The global economic crisis led to negative results for the Belgian economy in the last quarter of 2008. Moreover, the Belgian Central Bank (Banque Nationale de Belgique/Nationale Bank van België, BNB/NBB [1]) expects worse results for 2009. Between December 2008 and December 2009, a slowdown of 1.9% of gross domestic product (GDP) is expected, as well as an increase in the unemployment rate from 7.1% to 7.8%. The Central Bank forecasts a loss of 58,000 jobs in 2009.[1] http://www.nbb.be/
According to a study conducted by the human resources consultancy SD Worx, half of the companies located in Belgium expect to undertake restructuring during 2009. The companies expressing this view are mainly large organisations employing more than 500 employees and many are internationally owned. Domestic companies and small and medium-sized enterprises seem to be less concerned by restructuring processes.
Background
The global economic crisis led to negative results for the Belgian economy in the last quarter of 2008. Moreover, the Belgian Central Bank (Banque Nationale de Belgique/Nationale Bank van België, BNB/NBB) expects worse results for 2009. Between December 2008 and December 2009, a slowdown of 1.9% of gross domestic product (GDP) is expected, as well as an increase in the unemployment rate from 7.1% to 7.8%. The Central Bank forecasts a loss of 58,000 jobs in 2009.
Economic sectors most affected are likely to be those most sensitive to fluctuation. The motor industry and subcontractors to the industry have already suffered from the slowdown in demand. Chemical, metal and glass industries are also concerned by significant restructuring processes and job losses. On the other hand, other sectors seem to be in a stronger position. So far, logistics, transport, hotels and restaurants, health and social work, and food distribution are not facing any slowdown and some sectors are even recruiting additional staff.
Considerable restructuring expected
The human resources consultancy SD Worx recently published a study on corporate restructuring in the Belgian market between 2006 and 2009. Over the last three years, 41% of the companies located in Belgium undertook a restructuring process. However, the report shows that half of the companies expect such measures for 2009 alone. The study takes into account any form of restructuring such as a merger, closure or internal restructuring which may or may not include staff cuts.
Among the companies that have restructured since 2006, most of them (71%) were enterprises with more than 500 employees, while small and medium-sized enterprises (SMEs) represented only 21% of those restructuring their activities. The number of such measures is expected to rise in 2009 and it seems that companies mainly anticipate significant internal restructuring (19%) and capacity reduction (11%). International companies with more than 500 employees will be the most affected: 34% of foreign companies expect restructuring measures compared with 6% of national companies. The main objectives of such a reorganisation are mainly to improve financial results and organisational efficiency.
On the other hand, the Federal Public Service of Economy, SMEs, Self-employed workers and Energy (Service Public Fédéral Économie, PME, Classes moyennes et Energie/Federale Overheidsdienst Economie, KMO, Middenstand en Energie) is finding an increasing number of bankruptcies: 2,342 companies went bankrupt in the last three months, which amounts to an increase of 19.5% in comparison with the same period in 2008.
Workers at risk of unemployment
Not all of the restructuring measures will lead to staff cuts but this could be the outcome for most of the companies. Unemployment in vulnerable sectors is increasing, with major consequences for qualified and unqualified manual workers. Moreover, the economic crisis also concerns other types of workers. Between the second and third quarters of 2008, the Federal Public Service of Economy, SMEs, Self-employed and Energy noted a 25.3% increase in the total number of unemployed people, while the unemployment rate of workers aged between 15 and 24 years rose substantially by 78.1%. It should be noted that September always leads to an increase in the unemployment rate of young workers as they finish school and enter the labour market. However, it appears that most young people entering the labour market did not find a job.
Furthermore, unemployment seems to be affecting a large proportion of high-qualified workers. More specifically, unemployment among people with a university degree increased by 62%, while it rose by 9.3% among those with middle qualifications and by 27.6% for those with low or no qualifications. Nonetheless, the unemployment rate of workers with a third-level degree remains lower (4.6%) than it is for workers with no or a very low qualification (14%) and for workers with a medium education (7.3%).
Commentary
The economic crisis seems to have already had important consequences for companies’ activities and for employment. However, many more restructuring processes are expected for 2009. These processes will concern sectors with a high capacity of employment, which will have a significant impact on the employment rate. This will weigh heavily on social welfare expenditure for unemployment benefits, creating further problems as the state budget is already in deficit.
Emmanuelle Perin, Institute for Labour Studies (IST), Catholic University of Louvain (UCL)
Eurofound recommends citing this publication in the following way.
Eurofound (2009), 50% of companies expect to restructure in 2009, article.
