New economic recovery plan launched for Wallonia

In 2005, the Walloon regional government launched a set of measures seeking to boost the worrying economic situation of the region. The impacts of these measures are being evaluated in 2009. At the same time, in light of the upcoming regional elections in June 2009, the government has proposed a new framework for further measures. As part of this initiative, a particular focus will be placed on developing the region’s ‘green economy’ and its sustainability in the long term.

Poor economic performance

Wallonia, the French and German-speaking region in the south of Belgium, has been experiencing a relatively low economic performance for many decades, along with a higher unemployment rate. In 2005, Wallonia’s gross domestic product (GDP) per capita amounted to 87.5% of the European average; in the same year, its unemployment rate stood at 11.9%. Flanders, meanwhile, has fared considerably better in comparison, recording a GDP per capita of 120.1% of the European average and a significantly lower unemployment rate of 5.5%.

New ‘Marshall Plan’

The Walloon government – composed of the French-speaking Socialist Party (Parti Socialiste, PS) and the Humanist Democratic Centre (Centre Démocrate Humaniste, CDH) – decided to address this crisis situation by launching, in August 2005, an action plan aiming to reinvigorate the regional economy (BE0510304F). The government presented its objectives in a document entitled ‘Priority actions for the future of Wallonia’ (see overview (in French, 160Kb PDF)PDF) – this was subsequently called the new ‘Marshall Plan’ in reference to the plan launched by the United States to rebuild western Europe after the Second World War. The Walloon plan, albeit more modest than the original Marshall plan, aims to boost investment in enterprises by:

• facilitating access to investment grants;

• reducing tax for enterprises;

• developing industrial research and partnerships between universities and enterprises;

• developing and improving access to vocational training.

Positive results

Four years later, at the end of its term before the next regional elections on 7 June 2009, the government is now ready to assess the impacts of its economical measures. However, this assessment remains hard to realise: to properly measure the effect of political measures on the economy requires a long period, especially if the impact of the measures on the creation of companies and on employment is to be evaluated.

However, some positive results have been highlighted. According to the regional government, some 27,000 new jobs were directly linked to the plan. The positive features of the plan and the need for more future measures of this kind in the coming years have also been confirmed by the social partners – namely, the employers represented by the Walloon Union for Enterprises (Union Wallonne des Entreprises, UWE), as well as the trade unions the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) and the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV). In particular, the employers underline the importance of further development of school education and the need to evaluate school programmes in line with the needs of enterprises. For the trade unions, it is essential to emphasise the need for investment in the green sector and to train a qualified labour force for these sectors.

In the end, consensus was reached among the social partners, along with economists, members of the government and parties from the opposition on the need to pursue such an economic plan during the next government term.

Independent evaluation of plan

An evaluation (in French, 3.6Mb PDF)PDF was also conducted by the economic and employment observatory, the Walloon Institute of Assessment, Forecasting and Statistics (Institut Wallon de l’évaluation, de la prospective et de la statistique, IWEPS). According to the observatory, it is too soon to assess the economic impacts of the government plan. However, the evaluation shows that the so-called ‘Marshall Plan’ has contributed significantly to reinforcing the link between researchers, universities and companies. Moreover, small and medium-sized enterprises (SMEs) seem to have benefited from this collaboration, which was previously reserved for large companies. For IWEPS, the efforts made in terms of training were important; however, it concludes that the target beneficiaries were not those who needed it the most. People who followed training under this framework had already obtained a diploma and received training, while those who were less qualified only constituted a minority.

Marshall Plan 2 to be developed

The current regional government presented, in April 2009, a [declaration of intent (in French)](http://www.wallonie.be/servlet/Repository/Dans rubrique Plan Marshall.pdf?ID=44391) concerning further economic measures that could be included in a so-called ‘Marshall Plan 2’ during the next term. This declaration focused on three important points, namely:

• developing and boosting a green economy through additional research and training in green technologies, with advantageous tax reductions for green construction projects;

• reinforcing the link between school programmes and the needs of the labour market;

• distributing grants and tax reductions according to principles of good governance and transparency.

Focus on development of green economy

One of the major shortcomings of the plan launched in 2005 was – according to the French-speaking environmental opposition party Ecolo – the failure to develop a ‘green economy’. Their demand was finally met by the government, which has dedicated an important part of the new plan to sustainable development. The declaration of intent specifically focuses on the need to give financial incentives for research in green technologies, as well as the importance of providing incentives to universities and schools to develop training in these techniques. The objective is to finally develop a recognised expertise in such matters and to encourage companies to invest in these technologies. Another goal in terms of sustainable development is to sustain green constructions – either in the public sector through greater investments from the region, or in the private sector through financial incentives and a revision of town planning rules that sometimes constrain builders. At the same time, the government hopes to create more jobs in this new sector and to redirect unemployed people from the ‘old’ sector in crisis to a green sector in expansion.

Commentary

In this period of economic crisis, measures seeking to boost enterprise investment and development are certainly welcomed. According to many commentators, these sets of measures have helped to reduce the potentially detrimental impact of the economic slowdown on the regional economy. For now, both Flanders and Wallonia are experiencing a decrease in their unemployment rate, which has dropped by 8.9% and 3.6% respectively between 2007 and 2008, although unemployment in the south of the country remains high at 10.1%. However, the [latest data](/search/node/emcc OR erm OR index.php?oldIndex) registered by the European Restructuring Monitor (ERM) clearly show evidence of significant job losses through restructuring – mainly in Flanders, while Wallonia seems to be less affected by such losses and is even continuing to generate new jobs. A later evaluation of the year 2009 will show if this tendency is confirmed.

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