Resilience
This chapter provides addition information on the resilience of Dutch well-being as described in chapter 1 on trends in well-being. Well-being may also come under pressure in the longer term due to major external shocks that disrupt society. Is the Netherlands in a position to cope with a major shock? The 2008 financial crisis, the coronavirus pandemic and the war in Ukraine are examples of such major shocks. They show the fragility of our way of life and the longer-term limits on the sustainability of well-being. Shocks of this magnitude affect all dimensions of well-being. This is expressly not about the effects of the current shock, but about the extent to which the Netherlands is prepared for a subsequent shock.
What is a shock?
In the context of well-being, a shock is an infrequent event with major disruptive consequences for the entire population (OECD, 2014). Examples are wars, natural disasters, financial crises and pandemics. Such shocks occur in the relatively short term and are usually exogenous (externally caused), infrequent and to some extent unpredictable. They therefore exclude medium- or long-term trends and transitions. They also exclude regular fluctuations, such as flu outbreaks, economic fluctuations or annual floods; these are ingrained in the major systems – biosphere, society, economy – and these systems have adapted accordingly.
What is resilience?
Resilience is the ability of a society or system to reduce the risk of a shock, to absorb a shock when it occurs, to recover rapidly and possibly to adapt structurally to the new situation after the shock.noot1
Themes
Resilience of well-being is divided into six interrelated themes:
- Livelihood of households: Do households have the buffers they need to support themselves in the event of a shock? Do they have savings, a job and a home? Are they well informed and do they have the knowledge to deal with a shock?
- Size of vulnerable groups: How large are certain vulnerable groups that are the first to be affected in the event of a shock? For example households with low income and little wealth, the unemployed and people in poor health.
- Robustness of biosphere, society and economy: How robust are the major systems of the biosphere, society and economy and where
are they vulnerable? This concerns the four capitals: natural capital (biosphere),
social capital (society) and human and economic capital (economy). This theme is subdivided
into three subthemes:
- Robustness of the biosphere.
- Robustness of society.
- Robustness of the economy.
- Cross-border dependencies: How dependent is the Netherlands on other countries? Examples are imports of non-renewable resources such as oil and gas.
- Government power: How decisive is the government? Is the administration effective? Does the government have the financial capacity to take emergency measures?
- Critical systems: How shockproof are the systems that are essential for achieving the desired outcomes
and attaining the SDGs? We describe a system as critical if its failure could lead
to the failure of the other systems that are essential for the three major systems
or that have a social function that is too important to be allowed to fail. This theme
is subdivided into three subthemes:
- Failure of the system leads to the failure of one or more other systems.
- The system is essential for the functioning of one or more of the three major systems (biosphere, society, economy).
- The system fulfils an essential social role that is too important to be allowed to fail.
Interpretation
Resilience is not an absolute concept. There are no specific (Dutch) critical limits or standards against which indicator values can be compared. For example, monoculture makes agriculture vulnerable, but how much monoculture is acceptable and how much is too much? With the ending of natural gas extraction, the Netherlands has become more dependent on imports of natural gas, but at what percentage of import dependency should we start to worry? These are normative issues on which CBS makes no pronouncements.
The question is whether ecological, social and economic systems are equivalent or not: for a long time, the interests of the economy were paramount. As part of the ‘Beyond GDP’ approach – which seeks broader measures of prosperity, well-being and sustainability – ecology, society and the economy are viewed as interconnected systems (Hoekstra, 2019). According to current thinking on ‘planetary boundaries’noot2 and sustainability, there is a hierarchy in which ecological systems form the basis for social systems, and the economy in turn depends on the functioning of ecological and social systems. If the foundations are not sound, the layers built upon them will sooner or later collapse. The importance of the biosphere as the foundation on which society and the economy are built can also be seen in the first figure in Chapter 1.
The role of the monitor is to present these issues together with factual information on developments. Figures on resilience will be interpreted only on a factual basis, without reflections on critical limits or standards. These factual observations concern only the present. How well the Netherlands will be able to absorb a shock, recover from it and adapt in the future can only be measured indirectly by examining the current state of the relevant factors.
The indicators do not show the absolute level of resilience of well-being. The dashboard shows whether the indicators for the six aspects of resilience are moving towards a higher or lower resilience, and whether the Netherlands is more or less resilient compared to other EU countries.
The comparison of the position with other countries is indicative. The dashboard has been compiled from a Dutch perspective. For other countries, resilience could be measured with other indicators, such as cultural aspects of social cohesion or the role of religion in a society.
Results
This section outlines the development and relative state of the resilience of well-being. The dashboard contains a limited selection of key indicators describing the complex phenomenon of resilience. The dashboard helps to identify potential weaknesses, should future shocks arise such as the 2008 financial crisis or the coronavirus pandemic. The more ‘green’ indicators, the better society should be able to absorb such a shock.
Resilience of well-being ‘here and now’
Two themes in the resilience of well-being are related to well-being ‘here and now’. The theme of ‘livelihood of households’ measures the extent to which households on average have the resources to absorb a shock. Here we look at median wealth, savings at banks in the Netherlands, the extent to which people have control of their own lives, their perception of their own health and labour participation. In the theme ‘size of vulnerable groups’ specific attention is focused on certain vulnerable groups which would be the first to be impacted in the event of a shock: low-skilled people, the unemployed, self-employed people at risk of poverty, people with low income and little wealth and people with long-term limitations due to health problems.
The picture is positive: the long-term trends over the 2014–2021 period for eight of the 10 indicators show a rise in well-being. The other two indicators point to stable well-being. This means that households are better able to support themselves in the event of a shock. In addition the Netherlands is high in the EU ranking for five of the six indicators for which international comparisons are possible.
The resilience of well-being ‘here and now’ has also improved in the most recent year. Between 2020 and 2021 households’ savings rose by 3.4 percent and the low-skilled population decreased by 0.9 percentage points. Between 2019 and 2020 the poverty risk of self-employed people fell by 0.6 percentage points (5.9 percent) and the percentage of people with serious long-term limitations due to health problems fell by 0.4 percentage points (to 4.3 percent). The possible consequences of the coronavirus crisis are not yet visible in the latest figures. It is true that the size of vulnerable groups is decreasing to some extent, both on a trend basis and in the latest year, but it remains significant.
Livelihood of households
Size of vulnerable groups
Resilience of well-being ‘later’
Well-being ‘later’ concerns the amount of resources we leave for future generations over the long term. The question is whether the major systems that make our well-being possible – biosphere, society, economy – are robust enough to absorb major (external) shocks. In this connection specific attention is devoted to government power, a particularly important aspect in the event of a shock affecting large sections of the population and threatening major systems.
For six of the 13 indicators in the dashboard for well-being ‘later’ the well-being trend is rising. In the case of five there are stable trends. The declining trend in the available green and blue space per capita and the decrease in the most recent years (2018–2020) shows that the robustness of the biosphere is under pressure. The robustness of society is relatively high and trending higher. Although trust in people rose by 3.3 percentage points in 2021, trust in institutions declined by 2.6 percentage points in the same year. Government power is relatively high. Government debt fell by 2.2 percentage points in 2020–2021 to 52.1 percent of GDP. Trust in the rule of law trended lower, however, during the 2014–2021 period.
Robustness of biosphere
Robustness of society
Robustness of the economy
Government power
This edition of the monitor measures for the first time the resilience of specific systems that are of critical importance for well-being as a whole or for specific SDGs. We describe a system as critical if its failure could lead to the failure of the other systems that are essential for the biosphere, society and/or economy, or that have a social function that is too important to be allowed to fail.
Systems whose failure could lead to the failure of other systems are energy supply, telecoms and information infrastructures. The energy supply is the most vulnerable: dependence on energy imports is trending higher and is high compared to other EU countries. The share of renewable energy in total energy consumption is trending higher, but the Netherlands is in the lower part of the EU ranking (23rd in the 27 EU countries in 2020). Twelve percent of companies experienced malicious ICT security incidents in 2020.
Ecosystems, social relations and the business community are essential for the resilience of the biosphere, society and the economy. The major systems are by and large robust. Social cohesion in the neighbourhood (an indicator of people’s social relationships in their own neighbourhood) and trust in people (a more general indicator) are trending higher. Trust in people also increased in 2021. Businesses are also becoming increasingly robust. Their median solvency was 51 percent in 2020 and trended higher over the 2014–2021 period.
Systems that fulfil an essential social function are the financial sector, government, care, education, transport and drinking water supply. Resilience is increasing in the financial sector and government. The Common Equity Tier 1 ratio (CET1) – a key indicator of the robustness of the financial sector – shows an improving trend, although the Netherlands is in the middle group of the EU ranking. Trust in institutions is relatively high and the trend is upward, although it decreased by 2.6 percentage points to 66.9 percent in 2021. The effectiveness of public administration is high in comparison with other EU countries. The resilience of care, by contrast, is under pressure. The vacancy rate (the number of vacancies per thousand jobs) is trending higher and the Netherlands was 21st out of 25 countries in the EU ranking in 2020. In the event of a shock it may be difficult to find additional care personnel.
Critical systems: system failure
Critical systems: essential for the three main systems
Critical systems: essential for society to function
Resilience of well-being ‘elsewhere’
Dependencies on other countries represent a risk for the well-being of the Netherlands. The Netherlands is now largely dependent on foreign countries for its energy supply. In addition, essential products such as computers and mobile telephones, but also solar panels and electric cars, contain rare and expensive metals. Demand for these scarce raw materials is high. Well-being ‘elsewhere’ becomes vulnerable if the Netherlands itself does not have the required raw materials and security of supply is not guaranteed, for example due to geopolitical tension.
The theme of ‘cross-border dependencies’ in the resilience dashboard includes the indicators of dependence on energy imports, economic dependence on exports and the greenhouse gas footprint. The Netherlands is becoming increasingly dependent on imports of energy from other countries (the medium-term trend is red). Almost 70 percent of our energy is now imported. Since the start of measurements in 1995 the vulnerability on this point has never been as high. This makes the Netherlands vulnerable to geopolitical tensions.
Cross-border dependencies
Noten
Bruneau, M., et al. (2003). A framework to quantitatively assess and enhance the seismic resilience of communities. Earthquake spectra, 19(4), 733-752.
Rose, A. (2007). Economic resilience to natural and man-made disasters: Multidisciplinary origins and contextual dimensions. Environmental Hazards, 7(4), 383-398.
Rose, A. (2016). ‘Measuring Economic Resilience to Disasters: An Overview’, RGC (2016). Resource Guide on Resilience. Lausanne: EPFL International Risk Governance Center. v29-07-2016.
Rockström, J., et al. (2009). Planetary boundaries: exploring the safe operating space for humanity. Ecology and society, 14(2).