Services vouchers, Belgium

On 1 January 2004, the Belgian federal government launched a system of services vouchers in a new attempt to boost job creation by promoting the demand for domestic services and proximity services and to offer an alternative to the local employment agencies’ scheme.

Background

On 1 January 2004, the Belgian federal government launched a (still ongoing) system of service vouchers in a new attempt to boost job creation by promoting the demand for domestic services and proximity services and to offer an alternative to the local employment agencies’ scheme. The service vouchers aim to allow a user to pay a registered company for household tasks. The target group is unemployed people who find it difficult to get a job, and among them, those who are interested in undeclared work (Horlings, 2011).

Objectives

The services voucher scheme aims to:

• create new jobs, particularly for low-skilled workers – the target was for 25,000 additional jobs by the end of 2007;
• provide an incentive to move from undeclared work to a regular job in economic sectors where undeclared work is common;
• offer certain categories of unemployed people who perform service jobs for the local employment agency (local employment agencies’ workers) the opportunity to move towards a regular employee status;
• improve the work–life balance of service users by making it easier to outsource domestic work.

Specific measures

The services voucher is essentially a wage cost subsidy for labour-intensive, low-skilled domestic work. All residents in Belgium can buy services vouchers in order to purchase domestic help, ranging from housecleaning, laundry and ironing to sewing, meal preparation and transport for less mobile people.

The activities paid for with services vouchers are carried out by employees working for a company that is recognised as a services voucher company. The latter can include commercial businesses, such as temporary work agencies or cleaning companies; companies working in the social sector, such as reintegration services; and public services, such as local welfare offices or communities.

Each voucher costs the user €7.50, which corresponds to one hour of domestic help from a registered company. The cost of the voucher is partially tax deductible: the services voucher scheme entitles its users to a fixed 30% tax cut, so that the net cost is only €5.25. In addition to the €7.50, the registered company receives a government subsidy of €13.91.

Workers paid with services vouchers have a services vouchers employment contract. This is a normal employment contract with some specific features. The employment contract may be fixed term or open ended, full time or part time. A worker can serve several successive fixed-term employment contracts with the same employer without this leading to an open-ended employment contract. However, this is only possible for a limited period of time, which varies between three and six months. The workers have an employment contract, earn a wage corresponding to legal wage scales, accumulate social security rights and are insured against industrial accidents.

The user dates and signs the services voucher(s) and hands one voucher per worked hour over to the worker. Only the vouchers can be used to pay for hours worked. The worker passes the services vouchers on to the recognised company, which in turn sends them to the issuing company in charge of refunding the value of the services voucher to the recognised company. Since 1 September 2006, the paper services voucher scheme has been supplemented with an electronic version, giving the user and the recognised company a choice of either schemes.

A user can buy a maximum of 500 vouchers per year, though a disabled person can buy 2,000. From 1 January 2013, the voucher will cost €8.50.

Actors involved

The main actors involved in the services voucher system include:

• Workers: To do the tasks needed by users, the registered companies have to hire workers. There are no specific conditions to be hired, except that there must not be a familial link between the company and the worker.
• Registered companies: To be registered, the company has to be approved by the Service Vouchers Recognition Commission at the National Employment Office (Office National de l’Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA). The companies can be commercial, a non-profit association, self-employed people, local employment agencies, communes and social enterprises.
• Users: Private people who live in Belgium can buy vouchers through registered companies for household activities such as cleaning, cooking, ironing, sewing, caring or shopping.
• National Employment Office (Office National de l’Emploi (ONEm) – Rijksdienst voor Arbeidsvoorziening (RVA)): Supervise the demand on the labour market.
• Federal Public Service Work, Labour and social Concertation (Service Public Fédéral Emploi, Travail et Concertation Sociale – Federale Overheidsdienst Werkgelegenheid, Aarbeid en Sociaal Overleg): Is in charge of the regulation.
• Sodexo services: Is in charge of creating and distributing the the vouchers to the registered companies.

Outcome of evaluations; lessons and conclusions

Achievement of objectives

The introduction of the services vouchers in 2004 has been a great success. Indeed, the figures below show that the number of vouchers bought and the number of registered companies increase every year. In 2010, more than 136,000 people worked in those companies, which means more jobs and less unemployment. Those figures also mean less undeclared work. Indeed, the activities that the vouchers cover were usually the most common kinds of undeclared work.

Obstacles and problems

For the local employment agencies, the major issue is the difficulty of defining how much undeclared work is still present in Belgium. The authorities believe that the success of this measure has reduced the amount of undeclared work. However, this does not measure the amount of undeclared work that still remains.

Lessons learned

The Belgian government found a way to reduce the amount of undeclared work and thus reduce the issues of work accidents and financial fraud (regarding taxation). In addition, this is a way to partly and temporarily increase the number of people on the labour market and therefore reduce the unemployment rate.

Politicians also understood that providing opportunities and facilities to unemployed people to work as well as showing that there were advantages to working was a win-win situation. Therefore, the government has gone further and created the services vouchers.

Impact indicators

Source: Federal Public Service for Employment, Labour and Social Concertation

Source: Federal Public Service for Employment, Labour and Social Concertation

Transferability

The services voucher approach generated considerable interest among the peer review countries in the Mutual Learning Programme of the European Employment Strategy 2007. They generally considered it as an effective, if comparatively expensive, method of addressing the needs of vulnerable groups in the labour market. Some peer countries had already implemented similar schemes, although with a wider coverage of economic sectors and occupations, and less generous in terms of subsidy.

Some countries saw a major potential benefit in helping to bring some of those currently in the informal or undeclared economy into the regular labour market. Other countries questioned the high level of subsidy in the scheme, raised doubts about value for money and highlighted the potentially market-distorting effects of the fixed-price model incorporated in the services voucher scheme as well as the possible negative impacts through displacement and crowding out.

The relatively narrow focus on domestic services and the dominance of women among beneficiaries of the programme led to suggestions for a broader approach. It was argued that the inclusion of childcare as an eligible service would also increase the benefits of the scheme from the perspective of women wishing to enter the labour market.

Many countries saw scope for transferability of some variant of the scheme, although in some EU Member States the potential for transferability would be limited by factors such as budget constraints and different levels of development of the domestic services market: some countries have little or no tradition of domestic services being conducted for payment by people outside the family.

Contacts

Federal Public Service for Employment, Labour and Social Dialogue (Service public fédéral Emploi, Travail et Concertation sociale/Federale Overheidsdienst Werkgelegenheid, Arbeid en Sociaal Overleg): www.dienstencheques.be

Bibliography

Belgium Information Office (undeclared work): http://www.belgium.be/fr/emploi/contrats_de_travail/types_de_contrats/travail_non_declare/.

Eurofound (2009), Measures to tackle undeclared work in the European Union, available at /ef/publications/report/2009/undefined/measures-to-tackle-undeclared-work-in-the-european-union.

Federal Public Service for Employment, Labour and Social Concertation (definitions and explanations): http://www.emploi.belgique.be/defaultTab.aspx?id=651.

Federal Public Service for Employment, Labour and Social Concertation (statistics):

http://www.emploi.belgique.be/moduleTab.aspx?id=651&idM=218.

Federal Public Service for Employment, Labour and Social Concertation (2010 report on service vouchers) : http://www.emploi.belgique.be/moduleTab.aspx?id=651&idM=163.

Horlings, E. (2011), Service vouchers, Belgium, Eurofound, available at /ef/observatories/eurwork/case-studies/tackling-undeclared-work-in-europe/service-vouchers-belgium.

National Employment Office (regulations and services): http://www.rva.be/Frames/frameset.aspx?Path=D_opdracht_PWA/&Items=1&Language=FR.

Sodexo Service Vouchers: http://www.titres-services-onem.be/fr_particulier_le_fonctionnement.asp.

Michel Ajzen, Institut des Sciences du Travail – UCL