introduction. As indicated above, this thesis follows the comparative approach. Its aim is to explain social phenomena, in this case the emergence of a welfare state by analyzing the conditions and causes of variation.8 In other words by using comparative history a comprehensive image will be created in which the factors that influenced the rise of a welfare state will be researched. Comparative history tries to achieve a better understanding of history by combining the advantages of the case-oriented (qualitative) method and the variable-oriented method (quantitative) method. Historical research is characterized by the case-oriented method. This approach focuses on the uniqueness and heterogeneity of an individual case and treats it holistically. Within the case-oriented method a single factor might result in a particular outcome but that outcome can also be achieved by a combination of factors. A common goal in this type of analysis is to interpret a common historical outcome or process across a limited range of cases.9 Unfortunately, the limited amount of cases sometimes prevents the discovery of a trend or pattern. The variable-oriented strategy is looking at relations between variables. Cases are not seen holistically and are divided into variables and distributions. The strategy is used for making general statements about relations between aspects of cases considered collectively as populations of comparable observations.10 The disadvantage of this method is that a calculation of different variables sometimes can deviate from the actual case and misrepresent historical reality. In order to make a qualitative comparison between the cases a Boolean analysis will be made. For that a table will be formulated. In the table, the first two columns on the left show the 8 Charles C. Ragin, The Comparative Method, Moving Beyond Qualitative and Quantitative Strategies, (Berkeley, Los Angeles 1987) 2. 9 Ibidem, xiii. 10 Ibidem. 7 cases that are used in this comparison. The third column shows the periods in which a variable becomes successful in one of the cases. The variables are represented in the columns in the middle. The last column on the right represents the final outcome. Furthermore, there are several 1’s and 0’s in the table. According to the Boolean rules the 1’s stand for a variable to be ‘present’ while the 0’s stand for ‘absent’, this is the case in the table as well. When the variables are being discussed it will be explained if and when the variable is present or not. When a variable becomes present in the table the year it occurs in marks the division between two periods and a 0 or a 1. For instance, a working democracy is the first variable. The Netherlands became a working democracy in 1917. In the table, a 0 is filled in before 1917 and a 1 is put down after 1917. As stated before, the success (present) or failure (absent) of the cases is tested by means of six different variables that can influence the development of a welfare state. The variables are a working democracy, state efficiency, self-rule, a high GDP, industrialization and urbanization. After this table is created, a Boolean truth table will be formulated. Truth tables have as many rows as there are logically possible combinations of values on the causal variables. 11 According to this set of variables there are 2^6 = 64 possible rows. From the truth table containing all possible combinations a new truth table is distilled, containing only the combinations that occur in the first table. From there, Boolean algebra will be applied that will lead towards a conclusion. However, we are not there yet, first the variables will be discussed. A working democracy is important because of its values. The welfare state is a state which takes responsibility for the whole population and within a democracy the people have the power. There are different ways in which the democracy can be of influence. For instance, education can lead to democracy and on the other hand once a democracy is installed every citizen demands, and is entitled to education. No democracy can exist without an education system. However, there can be a successful education system within a non-democratic country, for example, in Russia and Indonesia before 1998. The democracy is considered a working democracy when universal male suffrage is obtained. In the Netherlands this was obtained in 1917 and in Indonesia in 1998. Therefore for the Boolean truth table the working democracy is present in the Netherlands since 1917 and in Indonesia since 1998. State efficiency is another very important variable. State efficiency means the implementation of the rules of the state, the bureaucracy and the degree of efficiency of that bureaucracy. The 11 Ibidem, 87. 8 degree of state efficiency can differ with each case. The focus of the government can in a certain period either be on education or disability or water supplies which means that the variable has more influence on one case than on the other. State efficiency is difficult to measure and therefore it remains to be measured impressionistically in the text. However, in order to apply a Boolean analysis a line has to be drawn somewhere. The main question concerning state efficiency is if the state is capable of implementing its rules on society. In the Netherlands the state is considered capable of that in 1900 and in Indonesia it did not happen yet. Self-rule can oppose or instigate the development of the welfare state. The colonizer can implement a system in the colonized country however colonization can also lead to nothing. The Netherlands had implemented an education system in Indonesia but did not provide any of the other collective services. Since the Netherlands have not been colonized by another country for a period longer than five years during the period discussed, the variable self-rule is only applicable in Indonesia and will therefore only be discussed in that part of the thesis. The measure of self-rule for the Boolean analysis is the question if the state is independent or not. In the Netherlands this is the case throughout the period that is discussed and Indonesia is considered independent since 1945. A high G.D.P. provides the means that are necessary for the implementation of collective services. Through economic growth more money becomes available for the government to spend on collective services, additionally the population becomes richer as well which benefits the standard of living. When the GDP per capita grows above the amount of 2000 dollars per year it is considered successful in the Boolean analysis. The GDP is measured per capita because it gives a more accurate representation of the GDP than a GDP per country does. The GDP per capita in the Netherlands had been above 2000 dollars for a period in the 17th century and it has been above 2000 dollars since 1827 whereas in Indonesia the GDP per capita surpassed the line of 2000 dollars in 1986. This shows the difference in prosperity of the two countries. Concluding, in the truth table the GDP is present in the Netherlands during the whole period and in Indonesia since 1986. Industrialization is a very important cause for collective arrangements. First, it causes economic growth. Secondly, it causes urbanization, and thirdly, it causes the emergence of the working class who are, particularly in the beginning, the issue of the welfare state. Fourth, industrialization lead to a change of lifestyle for the population, making them more dependent of the services the welfare state has brought them. If at least 25% of the labour force is 9 working in industry it is considered a success for the Boolean truth table. In 1900 in the Netherlands, more than 25 percent of the labour force was working in industry. In Indonesia this has not yet occurred. In 2006, according to the World Fact book of the CIA 18, 8 percent of the population was working in industry, 39, 3 percent was working in services and 42, 1 percent was working in agriculture.12 Cities consisted of a large concentration of people and problems that occurred as for instance disability could not be resolved ad hoc by small local institutes as was done before large-scale urbanization. Collective services had to be provided and regulated on a large scale, thus it was necessary for the government to step in. In addition, the high population density made it profitable to establish for example an education system or water supplies. If more than 30% of the population is living in towns of more than 10.000 people the variable urbanization is measured as present in the truth table. In the Netherlands the line of 30 percent urbanization was exceeded between 1600 and 1650, henceforth the variable urbanization is continuously present in the table.13 In Indonesia this line was reached in 1990. In order to decide the outcome of the Boolean analysis there must be established whether the three elements, education, disability insurance and water supplies are successful or not as well. Education is considered successful when universal primary male enrolment is obtained which was in the Netherlands in 1900 and in Indonesia in 1995. Disability insurance is considered successful when the first national social security act is established. In the Netherlands this was in 1901 and in Indonesia this was in 2004. Water supplies are seen as successful when the majority of the population has access to drinkable water. In the Netherlands this is reached in 1900 and in Indonesia in 1998. The water supply system in Indonesia before 1960 will not be discussed because there was no literature available about the water supply system in this period. This is probably due to the fact that Indonesia did not have a water supply system in that period, or that it was underdeveloped. A reason for the lack of water supplies is that the need for such a system was relatively low. Indonesia was a rural society and because most people lived in the countryside where there was a low population density they could use water from wells or streams which were clean enough to drink. However this explanation shows a pretty picture, it does raise the question what it was like in the few cities that were already established and if those wells and streams were also used as a sewer. No literature is found to answer this question; however, 12 13 The World Fact book, https://www.cia.gov/library/publications/the-world-factbook/geos/id.html . Jan de Vries, European urbanization 1500-1800, (London 1984) 39. 10 considering the situation in Indonesia in the second half of the twentieth century it can be concluded that the situation in the last half of the nineteenth century and the first half of the twentieth century was not very different. It was probably even better since the total population was lower and urbanization was less than it was in the second half of the nineteenth century which made it more probable that the need for a water supply system was also lower. The thesis consists of three chapters, each representing a different part of the welfare state. Chapter one is about education, chapter two discusses disability insurance and chapter three will delve into water supplies. Each chapter will be divided in four paragraphs. These four paragraphs are the Netherlands from 1850 to 1960, the Netherlands from 1960 to present, Indonesia from 1850 to 1960 and Indonesia from 1960 to present. In the chapters each of the listed causes will be discussed systematically with a small conclusion at the end of the chapter. Finally, at the end of this thesis the Boolean analysis will be applied and an answer to the main question will be given. 11 CHAPTER ONE: EDUCATION Education is an important factor in the welfare state. An interaction exists between education and important social, political and economic processes. For example, industrialization is one of the most apparent reasons for the expansion of education, however on the other hand education stimulated industrialization as well. Other economic processes that interact with education are an increasing standard of living, the commercialization of agriculture and the rise of the tertiary sector. Moreover, education interacts with political processes such as state formation and nation development as well as religious development and enlightenment. It also facilitated urbanization and revolutionized transport and communication. This chapter is dedicated to exploring to what extent the six variables explained in the introduction (a working democracy, state efficiency, self-rule, a high GDP, industrialization and urbanization) have instigated the development of an education system in Indonesia and the Netherlands. The chapter is built up in four parts, namely the Netherlands from 1870 to 1960, the Netherlands from 1960 to present, Indonesia from 1870 to 1960 and Indonesia from 1960 to present. There are two dimensions of education that must be noted, a qualitative and a quantitative dimension. The qualitative dimension encompasses the nature of education, whether the teachers are qualified, who pays for schooling, the difference between private and public schools, how the quality of the schools is controlled. For the quantity dimension the focus is mainly on enrolment rates, the rates of absence and when universal primary or secondary education was achieved. In this chapter both dimensions will be explored, yet for the Boolean truth table the quantitative analysis will be used because more numbers are available for both the Netherlands and Indonesia in this type of analysis so a more coherent picture can be provided. 1.1 EDUCATION IN THE NETHERLANDS FROM 1850 TO 1960. At the end of the eighteenth century the Dutch state started to play a role in educating Dutch children. Before that time education had mostly been a matter of the church and local government. Although the Netherlands had a relatively high level of education in the 17th and 18th century, there was no national regulated system. In 1784 the ‘Maatschappij tot het Nut 12 van ’t algemeen’ was founded. This enlightened society started to build schools, improve the quality of the teachers and promoted educational reform. In 1794 the French invaded the Dutch Republic and brought to power a pro-French movement aiming at a centralized state. The new government, in combination with the efforts for educational reform from the ‘Maatschappij tot het Nut van’t Algemeen’ was the driving force behind the new national education system. The success of the education movement was according to the Swaan due to ‘a singular combination of a strongly centralized government bureaucracy, capable of enforcing its decisions, and a mass movement providing a program, an evangelical inspiration and a corps of dedicated inspectors, teachers and voluntary board members’.14 Consequently, the regulation of education for the masses became an important topic for the state. In the nineteenth century, enlightenment was the philosophy of policymakers and they strove to increase social equality. Additionally, policy makers were seeking for ways to raise the level of knowledge and civilization of the masses. There were two main reasons for the government to educate the masses. Firstly, the government was afraid of moral deterioration of Dutch society and education was thought to provide a way out of poverty and crime. The elite benefited from the consequences of this regulation since it lowered the threats to their own property. Secondly, a higher educated workforce could stimulate economic growth, trade and industry. Contrary to the government, the local elites and the clergy were opposed to a national education system because they resented central interference in local privileges. 15 In the nineteenth century the democracy and the national educational system developed simultaneously. In 1848 a new constitution was introduced and the Netherlands became a constitutional monarchy. The right to vote was obtained once a male citizen paid a certain amount of taxes. In 1848 there were 80.000 citizens entitled to vote. Once more people received education, more people had the chance to become economically independent and thus be able to vote. More importantly, with the rise of the democracy the demand for education grew and vice versa. When a working democracy is established in a country, citizens demand education. The literacy rate of the population grew in the nineteenth century. At the beginning of the century 75 percent of the male population and 60 percent of the female population were able to write their own names. In 1890 this number had increased up to 95 percent of the male population and 90 percent of the female population.16 In 1855 23 14 De Swaan, In Care of the State, 100. Ibidem, 99. 16 H.Q. Roling, ‘Onderwijs in Nederland’, Geschiedenis van opvoeding en onderwijs (1982) 67. 15 13 percent of the young men who went into military service were illiterate, in 1875 this number had decreased to 12.3 percent and in 1900 there were only 2.3 percent illiterate citizens.17 The enrolment rates had also risen and when in 1900 compulsory education for children between 6 and 12 years was introduced, 90 percent of those children already attended school. The number of the population that was entitled to vote had also risen from 80.000 in 1848 to 300.000 in 1894 and 600.000 in 1897.18 However, when looking at these numbers it has to be considered that the total population also grew from three million in 1850 to five million in 1900. The democratization was also visible in the school struggle. The school struggle existed of two parts. The first part of the school struggle revolved around a conflict between the Protestants and the Catholics. Until the constitution of 1848 was adopted only the Protestant state could found schools. After 1848 the conflict was resolved by law. Freedom of education was recognized. The freedom of education led to the founding of private schools for every religion. However, private schools received less grants from the government than public schools and this was the focus of the second part of the school struggle. After 1917 the subsidies that were granted to private and public schools were equalized. Nevertheless Dutch society was still divided along social class lines and so was its education. In the countryside there were village schools where the social classes were taught separately, but in the same building. In the cities, however, separate schools were available in four different social classes. As the schools of the lowest class were free, school money became a parameter of social distinction. In the 1920’s the division of schools per social class was abolished. As indicated by De Swaan the success of the Dutch education system was for a large part due to state efficiency. Government officials carried out their tasks with energy and with a sense of duty.19 Yet, the struggle between the monistic state and the familiarity of the community continued. The education laws of 1801, 1803 and 1806 were a compromise on the topics of religious education and regional autonomy, leaving much to be settled by the authorities of the departments and by local agencies. Consequently, the various denominations in the Netherlands started to form tightly controlled networks which impacted every aspect of social 17 N.L. Dodde, Een speurtocht naar samenhang:het rijksschooltoezicht van 1801 tot 2001 (Den Haag 2001) 285. 18 Remieg Aerts, Land van kleine gebaren: Een politieke geschiedenis van Nederland 1780-1990 (Nijmegen 2001) 153. 19 De Swaan, In Care of the State, 100. 14 life. It was the start of pillarization. The emphasis that lay on the separation between the various denominations contributed to the efficiency of the system because it was important for the denominations to gather as much followers as possible. The numbers of school inspection officials also grew during the nineteenth century and the beginning of the twentieth century. In 1860 there were 103 school inspection officials whereas in 1900 there were 133 and in 1920 there were 165 school inspection officials. Logically, there was money needed for the development of the education system. There existed an interaction between the GDP and education. Education stimulated economic growth and increased trade and industry which resulted in a higher GDP. On the other hand, a rise of the GDP caused the government to invest more in education and also encouraged the parents to invest more in the education of their children. As a result of this interaction it became easier for the next generation to improve their social-economic position. This created an upwards spiral, and as education spread, more people contributed to a higher GDP, thus more people became entitled to vote, which benefited the democracy and that consequently benefited education. Another variable contributing to the development of the education system was the industrial revolution. As explained in the introduction of this chapter, industrialization was very important to the Dutch education system. The Industrial Revolution in the Netherlands commenced around 1870. In the beginning industrialization took place mainly in the west of the Netherlands. More modern, new companies were set up and the working class emerged. In 1890 the industrialization had broken through in the whole of the Netherlands. This relatively late industrialization did not mean that the Netherlands were poor, they were already very wealthy before industrialization. As industrialization proceeded, more money was invested in the education of local workers so they could be employed to operate more advanced machinery. The workers had to have fundamental knowledge in reading and writing to be able to read instruction notes and warning signs. In addition, as secondary education improved, more advanced machinery could be developed. The reciprocity of industrialization and education becomes apparent here. On the one hand industrialization stimulated education since workers with a primary education made it possible to use more complicated machinery. On the other hand, education influenced industrialization since the development of advanced machines became possible through higher education. As more workers needed to be literate industrialization contributed to a growth of enrolment rates. 15 Urbanization also influenced education. Cities served as a centre of knowledge and ideas which could easily be exchanged and discussed. Furthermore, the distance between school and home was smaller in cities, which benefited attendance, especially in winter. By 1870 20 percent of the children only went to school in the winter and in 1880 this number had declined to 14 percent and in 1890 it was only 9 percent of the children.20 The Netherlands were already relatively urbanized but around 1870 the population grew, mainly because of a decrease in the number of deaths. In 1850 the population consisted of 3 million people and in 1900 there were more than 5 million people. This demographic growth primarily had consequences for the cities for the employment rate was the highest there. Around 1870 cities like Amsterdam, The Hague and Rotterdam experienced a sharp rise in population and the ‘Randstad’ started to form.21 In 1863 the ‘Hogere Burger School’ was founded. This new school laid the foundation for secondary education although it was still only available to the higher classes. In 1900 only 7.9 percent of the children between 12 and 18 years received any education after primary school. It was not until the Second World War that the government started to focus specifically on secondary education for the masses. 1.2 EDUCATION IN THE NETHERLANDS FROM 1960 TO PRESENT In the 1960’s the Netherlands had completely transformed into an industrial country and education had made itself indispensable. The rise of the tertiary sector was followed by a growing need of higher educated employees. After the Second World War the emphasis mainly lay on the growth of secondary education. The costs of education had increased a great deal because all children between 6 and 18 were going to school. The increase in school attendance placed more much stress on the state treasury. In 1950 45.2 percent of the children between 12 and 18 years old, received secondary education whereas in 1900 only 7.9 percent attended secondary schools. 22 In addition, the divisions per social class had not disappeared completely because every kind of school had its own curriculum. This meant that the children went to a certain school based 20 Hans Knippenberg, Deelname aan het lager onderwijs in Nederland gedurende de negentiende eeuw (Amsterdam 1986) 29. 21 Aerts, Land van kleine gebaren, 127. 22 N.L.Dodde, J.M.G. Leune, Het Nederlandse schoolsysteem, (Groningen 1997) 97-98. 16 on their social background. A different and more extensive sort of education was required. In 1963 a new law on secondary education was passed called, the ‘Mammoetwet’, that went into use in 1968. The law was an alteration of the existing educational system and therefore it took a long time before the revisions could be taken. The existing education system was replaced by a new schooling system that aimed to be clearly set out and accessible to all social classes, both on a social and a financial level.23 The new Dutch education system consisted of primary education for children from 4 to 12 years, followed by secondary basic education for children aged 12 to 15 and then general secondary education and vocational education for students from 15 to 18.24 In 1969 the ‘Leerplichtwet’ was extended. This law stated that education is compulsory for every child between the age of 6 until the age of 15. After the Second World War the Dutch government strongly believed that society could be moulded according to their wishes. There was a new view on democracy which included guaranteeing a certain standard of living for the citizens of the Netherlands.25 The revision of the education system was a manifestation of the new view. Primary and secondary education was now democratized to be financially and socially accessible to people from all different backgrounds. However, the increase in enrolment rates in secondary education created the need for a turn in the way the department of education was organized. Table 1.1 shows the number of state officials working in the department of education from 1920 to 1990. Table 1.1:Aantal ambtenaren werkzaam bij het Ministerie van Onderwijs van 1920-1990. 1920 99 1945 - 1970 1611 1925 135 1950 543 1975 2062 1930 156 1955 727 1980 2707 1935 176 1960 937 1985 2947 1940 180 1965 1239 1990 2621 Source: N.L. Dodde, J.M.G. Leune, Het Nederlandse school systeem (Groningen 1995) table 6.4, 165. 23 J.J.M. Reulen, P.H.W. Rosmalen, Het voortgezet onderwijs in Nederland, ontwikkelingen, structuur en regelingen, (Tilburg 2000) 2.7. 24 Dodde, Leune, Het Nederlandse schoolsysteem, 97-98. 25 Aerts, Land van kleine gebaren, 268. 17 Nonetheless, next to the growth, the organizational structure had to be considerably adapted to the new education system. The introduction and development of the ‘Mammoetwet’ from 1955 to 1968 was the main cause of an alteration in the department of education. After several reorganizations since 1955 the department of education is well-organized with two ‘directoraat-generaals’, one for higher education and one for primary and secondary education.26 The expansion and reorganization of the department of education benefited state efficiency on the issue of education. Between 1950 and 1970 the Netherlands experienced strong economic growth. The expenses of the education system rose fast in absolute terms but in percentages of the GDP the growth was smaller. In percentages of the GDP the government spent 1,5 percent on education in 1900, 2 percent in 1910, 4,1 percent in 1930, 3,3 percent in 1950, 5,2 percent in 1960, 7,7 percent in 1970, 8,5 percent in 1980 and 6,8 percent in 1990.27 The reason that the percentage of 1990 was lower was because of an absolute increase of the GDP. The economic growth was not the only reason for the rise in expenses on education, as indicated above, the rise in enrolment rates also had put financial pressure on the state treasury. Between 1948 and 1962 the total production was doubled. Between 1963 and 1973 there was an decrease of agriculture and an increase of jobs in the tertiary sector.28 In the 1960’s an increase in wages caused the Dutch society to change into a modern consumption society. In the first place, this meant that the industry made higher demands to the level of schooling. Between 1950 and 1968 the number of people between 3 and 25 years old that went to school grew from 54 percent to 68 percent.29 It also meant that the working population were working less in industry and agriculture but found their jobs in the services sector. The Netherlands has become a highly urbanized country and with 16 million inhabitants on an area of 16,033 square miles its population density is high. Primary and secondary schools has spread throughout the country and the education system has national coverage. Only universities are quite scarce, they exist only in certain cities. Although there is an important relationship between urbanization and education it is not of major importance in this part of the thesis. 26 Dodde, Leune, Het Nederlandse schoolsysteem, 164-167. Bert Erwich, 95 jaar statistiek in tijdreeksen, (Den Haag 1994) 254. 28 Ibidem, 43. 29 Aerts,Land van kleine gebaren, 294. 27 18 1.3 EDUCATION IN INDONESIA FROM 1850 TO 1960 At first colonized Indonesia was primarily exploited by the Dutch for economic purposes. The Dutch Indies were very poor during the colonization period, mainly because of a growing population that did not have enough resources due to Dutch exploitation. However, near the end of the nineteenth century after the rise of mass education in the Netherlands and under the influence of the enlightenment, a new idea came into fashion in the Netherlands. The socalled ethical obligation, a debt of honour, implied that the Dutch should not just exploit their colony but look after the inhabitants and raise them, like a father raises his child. This notion was made tangible in the ‘Ethical Policy’. In 1902 a commission had investigated the situation in the Dutch Indies and they advised the government to improve ‘irrigation, emigration and education’ besides improving agriculture and stimulating industry to encourage economic growth. Thus, at the beginning of the twentieth century the Dutch implemented an education system in their colony out of a moralistic feeling of guilt resulting from the exploitation and out of selfinterest (for economic growth). Until the first half of the nineteenth century the education system in Indonesia had been almost non-existent, most schools only provided education for the European children living in Indonesia. There was a weak existing indigenous education system which consisted largely of schools for Muslims who learned to read and write based on the Koran.30 In 1892 the first primary class schools for the local elite and secondary class schools for the other local children were set up. These second class schools were not very popular; in 1904 the gross enrolment rate of local children attending primary education was 1.1 percent and in 1914 this had only risen to 2.1 percent.31 One of the major problems was the financing of the schools. As illustrated above, Indonesia was very poor and the Dutch had a limited amount of money that they wanted to spend on the education system. Around 1900 a solution was found when the concept of desa schools was introduced. In these schools, also known as village schools, primary education in writing, reading, arithmetic and simple education in crafts was given in the local language. The quality of the desa schools was low and the largest share of the expenses was paid by the local population. Nevertheless, in 1908 the desa schools started to spread out across Java and later to the rest of the country. In 1940 40 percent of the local children attended desa schools. Although these enrolment rates were 30 Bas van Leeuwen, Human Capital and Economic Growth in India, Indonesia and Japan: A quantitative analysis, 1890-2000, (2007) 82. 31 Ibidem, 84. 19 considered moderately successful as opposed to second class schools, they were still low. For this reason the number of indigenous people that were able to follow secondary education was low as well. Furthermore, the language in which the lessons were given on secondary schools was Dutch, while a lot of local children did not speak that language.32 Indonesia did not have a working democracy under Dutch rule. The Dutch controlled education; the Indonesian state had no say in it. Because there was no democracy, the Indonesian state could not formulate a demand for education. Nevertheless, the rise of ethical policy can be traced back to the ideas that emerged during the rise of a working democracy in the Netherlands and therefore a working democracy did have some influence on the development of the Indonesian education system albeit not Indonesian working democracy. In the Netherlands itself the Dutch state was very efficient in operating its education system. In Indonesia this was not the case. The education system as well as the accompanying bureaucracy was implemented upon them, enforced by the Dutch. For this reason the local population lacked the means and the enthusiasm of the Dutch officials and education inspectors had by executing the education system in their own country. Obviously there was no self-rule in Indonesia during the period of colonialism. There is a clear difference between the Indonesian education system during colonization and the period after independence. However, before the Dutch invaded Indonesia there was a very weak indigenous education system and the Dutch have introduced education on a large scale. Even so, the Dutch system was of poor quality and in a foreign language to the indigenous people. When looking at the development of the education system in the early stages, one can see that having a high G.D.P. contributes greatly to the development of an educational system. Because Indonesia was exploited by the Dutch in the nineteenth century it was very poor in contrast with the situation in the Netherlands at the time. Graph 1 shows this contrast in GDP. For instance, in 1930 the GDP in Indonesia was 1.141 dollars while the Netherlands had already achieved this GDP in the seventeenth century.33 32 33 Ibidem, 86. Maddison, Statistics on World Population, http://www.ggdc.net/maddison. 20 Graph 1.1: Per Capita GDP Growth in the Netherlands and Indonesia, 1850-1950. Source: A. Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1-2006 AD.” (2009), http://www.ggdc.net/maddison. As mentioned earlier, one of the biggest problems with the education system was financing it. The limited amount that the Dutch put into the Indonesian education system enabled the low quality desa schools to develop. Industrialization did not take place until the 1970s and therefore that did not have a direct effect on the development of education in this case. Indonesia was still a rural country relying mainly on agriculture; therefore there were no factory workers who had to be able to read warning signs and machine manuals in factories as was the case in the Netherlands during industrialization. A conclusion can be drawn that the need for an elaborate education system was less pressing as it was in the Netherlands. The schools that were set up in Indonesia were mainly village schools. Because secondary schools were mainly for the European population these schools were not widely spread out over the villages and mainly situated in the towns. 1.4 EDUCATION IN INDONESIA FROM 1960 TO PRESENT Since the 1940s primary education enrolment rates started to improve rapidly. The main reason for this was the abolishment of European primary education by the Japanese who replaced it, with a uniform six year primary education during Second World War. After the war this uniform primary school system was kept in use and supplemented by a uniform 21 secondary school system after independence in 1948. As stated above, during the colonization it was difficult for locals to attend secondary schools because lessons were taught in Dutch and only a few people had completed their primary education in the first place, so not many people were eligible for secondary education. After independence the demand for secondary education started to rise. The closing of Dutch schools had an egalitarian effect on the attendance of secondary schools. A uniform three years lower secondary school and a three years higher secondary school was established in Bahasa Indonesia, the language that the majority of the Indonesian population could understand. No distinction between the different ethnicities was made anymore.34 Indonesia wanted to put in place a completely new education system based on the needs of the Indonesian people. In the late 1960s 50 percent of the children from age 7 to 12 were enrolled in primary schools, and enrolment rates in secondary school were even lower. Around 1995 universal enrolment rates at primary level were attained. In the early 1970s until the 1980s there was a 55 percent enrolment rate at junior secondary schools. The goal of the Indonesian government in 2009 is a 100 percent enrolment rate at primary level and 96 percent at secondary level. 35 There was a small decrease in the 1960s, but in the 1970s both primary and secondary enrolment rates started to increase again. However, the government has favoured access over quality, which is still low. In Indonesia serious difficulties exist in the areas of teacher attendance, teacher salaries and teacher certification. Other problems are the deterioration of classrooms and the availability of textbooks and other school equipment throughout the archipelago.36 Meanwhile there was still no working democracy in Indonesia until 1998, after the rule of General Suharto. Consequently in this case the democracy cannot have contributed a lot to the education system. In a country an education system can exist with no working democracy but it is impossible to have a working democracy without an education system. The increase in enrolment rates at the end of the 1960’s shows signs of an improvement in state efficiency. With the reorganization of the education system, the system had became more accessible to the population; this, in combination with a rise in GDP, can explain the 34 Van Leeuwen, Human Capital and Economic Growth, 85. Anne Booth, ‘Education and economic development in Southeast Asia’, ASEAN Economic Bulletin 16 (1999) 297-298. 36 F. Javier Arze del Granado, ‘Investing in Indonesia’s Education: Allocation, Equity and efficiency of public expenditures’, World Bank Policy research working paper, (2007) 3-4. 35 22 rise in enrolment rates. Yet, the low quality of the schools indicates that the government still lacked effective planning and suffered from state inefficiency. As mentioned in the previous paragraph the education system changed after independence. In the period before 1960 the colonizers instigated the development of an education system and the indigenous system that existed before colonization was very weak. After colonization the Indonesian government took over and wanted to implement a new education system. The improvement of enrolment rates shows that the Indonesian government under self-rule could implement their own education system. Another important factor were the oil crises of 1970. Prior to the oil crises there had not been much financial and political room to fundamentally change the educational system. However, with the profits that Indonesia gained from their oil reserves, the country could be developed on a social, political and economic level. After 1970 there was an increase in government spending on education which can be explained by industrialization. Because of this rise, came a higher need for factory workers who were able to read and write warning signs and instruction manuals. This provides a motive for the rise in education expenditures of the government. Industrialization caused a growth in GDP, which enabled the government to spend more money on education. Enrolment rates climbed even more since the 1970s. At that time 50% of the children between 7 an 12 years were enrolled in primary schools. In 1995 universal enrolment at primary level was obtained. Graph 2 shows primary and secondary enrolment rates from 1960 until 2000. Graph 1.2: Gross enrolment ratio per level of education in India, Indonesia, and Japan, 1880-2000. Source: Bas van Leeuwen, Gross enrolment ratio per level of education in India, Indonesia, and Japan, 1880-2000, (2007), http://basvanleeuwen.net/Data.htm. 23 It is clear that industrialization played a big part in the education process in Indonesia since enrolment rates accelerated after the 1970s, when Indonesia started to industrialize. The rise of industrialization enabled the government to spend more money on education which had also a positive effect on the economic development of Indonesia. The rise of industrialization and the rise of enrolment rates can be seen in graph 3. Graph 1.3: Industry, value added in percentage of GDP and primary completion rates, in percentage of relevant age group in Indonesia 1950-2000. Source: World bank Quick Query, http://ddp-ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&queryId=135. In Indonesia urbanization is an important factor for education. Indonesia is a widespread country and as stated above before mostly rural. In large cities like Jakarta and Yogyakarta enrolment rates are over 90 percent while in provinces with little urbanization the enrolment rates fall under 80 percent. As mentioned earlier cities are centres of knowledge and the distance between school and home is smaller in cities which benefits attendance.37 However, urbanization is growing in Indonesia, showing in table 2. 37 Ibidem, 15. 24 Table 1.2: Urban population in percentage of total population in Indonesia, 1950-2015. Year Percentage urban 1950 12.4 1955 13.5 1960 14.6 1965 15.8 1970 17.1 1975 19.3 1980 22.1 1985 26.1 1990 30.6 1995 35.6 2000 42.0 2005 48.1 2010 53.7 2015 58.5 Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2007 Revision, http://esa.un.org/unup. 1.5 CONCLUSION Firstly it may be noted that out of the five different variables not all variables had the same amount of influence on the education system, nor was their influence present during the whole period in both countries. Yet, in every case the variables all played a role in the developments which occurred. The influence of all variables on the Netherlands and Indonesia will now be discussed in order. In the Netherlands the rise of the democracy and the rise of the education system happened simultaneously. The democracy was very important, it worked as a moral driving force behind the development of the education system. This, however, does not mean that without such a democracy an education system is not possible. Indonesia only had a working democracy since 1998 but the education system started to take shape as early as the 1960s and 1970s. This shows that a working democracy is thus not the only reason for a working educational system. It has become clear that the presence of a strongly centralized government bureaucracy is quite important in the execution of a collective education system. In the Netherlands the education system was realized because of the centralized state and the effort of the government officials. Indonesia lacked the efficient execution that was so 25 apparent in the Dutch bureaucracy and these severely undermined attempts to enhance the quality of the Indonesian education system. In colonization there is a paternalistic element or a desire to control the colony that instigated the installation of an education system, which became visible in the case of Indonesia. The Dutch had implemented the idea of education in Indonesia and when it was liberated from its ruler, Indonesia started to concentrate on creating their own education system. As the Indonesian elite learned about Western values such as the right to self determination and democracy, the opposition towards their colonizer rose before independence. Having a high G.D.P. is important since it provides the means for maintaining an educational system. In both countries there is a positive relation between a rising G.D.P. and the development of the education system. However, education is a necessary element of the welfare state and once a country is on a certain level of welfare, developing an education system becomes a priority for governments. This was the case in both the Netherlands and Indonesia. In Indonesia in the 1960s and 1970s enrolment rates started to increase. A reason for this increase was the oil crises in 1970. From then on the Indonesian economy started to grow and the government was able to invest in education. Industrialization has shown to be a stimulant for the development of education as well as a result of education. Industrialization and education influence each other. With the rise of industrialization the need for education rose. Secondly, with the arrival of industrialization the financial means for maintaining an education system also improved. Indonesia was a largely rural country and village schools were created for primary education. Contrary to the Netherlands, the relation between urbanization and education is rather important in Indonesia. First of all, the rise of urbanization and education developed simultaneously. More importantly, higher enrolment rates were achieved in cities than in rural provinces. In the Netherlands and Indonesia can be concluded that cities made education more accessible, because the distance between school and home was smaller, and there was a high concentration of people in cities, and because cities were centres of knowledge and ideas which could be spread out easily. 26 CHAPTER TWO: DISABILITY INSURANCE Just like education, disability insurance has become a central element of the modern welfare state. Disability was one of the constant risks that threatened the life of workers. Disability due to an accident on the work floor would cause problems between the employer and the employee. In case of an accident the question of who was to blame immediately arose since the guilty party had to pay for the medical expenses and loss of income. Employers sided with employees to seek legal reform to overcome this problem. Compulsory employment insurance was a solution because it provided a fund that could cover the medical costs. The implementation of national disability insurance took a lot of effort. In the Netherlands the first disability act was established thirty years after the start of industrialization whereas in Indonesia the first social security act for all inhabitants was established in 2004, thirty-five years after the start of Indonesian industrialization. This chapter seeks to answer the question to what extent a working democracy, state efficiency, self-rule, a high GDP, industrialization and urbanization have influenced the development of disability insurance in the Netherlands and Indonesia. As explained in the introduction of this thesis, the variable self-rule will be treated only in the case of Indonesia because it is not applicable in the case of the Netherlands. The chapter will also focus on the history of disability insurance programs in both countries, as well as the pros and cons of the specific systems. It is divided in four parts, and just as in the previous chapter each part is one of the cases presented in the Boolean scheme. 1.1 THE NETHERLANDS FROM 1850 TO 1960 The idea of the modern social security system originated during the social and industrial revolution in the 18th and 19th century in the Netherlands. Before the mass rise of social security there were all kinds of different sickness funds which originated from guilds. Within the guilds there was money set aside in case a member became sick or disabled. As opposed to these earlier arrangements the modern security system was nation-wide, collective and compulsory.38 38 De Swaan, In care of the state, 152. 27 The need for a modern security system soon became apparent in the changing working environment and the emergence of the working class. Due to industrialization the number of factory workers increased and it had become more difficult for guilds to provide funds for every worker. Workers in factories had to work long, exhausting days under terrible circumstances for little money. In addition the work in factories was dangerous and accidents were likely to occur. When a worker had lost his job due to disablement, he also lost his income. Without insurance and no income to pay for medical expenses, food, housing and clothing for the worker and his family, this could lead to painful situations, and sometimes death. Disability insurance provided a solution. It would cover the costs of the accident and associated legal problems, such as the question of who was the guilty party and who had to pay for medical expenses, were out the way. This was beneficial for both employer and worker. For the employer it was stimulating to invest in industrial safety when he was held accountable and would have to pay for medical costs. The worker had the security that he would receive medical treatment financed by a collective medical fund, and that he would receive a compensation for his loss of income. It became important for the government to step in because such a vast part of the population was working in factories. The government wanted to establish an act in which disability insurance was legalized. However, the execution of the disability act did not run smoothly. The first steps of social security in the Netherlands were slow and niggardly.39 The first social acts were made mainly in favour of the employers. The worker had yet to gain political power. In the beginning there was a relatively low level of party organization between and among workers and employers.40 Disability applied mainly to the third class, the workers, who carried the greatest risk of becoming disabled. Party organization proved to be a continuation of the school struggle and parties and unions also developed among denominational lines. As indicated in chapter 1 Thorbecke installed a renewed constitution which changed the Netherlands into a constitutional monarchy in 1848. From then it was a gradual process towards a democracy. In 1885, the question of social security was asked in parliament for the 39 40 Ibidem, 210. Ibidem. 28 first time but only from 1900 onwards it became imaginable that the government would guarantee any kind of social security.41 Democracy influenced the development of the Dutch social security system in two ways. First, in the 1870’s the working class emerged, because of democracy they could organize themselves in trade unions and political parties and gained a stronger voice in society. Second, the government had put the focus on the development of a healthy workers’ class, this resulted from both moral and economic reasons. Morally, the government started to feel responsible to provide its citizens with a certain standard of living and economically a healthy worker performed better in his job. A reliable bureaucracy was the foundation for the execution and control of legal measures concerning disability insurance. Around 1850 there were no more than 100 civil servants in service and in 1900 this number had only doubled.42 Specialization and professionalization emerged slowly. In 1900, thirty years after the arrival of industrialization, the first social security law was established, the Disability Act. Before social security legislation could be executed in any way there had to be a change in administrative and official thinking. In 1901 the ‘Rijksverzekeringsbank’ was set up. It was responsible for the accurate implementation of the disability act and to control the execution of the act. When the economy started to grow because of industrialization this was beneficial for the development of disability insurance, primarily because more money became available. For example, the disability act of 1901 was initially meant for heavy industries. Agriculture, the fishing industry and the shipping industry were not included. Since 1919 the GDP grew and in 1921 the act was modified and made available for workers in all industries, although workers who earned more than 1,200 guilders per month were excluded from the law. Graph 2.1 shows this growth in per capita GDP. 41 G.M.J. Veldkamp, Inleiding tot de sociale zekerheid en de toepassing ervan in Nederland en Belgie,(Deventer 1978-1980) 62-63. Aerts, Land van kleine gebaren, 173. 42 Aerts, Land van kleine gebaren, 155. 29 Graph 2.1: Per Capita GDP growth in the Netherlands, 1895-1925. Source: Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1-2006 AD.” (2009), http://www.ggdc.net/maddison. Disability insurance was also good for the economy; it can be seen as an investment in the worker and thus helped creating a healthy working class which was beneficial for the economy. The sort of labour factory workers performed became more complex and therefore the value of a worker rose. Education also influenced this rise in value. Because educated workers were more valuable, and education became more and more accessible, the level of workers in general went up and it became more worthwhile to invest for employers in disability insurance. Industrialization was very important in the development of disability insurance in the Netherlands. Around 1870 the arrival of the industrial revolution changed the working environment and increased the number of accidents on the work floor. The need for disability insurance became clear through the rise of the masses and the terrible circumstances workers had to work every day in the factories. On the other hand there was the rise of the working class and labour unions that gained a louder voice and demanded disability insurance. Furthermore, industrialization instigated the development of the social security system, it caused economic growth, which generated financial support for the development of a social security system and the more complex and expensive machines which in turn raised the value of the worker. Urbanization also had its influence on disability insurance. During the nineteenth century the Netherlands were already relatively urbanized. Industrialization started in the most urbanized part of the Netherlands, the west. Because of industrialization employment rates in cities rose 30 which caused migration towards the cities. This migration, combined with a demographic growth in the 1870’s caused further urbanization of the Netherlands. The circumstances in which the working class were living in urban areas were not as bad as in some other European countries because the Netherlands had a relatively high national income before industrialization. The fact that there was a relatively high national income and the high population density in the Netherlands, especially in the cities made it possible, and profitable to develop the foundation for a very extensive social security system. This program shall be further discussed in the next paragraph 2.2 THE NETHERLANDS FROM 1960 TO PRESENT After the Second World War the Dutch government developed a new view on the democracy in which the state guaranteed a certain standard of living for its inhabitants. The government officially declared that every citizen had the right to social security and that it was the duty of the state to guarantee that right.43 In short, the social security system became an area of special attention for the Dutch government. In the first place the unification of the social security law system became one of the goals. In addition, with the growth of the economy after the Second World War, the government had the opportunity to expand to all parts of social security, namely the disability insurance, sickness funds, health care, old age insurance, child allowance insurance and unemployment insurance. The secretary-general of the department of social security, Mr. A.A. van Rhijn, was given the task to set up guidelines for the development of social security in the future.44 During the 1960’s the Netherlands adopted a minimum income norm designed to represent a reasonable standard of living. All disabled individuals in the Netherlands were guaranteed this level of basic support.45 On July 1st 1967 the ‘Wet op de arbeidsongeschiktheid’ (WAO: General Disability Security Act) took effect. This law covered all the privately employed individuals up to the age of 65. The benefit it provided depended on previous earnings and the degree of disability after the first year of illness, which was covered by the Ziektewet (Sickness Benefit Act).46 In the 43 Ibidem, 268. Veldkamp, Inleiding tot de sociale zekerheid, 104. 45 Robert H. Haveman, Victor Halberstadt, Richard V. Burkhauser, ‘Public policy toward disabled workers’, (London 1984) 131. 46 Haveman, Halberstadt, Burkhauser, Public policy, 403. 31 44 second half of the twentieth century the WAO was the main disability act. By the end of the 1970’s the share of social expenditure was the highest in the world. 47 The number of workers who received welfare was twice as high as in surrounding countries and also the number of sickness absence was very high. 1 out of 10 working-age individuals received a disability benefit. If no measures were taken, that number would rise up to 6 out of 10 working-age individuals who received a disability benefit and in 2020 every healthy person would be paying the benefit for 1 disabled person. Graph 2.2 shows the number of people who received disability insurance. Graph 2.2: number of people who received disability insurance in the Netherlands, 1900-2008. Source: CBS, tijdreeksen sociale zekerheid, 1900-2008, http://statline.cbs.nl/StatWeb/publication/?DM=SLNL&PA=03763&D1=0-17&D2=0,2,4,6,12,22,32,42,52,62,(l6)-l&VW=T From the 1970’s onwards the Netherlands suffered a surplus in workforce that emerged both because of the coming of age of the baby boom generation and the increased labour force participation of married women. This surplus in workforce caused an increase in unemployment which enlarged the number of unemployment benefits, and the number of disabled workers also augmented. Consequently, this exerted financial pressure on the state. This situation could not last, and in the early 1980’s it became clear that something had to change to limit the costs of welfare. These measures were taken during the first government of Prime Minister Lubbers. Despite several measures, the number of disabled workers still 47 De Swaan, In care of the state, 210. 32 kept on rising. In 1993 still one out of ten Dutch citizens of working age (16-64) received disability transfer benefits. Almost 40 percent of older workers (55-64) were out of the labour force and receiving disability benefits, another 24 percent drew early retirement pensions or unemployment benefits.48 The government kept trying to change the social system to decrease the number of welfare participants but despite revisions of the system the number of disabled employees kept on rising. In 1993 the ‘Wet terugdringing beroep op de arbeidsongeschiktheidsregelingen’ was passed in parliament. This act caused the number of welfare participants finally to decrease.49 As mentioned before, the government spent a lot of attention to disability insurance and the social security system in general in the second half of the twentieth century. The government established the new view on democracy and had begun enthusiastically in providing benefits for disabled workers. When the financial costs started to grow too high, the government looked for a way to decrease the costs and still provide social security. Graph 2.2 shows that at the end of the 1980s the number of people who receive disability insurance is declining. It was very clear to see that the Netherlands was a working democracy at that time because the ideals of the working democracy such as equality were very well represented in the social security system. Everybody could be compensated for any sickness or disability and receive a benefit payment. This was especially the case in the 1960 and 1970’s when the economy was constantly expanding and there was an overload in workforce. The high number of payment benefit receivers was not only proof that the Dutch democracy was working; it mainly showed that the state was very efficient. One of the reasons for the high state efficiency in the Netherlands was the emphasis politicians put on direct regulation while making policy proposals and taking measures for political change. As explained in the previous paragraph there was a special organ established that executed disability insurance. De ‘Rijksverzekeringsbank’ changed into the ‘Sociale Verzekeringsbank’ in 1956. The SVB was responsible for the accurate execution of the social security system. Another significant reason for the expansion of the system was the booming economy. A high GDP appeared to be very important for the disability insurance. Giant amounts of money were pushed into the social security system and this was possible because of the growth of the 48 Leo M.J. Aarts, Richard V. Burkhauser, Philip R. de Jong, Curing the Dutch Disease,(Gateshead 1996) 1. Marjol Nikkels-Agema, Janthony Wielink, De WIA en haar gevolgen, nieuwe verzekeringsoplossingen voor werkgevers en werknemers (Kluwer 2006) 14. 33 49 economy. However, in the 1970’s the system had become so extensive that more money was going out than coming in. This shows that having a high GDP can have negative effects. Due to the economic growth after the Second World War the Netherlands were able to expand the social security system. However, at the end of the 1970s and the beginning of the 1980s the percentage of annual GDP growth decreased while the expenditures on social security kept increasing. Measures were taken by the government to lower these expenses. Near the end of the 1980’s these measures started to pay off as can be seen in graph 2.3. Graph 2.3: Government spending on social security in percentage of national income, the Netherlands, 19451990. Source: Bert Erwich, 1899-1994, Vijfennegentig jaar statistiek in tijdreeksen,Centraal Bureau voor de Statistiek (Den Haag 1994). In 1960 the Netherlands had been an industrial country for a long time. The type of work had changed considerably. The factories had been mechanized and made safe. The rise of the tertiary sector had lowered the amount of blue collar work and changed it into white collar work. The reasons why workers became disabled had changed overtime. Other types of diseases had arrived such as burn-out and RSI. This also held true for urbanization; the slums in which people had been living at the end of the nineteenth century had changed into districts with proper housing and the higher standard of production reduced the risk of accidents. 34 2.3 INDONESIA FROM 1850 TO 1960 Just as sickness, unemployment and disability was a constant fear and mortal danger for Dutch workers, this also applied to Indonesian workers. Disability insurance was hardly developed in Indonesia before 1960. The Dutch government had not implemented a national social security system in Indonesia for the indigenous population. The only local people who could receive reimbursement after disability or old age were local government officials and civil servants. For the majority of the indigenous population the only form of disability insurance was provided by the indigenous population themselves, by their families and community. Many workers who lived in towns held a close tie with their home villages. They would sent money back to their families and visit the villages on public holidays. If an urban worker was struck from unemployment or disability, he could rely on the home village for support. This provided some sort of social security net for the first generation of urban workers. However, in the beginning of the twentieth century, urbanization rose and with each generation more people were urban-born. These people did not have the security of their home villages and thus had to find social security somewhere else. There were several organizations to which the worker could turn to in times of need, such as local welfare organizations, self-help groups and, increasingly, labour unions.50 Mutual aid organizations and social welfare funds were created by voluntary organizations and by small groups of individuals banding together to tackle the problem by encouraging cooperation among ordinary people. Ethnic, religious and regional differences were the most important barriers for workers organization; the workers could not gain a broad coverage because of these differences. The Dutch were reluctant to allow labour unions and collaboration of Indonesians. However, the labour unions did exist and provided very primitive social security. The main task of labour unions, and the most important reason for joining a labour union, was providing social security. By 1922 the Onderlinge levensverzekeringsmaatschappij Boemi Poetera had agents throughout Java Bali, Madura, Sumatra and Ambon who sold life insurance and sickness policies on a commission basis51. In 1930 the depression hit Indonesia. The government provided limited unemployment relief to Europeans but did nothing for the indigenous population; they believed that the communal John Ingleson, ‘Labour unions and the provision of social security in colonial Java’, Asian studies review 4(2000) 472. 50 51 Ibidem, 486. 35 support structures were strong enough the cope with the depression.52 In 1936, the colony started to recover from the depression. At the same time the lowest number of members of labour unions was reached on Java. Thereafter the number started to rise again and gained a steady growth. The labour unions in Indonesia were modern organizations and the intellectual elite, which directed them, were influenced largely by the European example of labour unions. The core activities of every union in the late 1930’s remained to be social welfare and the development of cooperatives, saving funds and other mutual benefit schemes.53 There was clearly no working democracy in Indonesia, consequently there was also no ‘moral incentive’, from within the state to introduce a social security system. Because there was no legislation from the government on social security, state efficiency was not very important in this particular part of the thesis. The government felt no responsibility for providing social security and the local population had to rely on family networks and labour unions. The fact that the Dutch were in charge in Indonesia furthered the lack of ‘moral incentive’ and responsibility for the Indonesian population because the colony was mostly there for economic reasons and to enlarge the power of the Dutch in the world. A higher G.D.P. or at least a growing economy has a positive influence on the development of a social security system. When the depression was over in the colony, the number of members of labour unions rose again. If there is more money going around there is consequently more money available for social security. Indonesia had not yet experienced an industrial revolution in the period before 1960 so the Indonesian industry was very underdeveloped, however in the beginning of the twentieth century the first small steps towards industrial society were made by the expanding printing industry, railway industry and civil service.54 As was seen in the Netherlands industrialization activated the need for disability insurance. From that can be concluded that the lack of industrialization in Indonesia attributed to the underdeveloped state of disability insurance. The limited social security that was provided through labour unions follows logically from the little developed industry that existed before 1960. Urbanization in Indonesia was a cause for the creation of a disability program. Where in the beginning of urbanization workers would go to back to their home village when they were old 52 Ibidem, 493 Ibidem, 494. 54 Ibidem, 476. 53 36 or disabled, younger generations remained in the cities and therefore could not rely on their home village anymore and thus had to rely on help from the government or from labour unions. 2.4 INDONESIA FROM 1960 TO PRESENT As discussed in the previous paragraph, during the Dutch reign there was a strong reliance on the family and home village to form a social security net in case of illness and loss of income. Only government officials and civil servants would receive payment benefits. During the Post-independence reign of Sukarno(1945-1960) the economy was not doing very well and the colonial system continued with a few revisions. When Suharto came to power there was a period of economic growth that resulted in a new social security system called JAMSOSTEK which was set-up in 1977. It was only available for people in formal employment and who are obliged or entitled to participate in a variety of social insurance schemes. Provisions were extended only to employees of military, civil service and private companies above a prescribed staff size and salary. A division was made between public and private sector workers in which public sector workers received far more benefits than private sector workers in medium and large companies.55 The remainder of the population employed in smaller enterprises, self employed or unemployed were forced to rely on private insurance or support from immediate and extended families and local community. However, JAMSOSTEK was not very efficient. The system has poor administration, low returns on investment and high administration costs.56 Because Indonesia had no working democracy the pressure on developing a social security system for everybody was absent. In 2002 a task force was created to develop a bill to provide more effective social security for everybody. The law on the National Social Security system (SJSN) was introduced in 2004. This law serves as an umbrella law for five social security programs, namely: public pension, national health insurance, work injury and death benefit schemes. 55 M. Ramesh, ‘the State and Social Security in Indonesia and Thailand’ journal of contemporary Asia, 30, (2000) 541. 56 Ramesh, ‘The state and social security’, 539. 37 The differences with Indonesia before 1960 clearly show some motives for the development of the social security system. In 1977 the first official social security system was introduced, JAMSOSTEK. Indonesia was not a working democracy yet which is visible because the provisions were only extended to governmental and military employees. After the introduction of the democracy in 1998, a new act was developed in 2002 which was supposed to provide social security for all inhabitants. This act (SJSN) was implemented in 2004. However, in 2007 there was still no national security council established that will control if the law is in fact carried out, and though there is a general recognition that SJSN law is a first major step to develop a comprehensive national security system in Indonesia, so far it has failed to give meaningful impact except for health insurance for the poor. The significant delay in the action to implement the law has revealed seeming lack of coordination and real commitment. 57 In the Netherlands it took a change in bureaucratic thinking before the social security system could be properly carried out. It is essential for a social security system to work that this kind of change also has to take place in Indonesia because if no plans are carried out, inhabitants do not receive social security. As mentioned previously, in the years right after independence when Sukarno was in power (1945-1960) there was little economic growth. In the 1970’s the GDP started to rise along with industrialization, as can be seen in graph 1.3 in chapter 1. Seven years after the rise of industrialization the first social security system was set up in 1977. This indicates that with the arrival of industrialization the need for social security rises which can be easily explained because the work in factories is more dangerous. Industrialization causes urbanization and in urban areas there was less of a rural family network that served as a safety net. A new safety net was needed; the rise of industrialization caused the rise of the working class. The local labour unions and family networks could not provide social security for everybody and the government had to step in to provide national social security. As became clear in this chapter industrialization is an important factor in the development of a social security system because it expands the need for one. Because of the difficult and hazardous work in factories more accidents occur. 57 ILO, Indonesia: Implementation of the national social security system law, International labor organization, http://www.ilo.org/public/english/region/asro/bangkok/events/sis/download/paper24.pdf 3. 38 Indonesia was not very urbanized and as is explained in this chapter urbanization creates the need for disability insurance. In 1977 the first social security system was set up and around that time (1980-1985) there was a large urbanization growth in Indonesia which can be seen in table 2.1. Table 2.1: Urban annual growth rate in percentage, in Indonesia, 1950-2010. Year Urban annual growth rate 1950-1955 3.30 1955-1960 3.70 1960-1965 3.81 1965-1970 3.91 1970-1975 4.80 1975-1980 4.89 1980-1985 5.36 1985-1990 4.95 1990-1995 4.54 1995-2000 4.73 2000-2005 4.04 2005-2010 3.34 Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2007 Revision, http://esa.un.org/unup. The social security system was only available for governmental and military employees which are professions mainly situated in urban areas. 2.4 CONCLUSION The rise of the mass and increasing interference from the government started the new social security system to rise. When looking at the development of the democracy in the Netherlands and in Indonesia, it becomes clear that the democracy works as a ’moral incentive’ to introduce a social security system for everybody. Next to the moral incentive the democracy provides, the rise of the working class within a democracy is also important because the working class eventually organized and receives a stronger voice in society demanding social security. As is discussed above, the democracy in the Netherlands was gradually developing and the growing idea that the state was responsible for providing social security for its citizens around the turn of the century. In the 1960s there came a new view on the democracy in which it became the duty of the state to provide a certain standard of living for all its citizens and the government took a more active position to realize this responsibility. In 39 Indonesia there was no working democracy before 1998. The lack of a moral incentive, and the pressure from the population of a democratic country to establish a social security system appears to be of importance in the development of such a system. The fact that JAMSOSTEK was only available for military and government officials shows the lack of moral incentive and political pressure of the population. Once a democracy is established the citizens demand the right to social security. The biggest problem for the Indonesian social security system is state efficiency. As indicated above JAMSOSTEK suffered from poor administration and after the democracy was installed plans for a new social security system that covers the total population were made but not executed up till now. The Dutch did not implement a social security system in Indonesia. They did provide social security for their own people but did not provide any for the local population. Moreover, they were reluctant to allow labour unions and collaboration of the Indonesian population but the labour unions did exist although the social security that was provided remained underdeveloped. In this case the lack of self-rule negatively influences the development of a social security system; nevertheless the first social security system was introduced in 1969 and has still not achieved total coverage. Industrialization serves as an incentive for the development of social security. Before industrialization there was no social security system and as is visible in Indonesia the workers were able to rely on family ties and home villages. Due to further industrialization and education the worker became more valuable and because of the terrible circumstances in factories accidents were more likely to occur. Another incentive for the development of the social security system was urbanization. The population was packed together in cities which benefits party organization and labour unions. What is visible in both countries is that economic growth, industrialization and urbanization are incentives for the development of a social security system. Once these elements occur on a national scale the government starts to introduce a national security system. The working democracy, state efficiency and, again, a growing GDP enable the development of such a system. Because of democracy everybody has the right to receive disability insurance, because of state efficiency disabled workers actually receive their insurance and a growing GDP covers the costs. 40 CHAPTER THREE : WATER SUPPLIES Easy access to drinking water is something that is taken for granted in most Western countries, especially in the Netherlands. In Holland, when one turns open the tap one expects clean, fresh running water. Having a working system of water supplies is not that self-evident in the rest of the world, especially in developing countries like Indonesia. And 150 years ago it was not even self-evident in the Netherlands. Over the past 150 years, safe drinking water has transformed into a basic human right. A lot of diseases like cholera and typhus disappeared with the arrival of drinking water, which showed that it is essential for public health. Yet providing drinking water is no easy feat, certainly today in the world, with environmental pollution as its main nemesis. Although the differences in water supplies between Indonesia and the Netherlands are huge; both countries suffer from problems concerning water supplies. In Indonesia hundreds of people still drink water from the same river that they use as their sewer, and water supply companies in the Netherlands also have to cope with a lot of problems concerning purification of water and the growing water consumption of its population. In this chapter the history of drinking water in the Netherlands and Indonesia since the second half of the nineteenth century will be discussed. As is explained in the introduction of this thesis, Indonesia before 1960 will not be discussed. The chapter will begin with a discussion of the situation in the Netherlands and then continue on Indonesia. Just as in the previous chapters, the influence of five different variables that are quite familiar by now, namely a working democracy, state efficiency, a high G.D.P., industrialization, levels of urbanization, will be examined. As explained in the introduction of this thesis, self-rule will not be discussed in this chapter. 3.1 THE NETHERLANDS FROM 1870 TO 1960 From the Middle Ages on there were three types of drinking water. Surface water, well water and rainwater. Surface water and well water were the most common to drink from. People that lived near the coast were privileged because the dune water that came from wells dug in the dunes was of good quality caused by a natural filtering system through the sand. In most 41 cities tanks were placed which filled up when there was rain but these tanks were drained quickly and the lead-covered roofs could poison the water.58 With the demographic growth in the second half of the nineteenth century these water sources were soon not sufficient anymore. In addition to providing drinking water, surface water was used for all kinds of activities such as disposal of faeces and dumping of the waste of (bleaching) factories, which caused the water to be heavily polluted. Before the increasing urbanization, if the surface water at their usual drinking place was polluted the urban inhabitants would find another source for drinking water in the neighbourhood. That soon became impossible because of the increasing need for water and the increasing amount of waste. In Amsterdam the population could get water from the canals until the 16th century. In the 16th and 17th century a separation was made between sewage and drinking water. Since the beginning of the 18th century the control on this separation reduced which caused several epidemics to erupt in the nineteenth century. The diseases that had the most harmful effect due to lack of hygiene were cholera and typhus. In the nineteenth century the need for urban sanitation became clear. Collective arrangements concerning water supplies and measures to control epidemics were carried out by city councils. For instance during a cholera epidemic in Gouda in 1867, when clean water from outside the city was provided free of charge.59 After the epidemic subsided, the local government sold the water for 1 cent a bucket, which was a relatively high price in that period and so the population switched back to the polluted water from the canals and wells. After 1874 when a cholera epidemic cost the lives of 68 people, the government started to distribute free canal water that was purged with iron-chloride which gave a distasteful flavour to the water.60 This purification process occurred in cities throughout the country. The population preferred the old water but after persistent warnings from the local governments they started drinking the badly tasting purified water because it was healthier. This led to a decrease in cholera and typhus victims which then encouraged the population even more to drink the purified water. In 1853 the first water pipe was established. It transported dune water from the dunes in Haarlem to Amsterdam. The water was purified through sand filters before it entered the 58 Sacha Wijmer, Geert B. Vinke, Water om te drinken, (Rijswijk 1992) 43. K.W.H. Leeflang, Ons drinkwater in de stroom van de tijd (Rijswijk 1974) 12. 60 Leeflang, Drinkwater in de stroom der tijd, 12. 59 42 pipes. The price of this water was 1 cent per bucket and as stated above, people would rather drink the polluted water that was free. Once the first pipe was constructed it was not long before water pipes were constructed in other parts of the country. By 1900 there were 60 different water companies active in the Netherlands who provided large parts of the Netherlands with drinking water.61 However, the production of the water supply companies was not as much as expected. In Utrecht, less than half of the houses were connected to the water net in 1892 and in Leeuwarden this number was even lower, especially in workers’ houses. 62 The process towards complete coverage was difficult because of three reasons. First, there were a lot of technical problems concerning the varying taste, colour, and smell of the water in the beginning which made the population hesitant to drink tap water. Second, in the higher parts of the Netherlands there were deep natural wells which provided free water so in rural areas the need for a water supply system was smaller than in urban areas. Third, poor people had no connection to the water supplies in their homes but could receive tap water from different communal water taps that were placed in several cities. This meant that they had to walk far to get drinkable tap water and sometimes they had to pay for it too. In the large cities in the west of the Netherlands the connection to the water supply system came about a bit easier. This was to be expected because in the lower part of the Netherlands the surface water was of a very bad quality and they did not have the same wells as in higher parts of the Netherlands, making the development of a water supply system more urgent. Plus, the amount of water that was being used was higher in the west because of a higher population density than the rest of the Netherlands. As stated above the Dutch democracy developed after 1848 and the Netherlands officially became a parliamentary democracy in 1917. Until 1910 the water supply system was regulated by local governments and water supply companies. The water supply companies charged for the water from their water supply system. During this period there was still a lot of opposition in the countryside towards a system of water supplies for which the people had to pay. Both the local governments and the local villagers could not see the use of a water supply system.63 Since 1910 the government took responsibility for the water supply system after political pressure exerted by doctors. A committee was formed, called the 61 P.J. de Moel, J.Q.J.C. Verberk, J.C. van Dijk, Drinkwater: principes en praktijk (Den Haag 2004) 22. Wijmer, Vinke, Water om te drinken, 79. 63 Wijmer, Vinke, Water om te drinken, 87. 62 43 ‘Staatscommissie inzake het drinkwaterleidingvraagstuk’. The committee regulated water supplies in the Netherlands, they controlled the construction of the water supply system, investigated the way the water pipes were controlled and did hydrologic, geologic and botanical research in several dune areas for new possibilities to gain water.64 Before the government took the responsibility over water supplies the quality of the water was not controlled but after 1910 the government interfered which caused a rise in the quality of the water. Before the government started to occupy itself with water supplies the democracy was already visible in the collective arrangements that were provided by city councils and local governments. At first these arrangements were only available for rich citizens. Since the 1870’s the cities had a high population density caused by demographic growth and high employment rates in towns. The negative effects of the lack of water supplies in the poorer parts of town seeped through to the rest of the town and eventually these effects turned out to be more important than the costs of an extension of the water system to the whole town. The fact that water supplies were democratized and available for the poor came mainly out of necessity because public health was in danger. In the large cities social issues like the cholera and typhus epidemics, forced itself directly on the city councils and interference on a regional scale was more clearly set out than on a national scale. Even though, just as with disability insurance, administrative reform was necessary. In 1877 the state department of ‘Waterstaat, handel en nijverheid’ became independent but on the subject of water supplies regional interference came before national interference. In the 1890s the local governments and city councils of big cities started to develop a great activity on the sewerage and the water supply system.65 The ‘Staatscommissie inzake het drinkwaterleidingvraagstuk’ continued creating the water supply system and on the eve of the Second World War 75 percent of the Dutch population was connected to the water supply system. In 1954 the ‘Commissie Rijkssteun Drinkwatervoorziening’ presented a ten-year-plan to provide every part of the Netherlands of water supplies, with financial help from the 64 65 Ibidem, 85. Aerts, Land van kleine gebaren, 155. 44 government.66 This plan was more or less achieved in 1963 when 96 percent of the population was connected to the system.67 In the second half of the nineteenth century drinking water was costly (1 cent per bucket) and the population rather drank the free, polluted water. With the growth of the GDP people were able to pay for the purified water. As explained above the water from wells in rural parts of the Netherlands was still drinkable and the fact that the water from the water supply system cost money caused opposition in those rural parts. The economic growth after the Second World War enabled the provision of clean drinking water for the whole population. In the first place the high GDP enabled the expansion of the water supply system towards a connection to the network of every household in the Netherlands and in the second place a high GDP contributes to the purification of the water. Industrialization was also very important in providing drinkable water. The rise of industrialization provided the techniques and machinery to create a pipe system and continuing research helped improving those techniques and also purification techniques. But because of industrialization pollution grows, because of the industrial waste of factories particularly in the nineteenth century. A large part of the population in the nineteenth century still drank from surface water that was used as a sewer for factories. The importance of urbanization in the development of water supplies is already highlighted in this chapter. In the first place it created the need of a water supply system. The demographic growth and the growing population density in cities caused the amount of waste as well as the demand for water to grow. In the beginning the urban population used their surface water both as to drink from and as a sewer. This caused cholera and typhus epidemics. The terrible circumstances in the cities in the nineteenth century made the need for a working system of water supplies more pressing. In 1963 the water supply system had been fully developed, however there were several threats to the system. These threats will be discussed in the next paragraph. 66 67 Wijmer, Vinke, Water om te drinken, 96. Leeflang, Ons drinkwater in de stroom van de tijd, 148. 45 3.2 THE NETHERLANDS FROM 1960 TO PRESENT After the water supply system was finished it was somewhat unclear what exactly the new tasks of the water supply companies were. Soon pollution of the water appeared to be the main problem for the water supply companies. It became their key focus. Due to a growing population and the use of household machines water consumption was increasing rapidly. An expansion of the capacity of the pipe system was necessary. In the Netherlands there are two kinds of water supply companies, surface water supply companies and groundwater supply companies. The former are situated in the West and near the coast and the latter in the higher parts of the Netherlands. The water supplies that were not situated near the coast could increase the amount of groundwater that was extracted from the ground, but the dune water companies had to extract surface water which was more polluted and therefore harder to purify. About 70% of the water production exists of groundwater. In the 1960’s and 1970’s the main pollution problem was the pollution of surface water. Since then the extraction of groundwater has become difficult too. The extraction of this type of water causes the groundwater level to decline which means the Netherlands is drying up. In addition there is an ongoing pollution of groundwater. A famous example of pollution of the surface water is the Rhine. In the early seventies the Rhine became known as the sewer of Europe. Consequently, a committee (the Rijncommissie Waterleidingbedrijven, RIWA) that lobbied for international cooperation to prevent pollution and waste-dumping in the Rhine and the Maas, was set up.68 The countries involved joined forces and appointed more committees to prevent pollution of the Rhine. However, it did not have much effect until 1969. The public opinion changed after the water supply companies saved the drinking water from possible pollution from the Rhine. More campaigns were set up to purify the Rhine and prevent further pollution. In 1964 the government made a ten-year plan to restrict the pollution of surface water and control the amount of water that was extracted. The Netherlands was a highly efficient country which expressed itself also in its water supply system. Around 1960 every household was connected to the system, so in that area state efficiency had already done its job. However, state efficiency is visible in the decreasing use of water in the 1990s which shows 68 Leeflang, Water in de stroom der tijd, 200. 46 in the following graph. In the second half of the twentieth century the amount of water that was being used grew exponentially, especially in the 1960s this rise was huge. This growth was mainly due to a growing population but the amount of water used per person also rose. The reason for this growth was the developing consumer society and the use of household equipments like showers and washing machines. Families could buy these products because of the rise in GDP. The increasing use of water was a threat to the supply of surface and groundwater. As is visible in graph 3.1, the amount of water used decreased in the 1990s, due to water saving measures like water saving showers and the introduction of household water. Graph 3.1: The use of drinking water in the Netherlands 1899-1998. Source: CBS, Drinkwater, webmagazine, 18 januari 1999, http://www.cbs.nl/nl-NL/menu/themas/industrieenergie/publicaties/artikelen/archief/1999/1999-0163-wm.htm The governmental policy to provide for clean drinking water stimulated the industry to find more efficient and more effective ways to clean the water and because of that industry every household is provided with clean drinking water and a water supply. The water supply system inspires the industry to creating products and machines that use a lot of water such as showers and washing machines. In addition, the rising pollution in combination with the growing consumption of water threatens Dutch water reserves and it is unsure what will happen in the future. The pressure that urbanization exerts on the need for clean drinking water has proven to be a stimulant for the development of that industry. In the second half of the twentieth century the 47 water supply system in the Netherlands was very reliable and the purifying industry was very advanced. This relieved the pressure of urbanization on sanitation and water supply. However, the urbanization with its traffic and growing population also causes a lot of pollution nowadays. 3.3 INDONESIA FROM 1960 TO PRESENT Clearly Indonesia is less developed than the Netherlands in some fields. This also counts for water supplies. As explained in the introduction of this thesis the water supply system was little developed before 1960. The standard of living of the Indonesian population was so low that in 1969, when industry and GDP started to grow, the government began executing fiveyear-plans to enhance the standard of living of the Indonesian population. These plans were called REPELLITAs. Since the condition of the water system was poor, the government put extra emphasis on improving water supplies. In 1983, at the end of the third REPELITA, about 40 percent of the urban and semi urban population had access to drinking water through a pipe network and 23 percent of the rural population had access to drinking water, mainly from hand pumped wells.69 It is assumed that pipe water and most water from pumps was clean enough to drink without boiling.70 In 1990, 75 percent of the urban population had access to drinking water through a pipe network as is evidenced in table 3.1. 71 Table 3.1: Water Supply coverage in Indonesia, 1970-1990. Year Urban Rural 1970 10% 1% 1975 23% 5% 1980 35% 19% 1985 50% 30% 1990 75% 60% SOURCE: UNDP, ‘ COUNTRY PROFILE: INDONESIA’, UNITED NATIONS DEVELOPMENT PROGRAMME (1990). In 1980 the Indonesian government had set up a plan to solve all these problems, concerning a ‘mass’ approach. 72 69 Asian Development Bank, Indonesia water Supply and Sanitation sector profile (Manila 1984) x. Ibidem, 5. 71 Ibidem, x. 72 UNDP, ‘Country profile: Indonesia’, United Nations Development programme (1990) 2. 70 48 This mass approach included five major components. First, the urban areas were classified in different groups according to population size and minimum daily water requirements were set. Second, low cost technologies were used. Third, the design types were standardized to save engineering time, spare costs, ease logistic problems and maintain stocks. Fourth, to include the private sector, semi-government water supply companies that were eventually supposed to become self-supporting were created. Water use will be charged to provide money for maintenance and operations. Fifth, the community had to be educated so that they became more aware of water issues. 73 After eighteen years it became evident that the attempt of the government at sustainable solutions had been unsuccessful. There was still a huge problem concerning water supplies in Indonesia, especially in urban areas like Jakarta. The public water system in Jakarta is largely dependable on surface water. Due to poor quality, low pressure and incomplete coverage of the network most residents depend on a variety of water sources, including water vendors, bottled water and groundwater from both deep and shallow wells. The prices of drinking bottled water and water vendors had risen because the private sector was focused on making profits. This left the poor population with two options, pay high prices for drinking water or drink groundwater which was polluted. 74 Since 1998 the number of people who depend on groundwater has risen from 5 million to 12 million which has seriously damaged the aquifer, leading to pollution caused by saline or sewage. With the extraction of groundwater, seawater intrudes into the soil making the groundwater salty. Improper sewage disposal makes the aquifer polluted.75 In the short term the government has found ways to cope with the increasing pollution of the soil and a shortage of water. First, a competitive water market reduces water prices and ensures water quality. Second, public education on rainwater harvesting would help people to cope with the water shortages. Third, contamination of groundwater can be reduced by educating the people who are not connected to sewer systems about proper construction of septic tanks and sewage disposal. Water supplies have in some ways a different relation with a working democracy than education and disability insurance have. This is due to the basic need for clean drinking water. Of the three elements of the welfare state water supplies is the most elementary because a lack 73 Ibidem, 4. M. Ramachandran, ‘Reversing the Race to the Bottom: Urban Groundwater Use in Development Countries’, Environment 50 (2008) 55. 75 Ibidem, 54-55. 49 74 of drinking water and proper sanitation may cause several deathly diseases. Consequently, clean drinking water is elementary for the prosperity of the inhabitants of a country. Until 1998 Indonesia was not a working democracy. It may be said that a working democracy does not have an essential influence on the development of a water supply system. Since 1998 there still are a lot of problems with the water supply system to which the Indonesian government does not have sustainable long-term solutions. The main problems in the construction of a water supply system in Indonesia were the lack of trained engineering staff, institutional and financial problems, and the organization of services nationally and locally for the most effective utilization of the manpower available. Generally the responsibility for water supply and sanitation is vested in the local governments, but because of their lack of funds and staff the actual preparation and implementation of projects, including funding of investments, is executed by central government departments.76 However, the Indonesian government suffers from institutional problems such as corruption and a proper state efficiency, which prevents or delays the realization of plans. The Indonesian state lacks efficiency concerning water supplies. The plans that were made in 1984 are a good example of that because after eighteen years, no progress was made. Especially in the long term sustainable solutions appear to be impossible to successfully implement in the Indonesian state. Indonesia was independent since 1948 and only in 1969 the government started to make plans for a water supply system. From this can be concluded that other reasons, like economic growth and industrialization have a larger influence on the development of a water supply system than self-rule. In the 1970’s and 1980’s the GDP started the rise in Indonesia which provided more money to improve the water supply system. As mentioned above there are still financial problems. The REPELITA’S have tried to save costs by standardizing machines etc., but the biggest problem is that the water supply system is not financially viable. Economic development is leading to rapid population growth in Indonesia. A major part of the population is still very poor which means that they cannot pay the high water prices and have to use groundwater which leads to pollution of the aquifer, especially in urban areas. Industrialization arrived in 1970. Industrialization has both a positive and a negative influence on the Indonesian water supply system. On the positive side is the fact that the economy grew 76 Asian development bank, Indonesia water supply, xi. 50 after industrialization, providing more money for the system. Thanks to industrialization, the water supply system could be industrialized itself. The pipe system could be standardized, just as machines used for building a pipe system and new and better purifying techniques could be developed and applied. On the negative side industrialization causes pollution which was very unfortunate for the vulnerable Indonesian water supply system. Throughout the twentieth century Indonesia has been a mostly rural country. In rural areas the need for water supplies is less because there is a lower population density and less pollution. In urban areas the need for water supplies is more pressing. In urban areas more water is consumed and there is a higher grade of pollution. Most of the urban-poor live in kampongs. These are high density villages where the canals and rivers nearby are used as a playground for children as well as a sewer. The water comes from a communal tap which means some people had to walk a long way to get water. 77 Still, urbanization is going at a good pace, which puts the government in the difficult position to provide water supplies to the expanding population. The need for water supplies in urban areas presses the government for the development of a water supply system. 3.4 CONCLUSION The water supply system in both countries did not arise without difficulties. In both countries the same difficulties appeared, most importantly lack of clean drinking water caused by pollution of the water and the rise of urbanization and industrialization. The influence of the five variables will now be discussed in order. What has to be borne in mind is that the main reason for the development of a water supply system is public health. The working democracy probably has the least influence of all the five variables. In a way the relation between water supplies and a working democracy can be compared with the relation between education and a working democracy and disability insurance and a working democracy. When a working democracy is present everybody wants clean drinking water. However the difference between the two latter elements of the welfare state and water supplies is the inevitable benefit water supplies brings to public health. In this chapter it became clear that that is a very important difference. In Indonesia there was no working democracy until 1998 and in the Netherlands the working democracy was official since 1917. 77 UNDP, ‘Country profile: Indonesia’, 2. 51 In both countries the government took the responsibility to develop a water supply system after the dangers of non-drinking water and bad sanitation for public health became visible. The main difference between the Netherlands and Indonesia lies in the state efficiency. As became painfully apparent in Indonesia, institutional problems opposed the creation of a working water supply system. Today Indonesia does not have a proper working water supply system with total coverage. In the Netherlands it took half a century before every household was connected to the network. Indonesia started to develop the water supply system in 1969 and therefore it is not developing slow in comparison with the Netherlands. However, the system in Indonesia still suffers from a lot of difficulties and future prospects are not very promising. A water supply system has become a basic and necessary facility of the state. It is very important to solve the problems to create a working water supply system. The lack of state efficiency increases the vulnerability of the system and creates other problems such as the groundwater problem in Indonesia. A high G.D.P. is, just as industrialization and urbanization, very influential in the beginning, because it makes it possible to provide clean drinking water and a good sanitation system. Especially in Indonesia there is a clear connection between the rise of the GDP at the end of the 1960s and the plans the government made concerning water supplies in 1969. In Indonesia, a big part of the population is still very poor and cannot pay the high water prices. This also occurred in the second half of the nineteenth century in the Netherlands. In the Netherlands the government started to provide water for the poor while in Indonesia this has not yet happened. Furthermore we have seen that industrialization can have negative effects in the sense that it causes environmental pollution, pollution of the water which calls for enhanced purification technologies. Urbanization also causes pollution of the water because of the large amount of waste and the higher need for water in areas with a high population density. Especially in the beginning of the water supply system of both countries the pollution concerns mainly improper sanitation whereas later on it causes pollution problems such as traffic emissions. Urbanization and industrialization are an incentive for the creation of a water supply system in both cases. Yet it also challenges governments to provide drinking water, and it is important for public health that the government succeeds in that. As indicated before, Indonesia and the Netherlands suffer from some of the same problems such as pollution. Indonesia in the second half of the twentieth century has met the same problems as the Netherlands in the first half of the nineteenth century, urbanization and 52 industrialization. However, the Indonesian problem is the lack of state efficiency, which causes an underdeveloped water supply system and serious environmental problems such as pollution of the aquifer. 53 CHAPTER FOUR: CONCLUSION In this conclusion an answer will be given to the thesis question. How and why did the Netherlands came to develop a modern welfare state and did Indonesia not succeed in creating a modern welfare state? In the Netherlands the welfare state came up at the end of the nineteenth century. In Indonesia collective arrangements are a late 20th century development. Table 4.1 on page 59 gives a schematic overview of the results that have been established in the previous chapters. The concept of this table and the following calculations is explained in the introduction. It is difficult to determine uniform results because both the countries and the periods differ greatly. As has become clear the cases of the Netherlands 1850-1960 and Indonesia 1960-present can be compared the best. Each case is represented in table 4.1. However, the time periods in the table differ from the time periods in which the chapters are divided. This is because the variables become present in different years. The time periods in the table define when a variable or an element (education, disability insurance and water supplies) changed from absent to present. A reminder of these specific years will now be given. In the Netherlands a democracy was not present until 1917, state efficiency was found present since 1900. Self-rule was present during the whole period as was a sufficiently high GDP and a high enough degree of urbanization, and industrialization had developed enough to be considered present since 1900. In Indonesia all the variables became present much later. Indonesia was a working democracy since 1998, self-rule became present in 1945, the GDP had crossed the $ 2000 threshold by 1986, industrialization is absent during the whole period and urbanization became present since 1900. State efficiency is absent during the whole period as well. Of the three elements that are discussed it was determined in the introduction when they are considered absent or present as well. Education in the Netherlands is considered present in 1900, in Indonesia since 1995. Disability insurance is considered present in the Netherlands in 1901 and in Indonesia in 2004 whereas water supplies is considered present in the Netherlands in 1949 and in Indonesia in 1998. The variables have been chosen because they are exceeded at a certain moment in time. However, it took time to realize the elements of the welfare state, disability insurance is not installed overnight. Therefore some modification 54 have been made for disability insurance in Indonesia in the period 1998-present. The first disability insurance act in Indonesia was actually established in 2004, however the average sum of the years is taken and in most years disability insurance was present and therefore disability insurance is considered present in that period. For education the same has been done in the period 1990-1998 in Indonesia, since universal enrolment rates have been achieved in 1995. Education is considered absent in the period 1990-1998 since it was absent in most of those years. To hold on to the existing structure each case will now be analyzed in order. 4.1 THE NETHERLANDS FROM 1850 TO 1960 The Netherlands democracy developed gradually. The process began in 1848 and in 1917 universal male suffrage was established. The national education system was the first of the three elements of the welfare state to develop both in the Netherlands and in Indonesia. In the Netherlands the education system developed simultaneously with the democracy. More educated people resulted in an increase of democracy which consequently led to more education. Disability insurance and water supplies became quasi universal for all inhabitants around the turn of the century. For those cases a change in the administrative system was necessary before government plans were carried out. State efficiency was also very important for the education system, but no change in the administrative system was necessary. ‘De maatschappij tot nut van ´t algemeen’ carried out their tasks with great enthusiasm and the number of school inspection officials kept on rising. A high GDP enabled all three elements of the welfare state to develop. After the increase in GDP because of industrialization the enrolment rates went up, and education also stimulated economic growth by increasing trade and industry. When the work to be carried out by the workers became more complex, the value of the worker rose which meant that disability insurance was seen as an investment. More importantly, because of a rise in GDP more money was available for disability insurance. Water supplies benefited from a higher GDP because it enabled the population to afford clean water and as well enabled an expansion of the water supply system and purification of the water. Education made it possible for workers to use more complex machinery and because of industrialization more money could be used for education. In the cases of disability insurance and water supplies industrialization and urbanization have played the largest role. The growth 55 of industrialization in 1870 and continuous urbanization created the need for both water supplies and a disability insurance. For disability insurance industrialization was the main incentive. The changing work environment and the hazardous jobs increased the amount of accidents. Next to that the demographic growth and the increasing urbanization created an environment in which party organization and labour unions benefited. The need for a water supply system emerged in the 1870s when industrialization and demographic growth caused increasing urbanization. The need for water and the amount of waste was higher in cities. 4.2 THE NETHERLANDS FROM 1960 TO PRESENT After the Second World War the government had a strong belief as to the extent to which social change could be effected by government policies. In addition, there was a new view on democracy which included that the government was responsible for its citizens and had to provide them with a certain standard of living. This resulted in a revision of the education system, making primary and secondary education accessible to all social classes. At the same time an expansion of the social security system took place. Every household had been connected to the water supply system and pollution became the biggest problem for water supplies. According to the new view on democracy a high quality of drinking water is required and the government made plans to restrict pollution. The expansion and reorganization of the education system, social security system and water supplies demanded an expansion and reorganization of the bureaucracy and the Netherlands has become a highly efficient country. The Dutch GDP started to rise in the years after the Second World War which facilitated the expansion of the welfare state. Enrolment rates increased thanks to the new education system and the amount of government expenditure on education grew. More importantly, the social security system became very extensive and the costs of the system kept rising, which put a lot of pressure on the state treasury. At the end of the 1980s measures that were taken to reduce the costs started to work. The GDP growth also worked negatively on the water supplies. Because the population kept getting richer and a consumer society emerged with products like washing machines and showers the amount of water used kept rising which has negative effects on the environment. The Netherlands were very industrialized. In the period after 1960 the tertiary sector rose and society changed into an consumer society. The demands for the level of schooling rose 56 because of the complexity of industry. The standard of living had increased a lot and more people started to work in the tertiary sector. This caused a change in the types of causes of disablement. For water supplies industrialization had a good side and a bad side. On the one hand industrialization found ways to purify the water whereas on the other hand the industry was an important factor that polluted the water. In addition, the industry invented products like showers and washing machines which used a lot of water. The Netherlands had become more and more urbanized. Secondary and primary schools were established throughout the country. The relationship between urbanization and education is not very important in this part of the thesis. The same can be said for disability insurance, the slums of the nineteenth century had made way for clean and safe houses which were not dangerous anymore for public health. The extended purifying industry and the reliable water supply system had relieved the pressure of urbanization on the water supply system. However, urbanization still caused a lot of pollution. 4.3 INDONESIA FROM 1850 TO 1960 Indonesia was, logically, the least developed in this period. None of the variables were found present before 1945. The education system the Dutch had set up was of poor quality and not accessible for the whole indigenous population. Before 1900 Indonesia was exploited by the Dutch, and through the idea of ‘ethical policy’ the Dutch set up an education system in order to stimulate economic growth. Since the Indonesian GDP was so very low, there was no money to provide for the system, therefore the Dutch spent a limited amount on building up the education system. The variables are absent in the table. For water supplies and disability insurance the reason for this absence is that the need for these elements was relatively low because industrialization and urbanization had not yet begun. Disability insurance and water supplies could be provided on a small scale, in towns or by family ties and the community. 4.4 INDONESIA 1960-PRESENT Indonesia became a democracy in 1998. However, attempts had already been made to provide collective arrangements for education, disability insurance and water supplies. The education system was relatively successful in comparison with the other two elements. After 57 independence a uniform education system was implemented. In the 1970s and 1980s government expenditure on education increased which led to universal primary education in the 1990s. However, the education system still lacked quality. The education system was the first of the three elements of the welfare state in which the Indonesian government took collective action. For a national disability insurance program the democracy appeared to be of great influence for Indonesia. Before the democracy was installed the program was only available for public employees and private companies above a certain size and income. After the democracy was introduced, plans for a national social security system were legislated. Although the Indonesian population was in favour of enhancing the standard of living, water supplies was so important for the health of the population that the goal of the government already was enhancing the standard of living before it became a democracy. In Indonesia a large problem lies in the execution of the state. There is a lack of state efficiency for each element of the welfare state. Government plans and laws on the topics of water supplies and disability insurance are made but little improvements can be seen, and although universal primary enrolment is achieved, the quality of the education system is not very good. In 1969 the GDP started to rise because of the oil crisis and the government tried to enhance the standard of living for the poor by implementing a water supply system. This took place gradually and in 1990 75 percent of the urban population was connected to the network. However, the water supply system still suffered from unreliability, incomplete coverage and low pressure which necessitates the poor to find other sources of water including drinking from polluted groundwater, just as the Dutch population did before the water supply system was fully implemented. The growth of the GDP, industrialization and urbanization in the 1970s was the main incentive for collective arrangements for disability insurance and water supplies. The initiative for an education system had already been taken earlier. Industrialization and urbanization created the need for a disability insurance and water supplies in similar ways as it did in the Netherlands. The rise of GDP enabled the Indonesian government to establish disability insurance and water supplies and to enhance the education system. In sum, the working democracy was only present since 1998 and influenced disability insurance a great deal because a law for a national social security system was established, the other two elements were already available for the whole population. 58 State efficiency lacks in the Indonesian welfare state. It is absent in every element of the welfare state. Self-rule benefited especially the education system but also disability insurance and water supplies because the Dutch did not establish that during their reign. A high GDP made collective arrangements possible. When the GDP started to rise in 1970s the enrolment rates grow and a social security system and water supplies was implemented. However the GDP was only considered present in the table since 1986. Industrialization and urbanization created the need for disability insurance and water supplies. 59 Democracy The Netherlands Education Disability insurance Water supplies Indonesia Education Disability insurance Water supplies 1850-1890 1890-1900 1900-1917 1917-present 1850-1890 1890-1900 1900-1917 1917-present 1850-1890 1890-1900 1900-1917 1917-present 1850-1945 1945-1986 1986-1990 1990-1998 1998-present 1850-1945 1945-1986 1986-1990 1990-1998 1998-present 1850-1945 1945-1986 1986-1990 1990-1998 1998-present 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 0 1 0 0 0 0 1 0 0 0 0 1 State efficienc y 0 1 1 1 0 1 1 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Selfrule GDP Industriali zation Urbanization Outcome 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 1 0 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 1 1 1 0 0 1 1 1 0 0 1 1 1 0 0 1 1 0 0 1 1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 1 1 0 0 0 1 1 0 0 0 1 1 0 0 1 1 0 0 1 1 0 0 1 1 0 0 0 0 1 0 0 0 0 1 0 0 0 0 1 TABEL 4.1 60 4.5 GENERAL ANALYSIS The table above (table 4.1) gives a schematic view of the variables and whether they are present or not during a certain period. The following table (table 4.2) is, as explained in the introduction of this thesis, distilled from the Boolean truth table. The truth table contains all possible logical outcomes. Table 4.2. summarises those that actually appeared in table 4.1. TABEL 4.1 D E S G 0 0 0 0 0 0 1 0 0 0 1 1 0 0 1 1 0 1 1 1 0 1 1 1 1 0 1 1 1 1 1 1 D= democracy E=State efficiency S= Self-rule G= GDP I= Industrialization U= Urbanization N= number of total instances O= number of instances of welfare state. I 0 0 0 0 0 1 1 1 U 0 0 0 1 1 1 1 1 N 3 3 3 6 3 3 3 3 O 0 0 0 0 0 3 3 3 According to the Boolean analysis the following calculations can be drawn from table 2. O= 011111+101111+111111 O=dESGIU+DeSGIU+DESGIU O=ESGIU+DSGIU O=SGIU (E+D) And: o= 000000+001000+001100+001101+011101 o= desgiu+deSgiu+deSGiu+deSGiU+dESGiU o= degiu+desiu+deSGi+dSGiU These calculations show that Self-rule, GDP, Industrialization and Urbanization, combined with either State efficiency or Democracy lead to the development of a welfare state in the Netherlands and Indonesia. A welfare state is not achieved when, obviously, none of the variables are present, when only self-rule and GDP are present or when only GDP, Self-rule and urbanization are present. Because self-rule is found present in both O and o, the variable seems to be unimportant and can therefore be left out of the equation. Consequently the equation becomes O=GIU (E+D). What seems contradictory to what might be expected is that 61 the next variable with the least importance is GDP. The reason that the GDP is prominently visible in o is the way it is measured in the table. It is measured at $2000 per capita, if the limit would be set higher for the Netherlands it is likely that the GDP is less prominent in o. The final equation that O=GIU (E+D) is supported by the notion that in both countries the variables GDP, industrialization and urbanization were present before state efficiency and democracy became present. The Dutch welfare state developed around 1900. Since 1917 all variables present in the equation were present in the Netherlands. Industrialization came up in the 1870s and the country already had a relatively high GDP as well as a relatively high level of urbanization. As shown in the thesis the level of state efficiency was sufficient since 1900 and after 1917 the Netherlands was considered a working democracy. Indonesia followed a different pattern. In the 1970s in Indonesia industrialization grew as did the GDP and urbanization. In 1998 Indonesia became a working democracy, however state efficiency is still not present as is industrialization. Of the variables necessary to obtain O, according to this thesis, state efficiency and industrialization are missing. Even though the elements necessary for the development of the welfare state are ultimately present in Indonesia, the question is whether Indonesia has developed a welfare state, and if so it is still very fragile. This state of the welfare state can be explained by the lack of industrialization and state efficiency of Indonesia. The final answer to the question why and how the Netherlands did came to develop a welfare state and how and why Indonesia did not succeed in creating a welfare state appears to be the previous sentence. After a Boolean analysis it became clear that the equation towards developing a welfare state is O=GIU(E+D). 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