Belgian Government launches new plan for jobs

In July 1997, Belgium's Federal Government approved an important new job creation plan in which unemployment benefit is used as a wage subsidy. Further efforts are also made to promote the 32-hour working week. This article reviews the main points of the plan.

The Government's new plan to create employment is known as the "Smet" Plan, after the Federal Minister for Employment and Labour, Miet Smet. She has also made a number of changes to the existing "Vandelanotte plan" to promote the 32-hour working week. The various measures were approved by the Council of Ministers on 4 July 1997.

Smet plan: target groups and job types

The target groups of the Smet plan are:

• all people who have been unemployed for at least five years;

• all people who have been on supplementary (minimum) benefit for at least three years; and

• unskilled workers who have been unemployed for at least two years or who are on supplementary (minimum) benefit

All private companies, autonomous public companies, public credit institutions, public transport companies, educational establishments and local and provincial councils are included under the scheme, but Government departments and temporary work agencies are excluded.

The types of job envisaged are those "jobs that are no longer done because they have become too expensive" [sic]. Possible examples include petrol pump attendants, childminding, packaging work in large warehouses, car parking services, nurseries, home-shopping deliveries, material supply and transport services in companies and guards (for car park surveillance, for example).

Contribution on recruitment

The employee must be hired with a normal contract of employment as a part-time worker on either 50% or 80% full-time contractual hours. The employee receives a maximum of 120% of the sectoral minimum wage. For social security purposes the employee is considered as a part-time worker with all rights maintained. The National Department of Job Creation contributes the majority of the wages payable by using the unemployment benefit that would otherwise have to be paid. The employer thus pays between BEF 6,000 and BEF 10,000 a month to cover the costs of insurance, working clothes, travel and so on. The employer pays no social security contributions.

Unemployed people recruited in this way may be employed for a maximum of only three years in a "Smet" job. However, in order to help guarantee continued employment, there is then a further period of two years when they still qualify for subsidies that are progressively reduced. This is achieved through the classic method of exemptions from employer social security contributions (100% in the first year and 75% in the second year).

Union representatives involved in approval procedure

Both employer and employee representatives have welcomed the job plan. The chairs of the Federation of Belgian Enterprises (VBO/FEB) and the National Christian Federation of Small Businesses (NCMV) recently called on their members to respond creatively to the initiative by "creating feasible positions with added value for personnel, customers and the company". The unions had feared that "real" jobs would be displaced by this type of subsidised job. Therefore the procedure requires the employer to describe the job clearly in the application, which must also contain a positive recommendation from the company union representatives. The regional director of the National Employment Service (RVA) also has to approve the application.

Towards the 32-hour working week?

The "Vandelanotte plan" (named after the Belgian Deputy Prime Minister and Home Secretary), which has been in force for some time, granted a substantial reduction in employer social security contributions to companies in difficulties that had introduced a 32-hour week in order to preserve employment. The employees involved receive a pay cut in proportion to the reduced working hours, but then receive partial compensation, which limits the net wage loss to between 3% and 6%. This plan was not at all popular, and only one company has actually taken advantage of it. However, the Government has now adapted it: by way of an experiment, "healthy" companies will now also be able to make use of the scheme The company will enjoy a reduction of BEF 97,000 in employer contributions per year for each employee concerned.

Commentary

Since the economic recession of the early 1980s, Belgian employment policy has been divided into five types of measures:

1. job creation mainly through subsidised (public sector) employment;

2. encouraging people to enter and leave the job market (through measures such as early retirement, career breaks and so on);

3. reducing recruitment costs by giving bonuses on recruitment and granting social security reductions;

4. making working hours and contract periods more flexible; and

5. training initiatives, sometimes coupled with work experience projects.

In its "global plan" (1996-7) the Belgian Government set out the following firm objectives: reducing labour costs; stimulating the redistribution of labour (as in the Vandelanotte plan); reinforcing the policy of targeting the long-term unemployed and the unskilled (as in the Smet plan); developing new (labour) markets; and training and education.

It is doubtful whether the adaptation of the Vandelanotte plan will suddenly produce more supporters of the 32-hour working week. Schemes for the linear reduction of working hours are not really in vogue with Belgian employers. In the recent sector-based negotiations for new collective agreements, only nine of the 70 agreements have included a form of reducing working hours (BE9706205F). For example, the insurance sector will gradually go from a 36-hour week to a 35.5-hour week, while employees in the distribution industry can voluntarily opt for a 32-hour week spread over four or five days, with a proportional adjustment of their wages.

The active use of unemployment benefit as a subsidy for job creation in the private sector constitutes an important breakthrough in Belgian employment policy. Unemployment benefit, supplemented by a form of wage subsidy, has been used in the past for creating subsidised employment in government departments and registered charities, and since 1987 also for employment in "local employment agencies" run by local councils where individuals, by purchasing and issuing cheques, can use long-term unemployed people for domestic "chores" (such as cleaning and gardening).

With the "Smet jobs", Belgium is going the way of the similar "Melkert" jobs scheme in the Netherlands. It is hoped that the 85,000 long-term unemployed people, the 75,000 who are unskilled and unemployed, and the 30,000 individuals on supplementary (minimum) benefit, will benefit from it. (Peter van der Hallen, Steunpunt WAV)