Major reform of long-term unemployment rules proposed

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In October 1998, the Belgian Minister for Employment and Labour released the text of a proposal to reform the regulation of long-term unemployment, which has attracted trade union protests. The reform aims to reinforce the availability of unemployed people for work and to adjust the scale of sanctions for abuses. It takes a step towards replacing a system of unemployment insurance as a form of social security with a system that combines insurance and social assistance, as in other European countries. A recent academic study has provided evidence of this trend, showing that at least a third of those receiving social assistance are people who have lost their entitlement to unemployment benefits.

On 15 October 1998, the Belgian Minister of Employment and Labour submitted a draft reform of the unemployment system to the joint employer/trade union executive committee which administers the National Office for Employment (Office National de l'Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA), the federal body in charge of paying unemployment benefits. The reform aims to introduce stricter checks on the availability of unemployed people on the labour market, while at the same time reducing certain penalties for abuses.

Belgium is the only European country where unemployment benefits replace lost earnings on a proportional basis without a time limit. However, the level of benefit is reduced over time unless it is the household's sole income. This system is combined with checks and with sanctions in the form of suspension of benefits for between four and 52 weeks for various infringements, or permanent exclusion on grounds of "excessive length of unemployment".

Unemployment benefit forms part of the social security insurance system and is always kept separate from social assistance, which is payable by the community as a basic entitlement on humanitarian grounds to those who have lost all other means of support. Previous reforms of the criteria for the payment of unemployment benefit had already brought the two systems closer, but the latest proposal is a decisive step.

The proposed reform has already been denounced by the trade unions. According to the Wallonia n regional organisation of the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) : "progressive sanctions will reduce head-of-household and single-person benefits to a minimum level which has nothing to do anymore with a replacement income." In a joint press release, the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) and the FGTB/ABVV expressed their fear that the proposal was a step towards putting a time limit on entitlement to unemployment benefit. Without questioning the need to monitor unemployed people, the trade unions argue that the aim of the proposal is to reduce social security spending by placing the burden of long-term unemployment on to social assistance budgets which are borne by the state and local authorities.

Employers maintain that the proposal is a step in the right direction as, in the words of a representative of the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO): "while an unlimited period of entitlement to unemployment benefit may be a unique protection against poverty, it creates an unemployment and dependency trap."

Sanctions extended to all categories of unemployed?

The proposal provides for the first time for heads of household and single people to be penalised through a reduction of their benefits to the level of the minimum means of subsistence ("minimex") if the regional director of ONEm/RVA finds that they have not made sufficient efforts to find a job or training. Instead of receiving benefits amounting to 60% and 42% respectively of previous pay (limited by a ceiling), they will receive only a flat-rate benefit.

On the other hand, young people who have not found jobs a year after leaving school and who are currently entitled to a special provisional minimum benefit, will have their benefits increased to the level of the "minimex". They will not have to apply for supplementary benefit to achieve subsistence level.

Scale of sanctions revised

At the request of the social partners, ONEm/RVA will reduce the periods during which benefit is suspended to penalise administrative errors made by unemployed people and refusals of jobs or training. There will no longer be any penalties for unintentional mistakes.

The last two measures reflect the demands of the Public Social Assistance Centres (Centres Publics d'Aide Sociale/Openbare Centra voor Maatschappelijk Welzijn, CPAS s/OCMW s), local authority institutions in charge of distributing social assistance, which have faced a flood of new applications. They accuse ONEm/RVA of being partially responsible for the increase in their expenditure, as they have recorded substantial increases in applications over the past 10 years (up 129% in Flanders, 170% in Wallonia and 194% in Brussels- figures which refer just to the minimex).

ULB-KUL joint study

Transfers of charges between ONEm/RVA and the CPASs/OCMWs have been measured in a recent joint study carried out by the Free University of Brussels (Université Libre de Bruxelles, ULB) and the Catholic University of Leuven (Katholieke Universiteit Leuven, KUL) ("Flux de passage entre chômage et CPAS", A Vanheerswijnghels, M-N Beauchesne and M Olivier, TEF-ULB/HIVA-KUL, Brussels-Leuven, July 1998).

Comparing claimants' individual files disclosed by representative CPASs/OCMWs with ONEm/RVA data, the study revealed that one third (32%) of social assistance claims were lodged by people faced one way or another by problems relating to unemployment. Of these:

  • 12.4% were unemployed people whose benefit was insufficient because the jobs they had lost were part time or because they were young people on provisional benefits;
  • 10.9% of claims were lodged by unemployed people who had committed no mistakes but who had been deprived of unemployment benefit while their claims were being reviewed; and
  • 8.7% were unemployed people who had been deprived of benefit for a limited period. This category had either committed administrative mistakes (BE9804140F) or had refused a job or training or had left a job voluntarily

The study indicates that the increase in the number of social assistance claims was primarily caused by claims for supplementary benefit lodged on account of inadequate unemployment benefit. This result lends support to the perception of an increasing convergence between the social security and the social assistance systems.

Commentary

Belgium has maintained unemployment benefit within its social security system under pressure from the trade unions, considering the benefit as a replacement income linked to lost pay, without a time limit. However, more and more categories of unemployed people have been gradually excluded from the system and transferred to the social assistance system, as part of the fight against long-term unemployment.

The present proposal reinforces this trend, and now extends it to a category spared so far, namely heads of household. At the same time, long-term unemployment benefit would lose its link with the claimant's former pay level.

By introducing her draft proposal, the Minister has at least forced the social partners to take a clear position on the direction to be taken in future and answered local authorities' criticisms. The proposal will, however, be amended by the executive committee of ONEm/RVA and by the government. Measures can be expected in two stages: first a reduction of sanctions and increased checks; and secondly the reform of entitlement.

The principle of restricting unemployment benefit to those who can show their availability on the labour market could one day become the norm in Belgium. (Philippe Dryon and Estelle Krzeslo, Point d'Appui Travail-Emploi-Formation)

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