The Netherlands: 3.7% Unemployment Hides Hundreds of Thousands on Disability Benefits

The Scale of the Problem

The Netherlands presents a paradox. Unemployment is low, yet a substantial share of working-age adults are structurally outside the labour market, supported primarily by sickness, disability and social assistance benefits.

The headline unemployment rate of 3.7% (CBS, 2024) tells only a fraction of the story. The full picture requires adding:

• WIA (Work and Income according to Labour Capacity Act): 454,644 long-term disability benefits at the end of 2024 (UWV)
• WAO (legacy disability scheme, closed to new claimants in 2006): 152,441 remaining benefits at the end of 2024 (UWV)
• Wajong (disability benefit for young people): 246,850 benefits at the end of 2024 (UWV)
• WW (Unemployment benefit): 174,837 benefits at the end of 2024 (UWV)
• Ziektewet (sickness benefit): an average of 105,304 benefits running during 2024 (UWV)
• Bijstand (social assistance): 406,000 people below state pension age at the end of December 2024 (CBS)

UWV's disability schemes alone (WIA, WAO, WAZ and Wajong) accounted for 859,023 benefits at the end of 2024. These registers count benefits rather than people and are not designed to be added together — some people combine benefits or move between them within a year — so no single combined total is given here. The independent OCTAS commission on the future of the disability system put it another way in 2023: people classed as work-disabled now make up about 7% of the labour force, down from 12% before the reforms took effect.

The WIA Architecture and Its Limits

The Work and Income according to Labour Capacity Act (WIA) replaced the WAO for new claimants in 2006. It followed a period of very high inflow into WAO disability benefits that, around the turn of the century, left the Netherlands with almost one million people classed as work-disabled.

The reforms rest on two key pillars:

1. Employer-paid sick pay: employers must keep paying the wages of sick employees — first for one year, later extended to two years (104 weeks) — creating strong financial incentives for accommodation and return to work. Employers' premiums also became risk-rated.

2. The IVA/WGA split: distinguishing between full and permanent incapacity (IVA) and partial or non-permanent incapacity (WGA). Of the 69,046 new WIA benefits awarded in 2024, 55,792 were WGA and 13,254 IVA (UWV).

These reforms worked on their own terms: annual inflow into WAO/WIA fell from 1.5% of the labour force at the end of the last century to 0.5% in 2022 (OCTAS, 2023). But WIA created its own problems.

The WGA benefit — designed for people expected to return (partly) to work — has a poor employment record. According to OCTAS, 71% of all WGA recipients are classed as fully incapacitated, and although the WGA is meant for people with temporary limitations, a large share of them stay in the "WGA 80–100" category long term; only 8.2% of fully incapacitated WGA recipients work. Among partially incapacitated WGA recipients, 58% of former employees work, but only 34% of those who fell ill without an employer (the "safety-net" group). The commission also found that around 92% of benefit recipients feel uncertain about how their earnings are offset against their benefit, and that many see working as a risk. The system is administratively complex, and assessment processes are long.

In May 2023 the Netherlands Court of Audit (Algemene Rekenkamer), in Uitvoering van wet arbeidsongeschiktheid loopt helemaal vast, concluded that the WIA had become unworkable because UWV lacked enough insurance physicians: at the end of 2022, 17,259 people were waiting on average 18 weeks for an assessment.

Social Assistance (Bijstand)

At the end of December 2024, 406,000 people below state pension age received general social assistance — about 1% more than a year earlier (CBS).

What Works: Evidence from Dutch Experiments

Rotterdam's WerkLoont (Work Pays) experiment (2012–2013): A mandatory work-first programme for new applicants for social assistance, tested with random assignment between May 2012 and March 2013. Participants got up to 15 weeks of work experience (one day a week), job-application training and job-search support. The evaluation by SEOR and Regioplan for the Ministry of Social Affairs (2014) found WerkLoont's net effects the most convincing of the municipal experiments it studied: 12 percentage points more people in the experimental group never entered benefit, and among those who did, 44.7% left benefit within 12 months against 37.6% in the control group — a net effect of about 7 percentage points. The researchers found no positive effect on the durability or quality of the first job, however. The results suggest that mandatory activation at the point of application can measurably reduce inflow into Bijstand and speed up outflow.

Individual Placement and Support (IPS): UWV buys IPS supported-employment trajectories for benefit recipients with severe mental illness and for people with common mental disorders. Since March 2023 a subsidy scheme run by UWV also opens IPS to municipalities' clients; 918 IPS trajectories were started under it in 2024.

Jobs Agreement (Banenafspraak): Employers are to create 125,000 extra jobs for people with work disabilities by 2026 compared with a 2012 baseline — 100,000 in the market sector and 25,000 in government. Progress has been slow: against an interim target of 115,000 for the end of 2024, market employers had reached just over 77,000 extra jobs and government employers just under 12,500.

The Fiscal Dimension

InkludX estimates that public spending on disability and sickness benefits in the Netherlands — WIA, the older WAO and WAZ schemes, Wajong and Ziektewet — came to approximately €20.6 billion in 2024, or about 1.8% of GDP. This is InkludX's own estimate of public cash benefits, not an official government figure. It excludes WW and Bijstand, employer-paid sick pay, lost tax revenue and employment-programme costs, so the full fiscal cost of labour-market exclusion is higher.

Policy Outlook

• Assessment backlogs are easing but persist: UWV's backlog of WIA claim assessments stood at 14,030 at the end of 2024, down from 17,259 in 2022, while the number of people waiting more than six months for an assessment fell from 9,259 to 1,068 (UWV annual report 2024).
• The Jobs Agreement is being tightened: under the Wet banenafspraak, the target group is broadened and the wage-cost advantage (LKV) simplified from 1 January 2026, letting employers receive up to €2,000 a year for each employee from the target group. Removing the split between market and government targets — possible from 1 July 2026 at the earliest — opens the way for a quota for individual employers with a bonus and levy system, which the cabinet can activate if results keep lagging.

OCTAS found that the bottlenecks pile up among the most vulnerable: sick unemployed people, sick flexible workers and people disabled from a young age.

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Sources: CBS, "De Nederlandse economie in 2024 — De arbeidsmarkt" (2025); UWV, Jaarverslag 2024 (2025); CBS, "Aantal mensen met bijstand met 1 procent toegenomen in 2024" (2025); OCTAS, "Beoordeling van het arbeidsongeschiktheidsstelsel" (interim report, 2023); Algemene Rekenkamer, "Uitvoering van wet arbeidsongeschiktheid loopt helemaal vast" (2023); SEOR/Regioplan, "Uitkomsten en ervaringen experimenten netto-effectiviteit re-integratie" (2014); Rendement, "Doelstelling banenafspraak in 2024 wederom niet behaald" (2025); InkludX, Fiscal cost of disability — Netherlands country profile.