Social partners give mixed reaction to new government's plans

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In July 2003, four socialist and liberal political parties reached agreement on the formation of a new Belgian federal government. The coalition agreement includes a number of important employment and social plans, such as creating 200,000 jobs over four years and cutting employers' social security contributions. The social partners have reacted in differing ways to the new government's programme.

A general election was held in Belgium on 18 May 2003. On 8 July, after several weeks of often tense negotiations, four socialist and liberal parties which had been part of the previous coalition government - the Flemish Liberals and Democrats (Vlaamse Liberalen en Democraten, VLD), the (French-speaking) Reform Movement (Mouvement réformateur, MR), the (French-speaking) Socialist Party (Parti Socialiste, PS) and the (Flemish-speaking) Progressive Social Alternative (Sociaal Progressief Alternatief, SP.A-Spirit) - concluded an agreement setting out the terms and programme of a new 'violet' coalition administration for 2003-7, again led by Prime Minister Guy Verhofstadt of the VLD, who was responsible for forming the coalition. The agreement, entitled 'A creative Belgium based on solidarity. A breath of wind for the country' (Une Belgique créative et solidaire. Du souffle pour le pays/Een creatief en solidair België. Zuurstof voor het land) is dominated by economic and social issue, and notably states an ambition of creating 200,000 new jobs by the middle of 2007.

Reaction to the coalition agreement from the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO) has been one of disappointment. The business world has been grappling with a difficult economic situation, and had been hoping for a clear political signal from the new federal government. The signal given by the agreement is 'markedly insufficient', according to FEB/VBO. For example, it feels that: the government's proposals for reductions in social security contributions are disappointing; there has been no progress in making the labour market more flexible; and too much attention is being focused on distributing prosperity than on creating it. By allocating an extra EUR 4.5 billion of expenditure to the healthcare sector, and only EUR 800 million to a reduction in social security contributions, the new government has given a clear indication, according to the employers’ association, that it prioritises social expenditure over investment for the future.

Nonetheless, FEB/VBO believes that the governmental agreement offers some glimmers of hope. In particular, the employers’ association points to the agreement’s express focus on entrepreneurship, knowledge and job creation and its substantive action points in areas such as a reduction in social contributions and stimulation of research and development. The employers also welcome the fact that, with a view to bringing Belgium into line with the rest of Europe, a start had been made on placing a ceiling on the social security contributions paid by highly skilled workers. The agreement's substantive measures linked to improving the status of self-employed workers are further sources of satisfaction for FEB/VBO, as is the decision to conclude sectoral agreements with industry concerning compliance with the the Kyoto protocol to the United Nations framework convention on climate change, and measures to encourage households to save energy.

With regard to employers' social security contributions, FEB/VBO had called for an immediate, general and linear reduction worth a total of EUR 1.4 billion EUR with a view to safeguarding the competitiveness of Belgian enterprises. As far as FEB/VBO is concerned, the reduction set out in the government agreement (EUR 800 million on an annual basis starting on 1 July 2004, aimed at particular target groups) is no more than an initial step.

Representing small- and medium-sized enterprises, the Union of Small Firms and Traders (Union des Classes Moyennes, UCM) takes the view that the government agreement is imprecise in many areas, not backed up by figures and unbalanced: public enterprises (with EUR 7.2 billion for the railways alone) and short-term social needs (including a 4.5% increase in health costs) have taken the lion’s share of expenditure compared with sustainable investment for a healthy economy (with only EUR 800 million for reductions in social security contributions). UCM objects to the measures outlined in respect of self-employed workers. Their social security contributions will increase, but plans to improve their pensions are less clear, and an alignment of the value of their pensions with minimum pensions for employees, which was demanded vociferously by French-speaking self-employed workers, is conspicuous by its absence. However, UCM also points to some positive aspects. These include: the fact that all the fiscal reforms adopted in 2001 and 2002 have been retained; the plan to reduce social security contributions; the removal of limits on the work that retired workers may perform; and a simplified administrative procedure for company start-ups.

The socialist Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) is delighted that the new government plans to synthesise economic, social and ecological concerns by seeking to pursue a policy of encouraging a form of sustainable development that leaves room for social concertation. This latter point will be given immediate concrete shape through the organisation of a conference on employment in September 2003. However, FGTB/ABVV states that 'even if the intentions are good, some of the directions are still unclear and they raise questions – partly because of the absence of a clear assessment of the cost and indicative financing.' Furthermore, for FGTB/ABVV it is still not known how far the agreement's various measures – including those in the area of social security – will maintain a satisfactory balance between employed and self-employed workers, and whether the proposed tax changes will contribute to more fiscal justice, or to less.

Although FGTB/ABVV is delighted with the plan to create 200,000 new jobs in four years, it warns the government that this objective will be nothing more than 'deceptive appearances' if the government decides at the same time to shed thousands of jobs in public enterprises, and it will simply be 'pulling the wool over people’s eyes' if this figure is achieved by encouraging (small-scale) part-time jobs. FGTB/ABVV is thus opposed to the agreement's additional incentives designed to promote precarious employment. The union confederation also underlines that the social security system should be sufficiently well funded to compensate at least for the new lower contributions, and to be more favourable to employment. Lastly, FGTB/ABVV is pleased that the government wants to maintain accessible, high-quality healthcare, and take account of the higher costs resulting from the ageing of the population and the emergence of new needs.

The Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV), Belgium’s largest trade union organisation, has been much more critical of the government's programme than FGTB/ABVV. It believes that the federal government cannot afford to fulfil its ambitions, and points to alleged weaknesses in the budgetary framework for 2004-7, claiming that 'either the figures are correct and the promises are not, or the promises are correct and the figures are not'. CSC/ACV claims that the government agreement provides for too little in the way of new income, while the new initiatives (the reduction on employers’ social security contributions and increased health expenditure) will require money to be drawn from the state’s coffers. In these conditions, according to CSC/ACV, there is a major danger that the social security will have to meet the shortfall. CSC/ACV also has doubts about the target of creating 200,000 new jobs by 2007, particularly as the account may already be in debit as a result of job losses in the public sector, for example in the Belgian National Railways (Société Nationale des Chemins de fer Belges/Nationale Maatschappij der Belgische Spoorwegen, SNCB/NMBS), the postal service and the army.

However, CSC/ACV has announced that it will take part in the 'round table for employment' scheduled by the government for September 2003 after the summer holidays. It will prepare for the meeting with FGTB/ABVV, and will participate on the basis of seeking to correct the government agreement’s 'bad' proposals and implement the 'good' ones.