Economic crisis puts social dialogue in disarray

The end of 2012 was highly turbulent for Belgian’s government, businesses and social partners. As the government struggled to find agreement on its federal budget, business closures and restructuring were leading to high job losses. October 2012 could be called ‘the dark month’ for employment in Belgium, when more than 5,000 jobs were lost and a record number of bankruptcies led to the closure of more than 1,200 companies. The number of indirect jobs lost has not yet been calculated.

Belgium’s ‘dark month’

More than 1,200 bankruptcy proceedings were begun in Belgium in October 2012 according to consultancy firm Graydon, a leader in commercial and marketing information and credit and debt management. This was an increase of 7.18% compared with October 2011.

Their figures also showed that in the ten months from the beginning of 2012, more than 9,000 companies went bankrupt. Figures for 2012 could exceed those of 2011, which was a record year for bankruptcies in Belgium (BE1201011I). According to Graydon, comparison with the period from January to October 2011 showed that Flanders (+10.78%) was harder hit than Brussels (+1.31%), while Wallonia saw a slight decrease in insolvent companies (-1.64%).

However, bankruptcies were not the only type of restructuring taking place in Belgium. The table gives an overview of the most significant negative restructuring cases – including those stopping short of closure, but still leading to major job losses – in October 2012:

This adds up to more than 6,750 jobs lost in October 2012, a figure that only takes direct jobs into account. Many more indirect jobs may have been lost.

Unions’ disappointment

A number of strikes were called in response to the planned restructurings.

The Belgian General Federation of Labour (FGTB/ABVV) called for a European-wide strike on 14 November 2012. It invited all workers to protest not only over the restructuring of companies in Belgium, but also against austerity measures across Europe. It called for a ‘relaunch plan’ to create jobs and tackle economic depression.

The Confederation of Christian Trade Unions (CSC/ACV) denounced the series of restructurings and the impact they would have on employment in Belgium. The union wrote an open letter to the Belgian Government demanding a halt to cuts in the health budget, social care and education. It reminded the government of the importance of the automatic wage index, and said it wasn’t fair to make workers pay for the crisis. The CSC/ACV also proposed some alternatives, such as the sustainable and structured decrease of expenses, taxes and wage costs.

Meanwhile, the Federation of Liberal Trade Unions of Belgium (CGSLB/ACLVB) urged workers to back united action on 8 October 2012. This action was organised by the European trade union IndustriALL which called for a ‘relaunch plan for a strong, sustainable and social industry’.

Employers want ‘shock treatment’

The employers’ organisations also reacted with a ‘common front’. A joint letter to the government was written by The Federation of Enterprises in Belgium (FEB/VBO), the Organisation of the Self-employed (UNIZO), the Union of Small Firms and Traders (UCM), the Flemish organisation of agriculture (Boerenbond), the Walloon organisation of agriculture (FWA), Brussels Enterprises Commerce and Industry (BECI), Walloon organisation of enterprises (UWE), and the Flemish organisation of enterprises (VOKA).

They asked for ‘shock treatment to save employment and enterprises’. They stressed the necessity for the country to be more competitive. They said it was ‘irresponsible to continue to deny the competitive gap’ Belgium suffered in comparison with other countries.

Budget agreed

The political situation was tense in Belgium. European guidelines required Belgium’s government to make savings of €3.4 billion to reduce the public budget deficit to 2.15% of GDP before the end of 2012.

This was not a simple task, given that the political parties elected to central government had found it difficult to form a working coalition and to establish previous federal budgets (BE1112021I). Unfortunately, the economic context did not help. While they were discussing the necessary public savings, a number of major negative restructurings were announced.

The trade unions insisted that any budget changes could not affect the automatic indexation of wages, and that the burden of the necessary federal budget savings should not be placed entirely on workers (BE1207011I).

Employers stressed the importance of keeping Belgian companies competitive. This, they said, meant wage costs had to be reduced and this therefore raised serious questions about the automatic wage index system.

This tense climate put extra pressure on the federal bargaining. Nevertheless, on 20 November 2012, agreement was reached on a budget that followed European guidelines and focused on economic revival. The government said it would combat the labour cost gap and strengthen competitiveness. The budget agreement included measures to contain wage evolution. While the automatic wage index was retained, the composition of the index basket was altered in order to temper its effect.

The budget also imposes a wage freeze in 2013–2014 except for the automatic index-linked rises. The aim is to reduce the labour cost gap with neighbouring countries by 1.6%, reinforcing Belgian competitiveness and stimulating employment.

Social partners’ mixed reactions

The Federation of Enterprises in Belgium (FEB/VBO) and the Organisation of the Self-employed (UNIZO) said the budget was well-balanced.

Unions said their worst fear, the end of the automatic wage index, had not been realised. However, they were concerned that they did not have any margin to negotiate further wage rises. Trade unions wondered whether, under these conditions, cross-sectoral social dialogue still made sense in Belgium.

Intersectoral social dialogue has already suffered in recent years. There were difficulties in 2008, when negotiations on the Interprofessional Agreement (IPA) 2009–2010 only succeeded thanks to financial mediation from the Government (BE0809019I). Negotiations on the IPA 2011–2012 actually failed – the proposed agreement being rejected by the Federation of Liberal Trade Unions of Belgium (CGSLB/ACLVB) and the Belgian General Federation of Labour (FGTB/ABVV) (BE1108011I, BE1102011I).

The FGTB/ABVV and the CSC/ACV union federations had already said that an IPA 2013–2014 was not possible. They felt that the government’s intervention left no margin to negotiate wage evolution, the most important part of the agreement. The FGTB/ABVV went one step further and still planned to start up sectoral bargaining (in a period of non-government intervention is the usual step in the bi-annual programming of collective bargaining in the country).

Government seeks social partner discussions

The government asked the social partners to discuss several other topics. Some of these topics are defined as ‘partial agreements’.

The first partial agreement concerned the technical practicalities of implementing government decisions intended to reduce labour costs, and the recurring decisions about how to keep to the budget while also adapting social allowances to cost-of-living changes, improving the minimum wage, and abolishing age-discriminatory youth wages. A deadline of mid-January was set for the talks, and a consensus was reached at the last moment, on 15 January 2013.

The second partial agreement, on a more flexible labour market, also had a mid-January deadline, but the social partners asked for more time for discussions. The unions stressed that they did not want to ignore existing working time regulations.

The third partial agreement concerned the harmonisation of the employment status of blue-collar and white-collar workers. The deadline given here was the end of March 2013. As this is a huge issue, difficult discussions were expected. The social partners have asked the government to participate in the negotiations in order to give legal certainty to the bargaining results. The Constitutional Court proposes that agreement needs to be concluded by 8 July 2013.

Commentary

During the past few years, negotiations on Interprofessional Agreements have been difficult. Often, the government has had to intervene – sometimes with financial support – in order to find a compromise suitable to all parties. The negotiations on the IPA 2013–2014 are the most recent example. The Belgian Government limited the possibility of wage rises and, as a consequence, the negotiation margin on other subjects.

On the most difficult question, harmonising the employment status of blue-collar and white-collar workers, the social partners have even asked for the government’s help in advance. Although this can be seen as a sign of weak social dialogue, it also illustrates the willingness of the social partners to continue bargaining.

Michel Ajzen, Institut des Sciences du Travail, UCL, and Caroline Vermandere, HIVA-KU Leuven