Dispute over labour costs threatens intersectoral agreement

In October 1998, business leaders unambiguously condemned as "irresponsible" the Belgian federal government's decision to postpone a further reduction in labour costs. The employers' organisations immediately responded to the decision by cancelling planned negotiations with the trade unions. They also threatened to retaliate by postponing investment in education and training.

Until recently, it had seemed that a new two-year intersectoral agreement in Belgium was within reach (BE9809242F). Though both trade unions and employers still had a long way to go, there were hopes that for the first time in many years the social partners would reach an agreement without the government's intervention. The employers' organisations were said to be ready to accept most of the unions' proposal to drop the principle of fixed, set wage increases and to replace them by a target figure, creating more freedom for business. However, the employers were demanding corrective mechanisms to counteract a possible lack of self-discipline in certain industries.

The social partners had planned to discuss the details of the possible agreement on 12 October 1998, but the employers' organisations cancelled the meeting. This was not an attempt to embarrass the unions but the employers felt that there was no point in negotiating an intersectoral agreement unless a "clear and unambiguous decision" about the implementation of the state Budget had been made. On 11 October, the government had announced its decision to release a promised BEF 18 billion in reduced labour costs on 1 July 1999, rather than on 1 January 1998, in order to balance the federal budget for 1999.

"This puts investors on the wrong foot. Lower labour costs are not a gift to employers. They are necessary to keep Belgian industry competitive and to create more jobs. But what is worse is that the government does not keep its own promises. That is unacceptable," declared Tony Vandeputte, chair of the Flemish employers' organisation, Vlaams Economisch Verbond. Mr Vandeputte, adopting a militant stance which surprised many, said that the government should expect retaliation: "In exchange for the promised reduction of social security contributions, employers committed themselves to invest in the training of employees. Perhaps we should postpone that scheme for a while" (BE9810249F). The extension of the right to sabbatical leave, which needs the employers' cooperation, may also be at risk. The employers now want to link all these subjects together during the negotiations, which so far they have always refused to do.

The National Christian Self-employed Organisation (Nationale Christelijke Middenstandsvereniging, NCMV) has pointed out that employers will receive even less in labour cost cuts in 1999 than the government had led them to expect. Companies will receive only half of BEF 15.6 billion, that is BEF 7.8 billion, in 1999. The refund of health service contributions, however, is calculated at the end of each quarter. Accordingly, the government will have to refund contributions for only a single quarter in 1999, or BEF 3.9 billion, says Kris Peeters, the organisation's general secretary. Bearing in mind that the government will be better off by BEF 6 billion in 1999 because current employment agreements will not be renewed, the scheme to reduce labour costs will arguably actually result in a "profit" for the state in 1999.

Prime Minister Jean-Luc Dehaene admitted that his government's decision about the 1999 Budget will have an impact on negotiations over pay and employment over the next two years. However, he stated: "But if the social partners are prepared to study the decision once again they will find that our commitment to reduce labour costs by BEF 105 billion over a six-year period remains valid."

The trade unions have mostly refused to comment, partly because they do not wish to anticipate the views of their members about the budget and partly because they arguably have no real reason for complaint. The modest increase in some social benefits has been made possible only because of the postponement of the labour-cost reductions. So they have aimed most of their criticism at the employers, rather than at the government. Cancelling negotiations with the unions was "incomprehensible" and "shocking", they claimed. "Postponing labour-cost reductions does not mean they will not be introduced at all," argue Willy Peirens and Michel Nollet, leaders of the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) and the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) respectively: "Anyway, our proposals for a central agreement are not dependent on the date that labour costs are reduced."

Of the funds becoming available as a result of lower labour costs, BEF 8 billion were not to be allocated until an agreement had been reached about training courses for employed and unemployed people. If no agreement is reached, social security contributions will not be reduced.

The unions claim that collective agreements dealing with training and education may create around 25,000 jobs. Economic growth and further reductions in social security contributions may lead to the creation of approximately 100,000 new jobs by the end of 2000.