1997 Annual Review for Belgium

This record reviews 1997's main developments in industrial relations in Belgium.

Introduction

The economic situation in Belgium was favourable in 1997, with growth rates reaching 2.1%. This was largely achieved through export growth, as domestic consumption remained weak. Inflation stood at 1.9%. According to the Institute for the National Accounts (Institut des Comptes Nationaux/Instituut voor de Nationale Rekeningen, ICN/INR), the 1997 budget deficit was 2.1 % of GDP. The improved economic prospects, and the 1998 budget measures seem set to reduce the deficit even further. The National Employment Office (Office nationale de l'Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA) reported the unemployment rate for 1997 at 13.3% for the total labour force (10.3% for men and 17.2% for women).

The Federal Government coalition between socialist parties - the Parti Socialiste (PS) and Socialistische Partij (SP) - and christian democratic parties - the Christelijke Volkspartij (CVP) and Parti Social Chrétien (PSC) - remained stable. Elections (federal, regional and community-level) will take place in 1999.

Key trends in collective bargaining and industrial action

In the absence of agreement between the central social partners over a two-year intersectoral accord for 1997-8 (BE9702101F), the Government laid down the basis for collective bargaining at sector and company level, including: a ceiling on wage increases; measures to reduce employers' social security contributions in firms which redistribute work; specific measures for target groups; and development of community services through return-to-work schemes for unemployed people.

At sector level, most agreements favoured the redistribution of work through measures such as part-time work, part-time early retirement, flexible work schedules or career breaks (BE9706205F). The insurance sector was the only one to have chosen the route of reducing working time in exchange for more flexibility (BE9707111N).

At company level, agreements to reduce working time were concluded in some firms, implementing government measures to maintain or create jobs through a reduction of working time linked to the reduction of social security contributions. These measures are limited to firms which apply for them - an example was Interbrew (BE9705106N).

At regional level, the scope of negotiations between regional social partner organisations is theoretically limited to matters covered by employment and training policies. However, in practice they have their own economic policies and their collective negotiation practices are different:

• in the "Leuven declaration" signed in July 1997, the social partners in Flanders stated that their common objective was to reduce unemployment by half by the year 2000 (BE9710220N). The Flemish region's employment policy is aimed at stimulating demand by means of economic aids and support for in-company training. Job creation is promoted in the voluntary and public-works sector and workers are encouraged to reduce their working time voluntarily by the granting of subsidies to make up for the loss of income (BE9707214N);
• the social partners in Wallonia signed a joint declaration within the tripartite Economic and Social Council of the Walloon Region (Conseil Economique et Social de la Région Wallonne, CESRW), committing themselves to collaborating actively in the economic development of the region (BE9803135F). The region promotes training and development projects in small and medium-sized enterprises (SME s), the reintegration of low-qualified unemployed persons in jobs in the voluntary and public sector and training schemes through subsidies. It also supports projects in firms aimed at reducing working time to increase employment (BE9711123F); and
• in the Brussels-Capital region there is a continuous dialogue between regional social partners on employment and vocational training. The region is preparing a series of projects to support firms that reduce working time to increase job opportunities (BE9803136N).

Industrial relations, employment creation and new forms of work organisation

Other than the measures mentioned in the section on collective bargaining, federal employment policies had three aims in 1997:

1. to reduce labour costs by aligning them with those of Belgium's three main trading partners - France, Germany and the Netherlands- through pay restraint and a reduction in social security contributions;
2. to achieve a redistribution of available work through a better integration of job seekers into the labour market, an improved response to workers' aspirations - allowing them to choose their working time - and a more flexible organisation of work. Such measures include career breaks on request, part-time work and partial retirement, and are negotiated individually or collectively at sector or company level. The annualisation of working time is another measure introduced to render working time more flexible; and
3. to integrate target groups into the labour market.

The main government schemes include the "first work-experience contract" (Première Expérience Professionnelle, PEP) for young people who have been unemployed for at least nine months, which offers six months of work experience (renewable for a further six months). Employers benefit from a reduction in their social security contributions and the young person's pay is made up partly of unemployment benefits and partly of a supplement paid by the employer.

Furthermore, employers hiring long-term unemployed people (or people in comparable categories, such as unemployed people receiving the minimum subsistence-level benefits) are eligible for a reduction in social security contributions for two years. The reduction is higher if the period of unemployment or the period of receipt of benefits is longer, or if the unemployed person is more than 50 years old. Very long-term unemployed individuals (five years, or on minimum-subsistence benefits for three years) can be employed under a standard employment contract for a half-time post (a scheme known as "Smet jobs") in tasks which are no longer commonly performed (petrol pump attendant, parking attendant, supermarket reception, etc) (BE9707213F).

Other government measures are aimed at creating employment in the "social economy", by means of a reduction in social security contributions (BE9801131N). The development of the activities of "local employment agencies" (local associations run by the social partners and local authorities) is also supported. These agencies provide services to private individuals by employing long-term unemployed workers and granting them a supplement to their unemployment benefits (BE9708213F). Most of these measures are matters for the regions and the communities. Regions have also concluded cooperation agreements with the federal authorities to develop retraining programmes for long-term unemployed people based on a return to work while still receiving unemployment benefit.

As part of the preparation of the national action plan to implement the EU employment guidelines, which Belgium and the other Member States are to present at the Cardiff European Summit in June 1998, the Government has started negotiations with the social partners and the regional authorities on: the provision and promotion of training; the development of initial vocational training; work experience and training for unemployed people and the provision of retraining; the provision of in-house training and tax relief for training measures; the reduction of social security contributions and taxes for lower-qualified labour; the reduction of SMEs' administrative charges; the creation of jobs in social and community services; the encouragement of after-school care for children by means of a contribution of 0.05% of the total paybill; and the encouragement of more flexible organisation of work and more flexible contracts.

Developments in representation and the role of the social partners

Debate surrounding the issue of employee representation in Belgium focused in 1997 on the Renault Vilvoorde case (BE9703202F) - when the French motor manufacturer announced the closure of its Belgian plant without prior workforce consultation (EU9703108F). The issues raised included the operation and effectiveness of European Works Councils (EWC s) and the influence of national legislation on transnational companies. It was made clear that EWCs are primarily installed for the purposes of exchanging information and for consultation, but not for collective bargaining. In addition, it was argued by many trade unions that the Renault case demonstrated the relatively light weight of the EWC process. Indeed, the sanctions for not following the information and consultation mechanisms were perceived to be non-existent or symbolic.

The strong reactions to what was seen as a lack of an energetic response by the Belgian system towards a Renault management which ignored the basic rules of providing information and consultation, have resulted in a promised future change in the legislation governing this area of industrial relations. Union representatives were keen to see redressed the balance at European and Belgian level between unions and employees on the one hand and transnational corporations on the other. It was thus argued that a "social Europe" should include a forum for collective bargaining at this level.

Industrial relations and the impact of EMU

Given the fact that meeting the demands for EMU membership has been a long process and has included several major changes in traditional public spending patterns and budget planning, preparations for EMU have had a strong influence on social dialogue and collective bargaining. This process established the boundaries for social dialogue by laying down a framework for economic and social developments. The Government was particularly keen on keeping inflation down by means of limiting wage increases. The framework for collective bargaining was outlined in the so-called "future plan" of the Government, which, as mentioned above, took the initiative because the social partners could not reach a global accord on these issues for 1997-8. The most important and visible elements of the plan (see above) included: a maximum 6.1% nominal wage increase for the 1997-8 period; priority accorded to the creation of new employment by using the means usually expended on additional wage increases; and linking reductions in social contributions to employment agreements between the social partners.

Conclusions and outlook

In 1997, the industrial relations sphere in Belgium was very much dominated by preparations for EMU and the impact of budgetary stringency on wages. The desire to create new employment opportunities was at the top of the policy agenda and many targeted measures have been instituted or are being developed in order to achieve this goal. There were also a number of other, more "national" issues which affected industrial relations, including: regional differences; the increasing importance of sectoral bargaining; and the establishment of a new agency to advise on employment policies.

The Flemish social partners have taken the initiative to negotiate a Flemish social agreement for the 1998-2000 period. After several years of failure to reach a federal global social agreement, resulting from clear differences in opinion between the Flemish and the Walloon social partners and government parties, this initiative is rather significant. This represents a new departure for Belgium: social agreements traditionally belong to the federal policy domain and are negotiated between the representatives of national social partners and recognised by the federal government. With this latest initiative, the Flemish social partners have been keen to send a strong signal in the direction of Brussels that firm and timely action is expected in view of the long-standing debate on employment creation, employment costs, wages, and so on. The Flemish social partners continue to express the hope that a general agreement at the national level can move further in this area.

Given the lack of a general intersectoral agreement, sectoral bargaining gained in importance. It was predicted by some that this would be a difficult exercise, as the social partners had little tradition of working under constraints such as the Government's wage increase limitations and the explicit link with job creation. The fear was that the company level would become the most prevalent domain for bargaining, a development which would - from a union perspective - be to the disadvantage of employees. This has not been the case, however. In fact, according to the unions, the number of employers covered by sectoral agreements has never been higher. In all important sectors, agreements were signed in 1997 (BE9706205F).

The Belgian Government has created a new institution, the Higher Council for Employment (BE9708114N), whose role is to advise the government on issues related to employment developments - including the effects of collective agreements on job creation - and on its decision-making in this domain (BE9801129F). The new Council is in principle a technical body independent of the government and the social partners, and is chaired by the Minister for Employment and Labour. The council plays what can best be described as a watchdog role, paying particular attention to the impact of collective agreements on job creation. The social partners have therefore not been invited to participate because, in their capacity as negotiators of collective agreements, they would be both judges and judged.

(Hans Bruyninckx, Steunpunt WAV, KU Leuven, and Estelle Krzeslo, Point d'Appui Travail Emploi Formation - ULB)