Social partners denounce recommendations by Higher Council for Employment

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The political debate on employment policies in Belgium grew bitter just before the Christmas break at the end of 1997. Recommendations on government policies made by the new Higher Council for Employment provoked the anger of the leaders of the two main trade union organisations and some critical declarations from the chief executive of the employers' federation.

Recommendations made by the Higher Council for Employment, a new independent body set up by the Federal Government to "evaluate measures to promote employment and examine job-creation proposals", were leaked to the daily newspaper, Le Soir, which published them on 22 December 1997. The proposals had been originally expected only at the end of January. The Higher Council for Employment, it should be recalled, is made up exclusively of experts with no places at all for the social partners (BE9708114N).

Draft recommendations

In its recommendations - not yet officially published but now widely commented upon - the Higher Council's preliminary draft took a clear-cut position on questions for which compromises had been hard to reach between the social partners:

  • reduction of working hours;
  • pay indexation; and
  • reduction of wage costs and job creation.

On the reduction of working hours, the draft recommendations said that these were already shorter in Belgium than elsewhere. According to the Council, employers and trade unions would never be able to agree on a general reduction. Instead, efforts should be made to promote part-time work or the four-day week by lengthening the working day and staggering working hours, and to encourage negotiations on these points at company level.

On pay indexation the Council suggested replacing the automatic system with one based on a single annual indexed rise. This would fit in with the necessary wage restraint already in place following the guidelines imposed on the social partners by the Government (BE9710117F). The Council also proposed introducing wage flexibility in line with companies' productivity.

On the reduction of wage costs and job creation, the Council adopted a radical position: it thought that a general reduction of employers' social security contributions was necessary for all companies in the form of a fixed amount for each worker. Contrary to union wishes, that reduction should not be linked to job creation but granted unconditionally. It would be an incentive to increase part-time work because "the more the (worker's) income diminishes, the more the employer's financial advantage - in terms of the percentage of wage cost - increases" (quoted in Le Soir, 22 December 1997), and it would be a better method of redistribution than the reduction of working time.

For the Council, the best formula would be to extend "Maribel" - a system that allows a fixed reduction in employers' contributions for blue-collar jobs, but which absorbs one-third of the whole budget earmarked for employment (BE9703103N) - to the service sector. That would be very expensive for social security - BEF 40 billion, according to the National Bank's estimates - and could be compensated only in the long term, as the national debt decreased. However, the Council declared itself against any proposal for the financing of social security through taxes or any taxation under government responsibility.

Negative reactions

It is not the originality of the Higher Council's recommendations that provoked the end-of-year row, but the feeling, widely shared by all social partners, that advantages achieved through social consultation were being challenged by an institution acting well beyond its terms of reference.

It must be recalled that for 50 years Belgium has had institutionalised consultation through bodies like the National Labour Council, the Central Economic Council and the joint committee s in which unions and employers discuss these very questions. They continue to operate even in the event of the breakdown of intersectoral negotiations, as was the case in 1997, and they produce recommendations and opinions for the Government.

In fact, in October 1997, the social partners sent a "joint declaration" to the Prime Minister (BE9710117F) in response to his call to resume the negotiation of an intersectoral agreement. In that text, the employers admitted for the first time that the reduction of wage costs accepted by the unions had to be compensated by alternative financing of social security, under the form of an environmental tax or income tax. That is precisely what the Higher Council for Employment today condemns in its recommendations. This opinion, as well as the negative judgment on the collective reduction of working time, the marked preference for part-time work and the challenge to the system of wage indexation as accepted in collective agreements, has helped, in the view of social partners, to put a brake on the modest progress in social negotiations.

In fact the unions are wondering whether the Higher Council for Employment is not echoing the policy which was always recommended by Fons Verplaetse, governor of the National Bank, who apparently has the Prime Minister's ear. It is indeed Marcia de Wachter, the general secretary of the National Bank, who heads the Higher Council for Employment and is also the author of the much debated recommendations.

In addition, the Socialist Party, a member of the Government coalition, and the experts that it had designated to the Council have immediately distanced themselves from the text of the recommendations as published in the press, demanding that other proposals be examined in the final report. Among these proposals are those put forward by the Planning Office along the lines of the 1996 "Robien law" in France (FR9705146F), which recommend a general reduction in working hours to create jobs and a proposal to adjust the reduction of employers' social security contributions in accordance with a series of precise criteria (BE9711123F). They would be compensated by arrangements to finance social security based on companies' fiscal results.

Commentary

The social partners' anger is directed more at the Government than at a body for which they see no need in the field of industrial relations. If its recommendations were followed, Belgian social policy would be defined by an illegitimate (even if legal) body that denied the reality of consultation. According to the chief executive officer of the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO), Tony Vandeputte, such logic "does not quite apply to Belgian reality, which involves considerable unionisation, with its strength concentrated at sector level" (quoted in Le Soir, 24 December 1997).

It is feared that the Council's recommendations, even softened in the final version now in preparation, may serve as the basis for the Belgian plan for employment that the Government will submit to the European Commission in April 1998. (Philippe Dryon and Estelle Krzeslo, Point d'Appui Travail Emploi Formation - ULB)

Reference

"Les relations collectives du travail en Belgique. Acteurs et institutions", E Krzeslo, Point d'Appui Travail Emploi Formation, Dossier 16, June 1996.

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