Study claims social security system has deteriorated

A study published by the Antwerp Centre for Social Policy Research concludes that the Belgian welfare system has lost its top position in Europe and is at risk of declining into a minimal social security system. According to the study, the country’s poverty rate is now higher than previously, while the gap between the economically active and inactive population has widened over the last decade. The research team points to the fact that benefits have remained at the same low level, whereas income levels are rising. The study has provoked considerable reaction from social and political figures, generating fresh debates about the ageing of the population and regarding the future of social security funding.

A research team from the Centre for Social Policy Research (CSB) at the University of Antwerp (Universiteit Antwerpen), headed by Béa Cantillon, compared the Belgian welfare system with the systems implemented in 26 other European countries. The results of this comparative study led to the conclusion that the Belgian social security system is declining and that it no longer represents one of the top European welfare systems.

Study findings

According to head researcher Ms Cantillon, the country’s previously favourable social security situation has entered into decline since the 1990s, when studies forecast that the Belgian social security system could run into difficulties in the new social and economic context. Recent studies have confirmed these predictions. The research team from the University of Antwerp added that the high level of social protection may decline to a minimal level. They point to the widening income gap between active and inactive people, caused by insufficient indexation between benefits and wages (BE0202308F).

The first group to be hit by this low level of benefits are mainly unemployed and retired citizens. Although some major reforms have been implemented – including employment activation policies, a reduction in employment taxes, universal protection and new coverage for social risks – Ms Cantillon believes that several mistakes have been made in this respect. In particular, the reforms were adopted too late and were either overcautious or too drastic. Moreover, the diverging opinions from the two sides of the linguistic border concerning the best allocation of social measures have constituted an additional hindrance and have slowed down the reform process.

Reactions to study

The conclusions of the study have provoked considerable reaction from the country’s socioeconomic and political leaders. The Federal Minister of Social Affairs, Rudy Demotte, argued that ‘the social security system is performing well’ and criticised the data on which the study was based. Minister Demotte contended that: ‘The years on which the study is based are not recent enough’ and that therefore ‘the data do not include the most recent reforms such as the social corrections, the link between benefits and welfare, or the family benefit for expenditure on schools which have contributed to increased incomes’ (BE0610049I).

The Flemish Minister of Employment, Education and Vocational Training, Franck Vandenbroucke, referred to the study during a televised debate. In his opinion, Belgium needs social reform, ‘allowing the regions to adopt more coherent policies and the federal state to strengthen its healthcare and pensions financing’. Minister Vandenbroucke believes that the decline of the welfare system will be inevitable unless rigorous expenditure controls are applied, the rate of the actively employed population is increased and better cooperation between the regions is established.

Pension concerns

Amid this controversy over the social security system, the particular issue of pensions was discussed at length. The Federal Minister for Pensions, Bruno Tobback, stated in an interview with the newspaper La Libre Belgique that future pensions will be guaranteed but that their amount will not be sufficient to cover ‘luxury expenses’, such as travelling, buying a car or renovating a house – expenses for which additional insurance funds will be needed. Minister Tobback believes that it is important to encourage private insurance systems, arguing that the minimum legal pensions will not be adequate to cover a longer retirement period and its associated expenses, even if the amount of the allocations is increased. The minister considers improving the economic activity rate of senior workers as an essential prerequisite for financing future retirement payments.

At the same time, Minister Tobback announced that the minimum pension would be increased in April 2007, two months before the next federal elections. These announcements generated strong reactions from the Christian Union of Pensioners (Union chrétienne des pensionnés, UCP) and from the Federation of Early Retired and Retired People (Fédération des préretraités et retraités/Federatie van Bruggepensioneerden en Gepensioneerden, FPR/FBG). According to the pensioners’ representatives, the legal retirement allowance should aim to help people have a decent life and the current benefit is one of the lowest in Europe. As FPR/FBG concluded: ‘Pension allowances must remain an insurance and not charity.’

Emmanuelle Perin, Institut des Sciences du Travail (IST), Catholic University of Leuven