Political and economic crises hamper social partner talks

Over the past months, the social partners have entered negotiations on a national intersectoral agreement to determine their economic and social priorities for 2009–2010. However, the negotiations take place in a double crisis context – the global economic crisis and the country’s political crisis. In this context, negotiations have been difficult, with the employers aiming to contain wage inflation and the trade unions focusing on workers’ decreasing purchasing power.

Background

Every two years, the Belgian social partners negotiate their economic and social priorities for the next two years. The following organisations participate in the negotiations: the three trade unions – the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV), the Federation of Liberal Trade Unions of Belgium (Centrale Générale des Syndicats Libéraux de Belgique/Algemene Centrale der Liberale Vakbonden van België, CGSLB/ACLVB) and the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) –and the Belgian Federation of Employers (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO). In December 2006, after a prolonged bargaining round, the Belgian social partners reached an extensive national intersectoral agreement for the period 2007–2008 (BE0701019I).

The priorities put forward in the national intersectoral agreement provide a general framework of economic and social policies that will constitute a basis for other collective agreements at cross-industry or sectoral level, or for legal regulations depending on the field concerned. However, the national agreement is not mandatory and, at several times in the past, the social partners did not reach an agreement due to diverging positions between the employers and trade unions (BE9702101F).

In the case of no agreement being reached, no global challenges would be jointly identified by the social actors, which in turn would lead to more difficult negotiations in the collective bargaining process in the following years. In addition, the ‘weaker’ sectors of the economy would not have a framework to negotiate further collective agreements and workers who are not covered by collective bargaining at sectoral level would not benefit from any improvements negotiated in other economic sectors.

Finally, the absence of a national intersectoral agreement among the social partners would leave the way open for the public authorities to legislate according to their own good will.

Economic and political tensions

This year’s negotiations have taken place in a difficult context and reaching an agreement between the employers and trade unions has certainly been a complex task.

Belgium, like the rest of Europe, is confronted with a major economic crisis and price inflation. Trade unions are concerned by the decrease in workers’ purchasing power while employers worry about a probable uncontrolled increase in wages. Meanwhile, the country has experienced severe political tensions since 2007 (BE0802049I), with the government in a situation of great volatility – leading to its collapse again in December 2008 over the state bail-out of Fortis Bank (BE0810049I).

Purchasing power versus wage inflation

Belgium possesses a particular mechanism of automatic indexation of wages which follows the general evolution of commodity prices. This means that wages are indexed in line with average prices of regular products, including more than 500 products with the exception of gas, tobacco and alcohol; the prices of most of these products have increased significantly over the past years. This type of wage indexation aims to link wage development to the actual evolution of living costs. It only exists in two European Member States: Belgium and Luxembourg.

Employer concerns

Consequently, as living costs in Belgium have risen significantly over the past two years, FEB/VBO fears negative consequences for the Belgian economy if the automatic wage indexation is maintained. According to the federation, companies have already reached their budget for employment costs. For instance, in the technology industry, companies paid an additional €500 million for wages in 2008, and most of the employers expected to end the year with labour costs twice as high as those in 2007.

The Belgian employers particularly highlight the difficulties that small and medium-sized enterprises (SMEs) face in increasing employees’ wages according to the indexation system, while they have little scope to raise their sales prices at the same rate due to growing competition. To underline their viewpoint, the employers refer to studies which have been carried out by the Organisation for Economic Co-operation and Development (OECD) and which reveal that wages have been increasing faster in Belgium than in its neighbouring countries.

Trade union concerns

Therefore, FEB/VBO proposed to open discussions with the government and the trade unions to reconsider the automatic indexation of wages. However, the trade unions consider this proposition as unacceptable, especially in the context of the current economic crisis. Trade unions, as well as workers, are worried about the significant loss in workers’ purchasing power and are highly concerned by the tough living conditions of an increasing number of people who can no longer make ends meet.

CSC/ACV General Secretary Claude Rolin argued that ‘if some corrections in the wage indexation have to be established, these should be determined at the sectoral level’. Overall, the trade unions have concentrated their demands on an increase in the minimum wage, improved employment conditions for part-time workers and a guaranteed benefit system for unemployed people, particularly for unemployed temporary agency workers.

Commentary

The negotiations between the social partners have been extremely difficult. Nonetheless, the government was able to act as a mediator – before the Prime Minister, Yves Leterme, offered its resignation on 19 December 2008 – and both sides agreed on a proposal for an intersectoral agreement which now needs to be adopted by each of the social partners.

Emmanuelle Perin, Institute for Labour Studies (IST), Catholic University of Louvain (UCL)

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