Though Wim Kok, the prime minister of the Netherlands from 1994 to 2002, had a reputation as a highly effective politician and social reformer, it is likely to be overshadowed by the Srebrenica massacre in former Yugoslavia in 1995, when Dutch troops failed on his watch to prevent the worst war crime in Europe since 1945.

Kok, who has died aged 80, sent a battalion of soldiers, nicknamed Dutchbat, to join the United Nations UNPROFOR peacekeeping mission, involving troops from many nations stationed in various parts of the violently disintegrating Yugoslavia.

The Bosnian-Serb army of Republika Srpska (VRS), led by General Ratko Mladić and supported by the Scorpion paramilitary unit from Serbia, surrounded Srebrenica in north-eastern Bosnia in summer 1995. With unintended irony, the UN had designated the enclave a “safe area” for civilians fleeing the fighting in the region in April 1993.

But the UN had failed to disarm the army of Bosnia-Herzegovina or to force the withdrawal of the VRS from its encirclement of Srebrenica before it put in the Dutch troops to protect the safe area. They failed to prevent Mladić from seizing control of the town and subsequently rounding up thousands of men of military age and boys, separating them from up to 30,000 people mainly women and girls, who were subjected to ethnic cleansing and abuse.

The men were confined separately in a camp where an estimated 8,000 and more, mainly Muslims, were killed by Mladić’s men. Kofi Annan, then UN undersecretary general for peacekeeping operations, called the massacre the worst war crime on European soil since the end of the second world war. The atrocity was also declared to be genocide and a crime against humanity.

In 1996 the Dutch government ordered the respected Netherlands Institute of War Documentation to investigate the massacre. Its massive report was delivered in 2002. It criticised the Dutchbat deployment as ill-considered and fundamentally impossible.

The Kok administration accepted partial responsibility for the circumstances surrounding the massacre, and Kok and his cabinet resigned, ending a political career in which a great deal had been achieved in other fields.

Mark Rutte, the present Dutch prime minister, said: “It was no secret that the Srebrenica tragedy weighed him down to the very end.”

Blame was also assigned to the UN, the Norwegian general in local command and poor liaison between Dutch, Norwegian and Pakistani elements in UNPROFOR. But the Dutch courts ruled that ultimate responsibility for Dutchbat rested with the Dutch government and nobody else. The associated national trauma and shame remains the subject of much unease in the Netherlands, not helped by the decision to issue commemorative insignia to Dutch veterans for their “behaviour in difficult circumstances” in 2006. Families of the victims and many Dutch citizens were outraged.

Wim (Willem) Kok was born at Bergambacht in the province of South Holland, to another Willem, a carpenter, and his wife, Neeltje (nee De Jager). After study at Nyenrode Business University, Utrecht, he worked at the socialist National Association of Trade Unions, becoming chairman in 1973. This body merged with the Catholic trade union group into the Federation of Dutch Trade Unions in 1982 and Kok continued as chairman until 1985.

The following year Kok was elected to parliament on the Labour party list. The party leader and former premier Joop den Uyl retired later in 1986 and Kok was chosen as the new leader of the party and the opposition. After the 1989 election Labour joined a coalition led by the Christian Democratic Appeal (CDA) and Kok became deputy premier and minister of finance.

In 1994 Labour emerged as the largest group in the fractious parliament, which is elected by direct proportional representation, leading to a multiplicity of small parties. In a hard struggle prime minister Kok formed a coalition with the VVD (conservative-liberals) and D66 (social-liberals). It was the first Dutch government since 1908 with no Christian Democrat participation.

Adopting the “polder model” of consensus between government, employers and unions working together on the Social-Economic Council, Kok embarked on a general boost of the economy, stagnant for years, with policies to cut debt and expenditure, and to boost employment with lower pay, shorter hours, privatisation and big infrastructure projects creating jobs. The consensus approach and centrist orientation of his administrations impressed the likes of Tony Blair and Bill Clinton. Social legislation in Kok’s second term included legalising euthanasia, a world first, and same-sex marriage.

The largest domestic crisis after Srebrenica during Kok’s period in office was connected with the ruling House of Orange. There were loud public protests in 2002 when the heir to the throne, Prince Willem-Alexander (now king) got engaged to Máxima, daughter of the Argentinian banker Jorge Zorreguieta, who served two years as minister of agriculture under the military junta led by General Jorge Videla. Kok defused the tension by persuading Máxima’s father not to attend the wedding. As queen-consort she is now very popular.

In 1996 Kok and his wife Rita (nee Roukema) decided to tour the US after attending the Olympic Games in Atlanta. They hired a camper-van and worried the US authorities by driving around at will without an escort, agreeing only to check in with the CIA from the sheriff’s office or police each night to reveal where they were. In retirement Kok lobbied for the EU and served on several company and charitable boards.

Kok is survived by Rita, a daughter and two sons.

• Wim (Willem) Kok, politician, born 29 September 1938; died 20 October 2018

• This article was amended on 28 October 2018. At the time of the Srebrenica massacre, Kofi Annan was UN under-secretary general for peacekeeping operations, rather than UN secretary general