The financial and economic crisis has led to fiscal austerity measures and reform policies in the Netherlands that have had a direct impact on municipalities. Decreased municipal budgets have forced municipalities to cut public services and lower the employment conditions of municipal employees. It may be expected that in countries like the Netherlands, with stronger social dialogue institutions, decision-making will provide more room for effective employee participation. This study investigates whether and how social dialogue has influenced austerity policies in Dutch municipalities. The results indicate that collective bargaining at sectoral level resulted in moderate increases in nominal wages as well as support for workers who were made redundant. At the workplace level, the effectiveness of social dialogue through works councils has varied depending on the history of relationships between employers and employee representatives and their strategic approach in dealing with austerity.