Setback for new national social pact

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The budget proposed by the Belgian Government for 1998 has greatly disappointed the social partners. Although the Government had asked them to conclude a new social pact to encourage employment, they believe that it has not allocated enough resources to finance one. The partners themselves had issued a joint declaration on employment in October 1997, which had been noted for its innovatory aspects.

Traditionally, the Belgian social partners agree every two years on a national intersectoral agreement, but they did not manage to do so at the beginning of 1997. They therefore left the Government to impose its own measures to reduce unemployment and to fix the pay bargaining framework for sectoral agreements itself. Belgium, as a result, has had no "employment plan" approved by the social partners at national level (BE9702101F). This situation appears to have weakened the Belgian Government with respect to its EU partners in the run-up to the "Employment Summit" to be held in Luxembourg on 20-21 November.

New national pact proposed

To address this situation, in June 1997, Prime Minister Jean-Luc Dehaene relaunched the idea of a national agreement with four priorities: the reduction of employers' social security contributions; the redistribution of work on an individual and collective basis; special measures for targeted groups (such as young people and older unemployed people); and the development of community services through the "active" use of unemployment benefits. The Prime Minister's aim was to get the social partners to meet again and restart the aborted talks.

In fact, the lack of a national agreement has had significant consequences: sectoral agreements negotiated between January and June 1997 have had only a very slight effect on employment. They mainly included measures on early retirement, career breaks and part-time work, which passed as job creation and work redistribution (BE9706205F).

On the other hand, the lack of an agreement has given new strength to the existing trend in Belgium towards regional employment agreements, which are intended to divide the social security budget between Flanders and Wallonia. At the beginning of July, 16 well-known Flemish figures from the economic, social and political spheres concluded the" Treaty of Leuven", a pact designed to halve unemployment in Flanders by 2003 (BE9707214N). In Wallonia, such a prospect arouses less interest, as the Walloon social partners meeting in the jointEconomic and Social Council of the Walloon Region (Conseil Economique et Social de la Région Wallonne , or CESRW) prefer to keep the debate at the level of national institutions.

Social partners' response

The Prime Minister's initiative for a new agreement did not really arouse any enthusiasm amongst the interested parties.

In September, on the resumption of business after the summer break, Michel Nollet, president of theBelgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV), called for caution: an agreement stressing the need to reduce employers' social security contributions without any guarantee of alternative financing to preserve social security and without any firm commitment to job creation would, he maintained, create a negative social climate.

It was the Government's responsibility, Mr Nollet said, to find alternative financing for social security. However, the FGTB/ABVV does not want households to have to subsidise a reduction in employers' contributions. Employers are also reluctant, as they do not want to be forced to guarantee the preservation or creation of jobs in exchange for the reduction, and they refuse to consider new taxes as a means of balancing the social security accounts.

Nevertheless, on 1 October the social partners addressed a joint declaration to the Prime Minister. They agreed with the points that he had proposed, but insisted that the success of this project depended on the Government itself and on the resources earmarked in its budget for aid towards employment and rebalancing the social security accounts. The social partners also wanted programmes to reduce unemployment to form the subject of new agreements between themselves, rather than having them imposed by the Government.

The joint declaration included several innovations that had not been aired in the previous discussions:

  • for the first time, the employers' representatives acknowledged that reducing social security contributions on pay implied alternative means of financing the system, which meant in turn that they supported reinforcing public funding; and
  • for their part, the unions agreed to accept the reduction as long as households or people on benefits would not have to bear the cost. It was up to the Government to find the resources to make up for the lack of revenue, but without making the public pay directly.

The problem, according to some commentators, is that the Government is paralysed by factionalism amongst the parties within the coalition and is likely to be be unable, at the time of the budgetary debate, to respond to the demands of the social partners.

Has the social pact been buried?

When the Prime Minister delivered the Government's budget declaration in early October, the social partners were disappointed. The BEF 5-6 billion proposed to help the social partners to carry out their proposals to reallocate work is barely enough to safeguard existing measures or to prolong them. The Government made no proposals on ways to make up the losses in social security revenue, but simply referred the issue back to the social partners.

Reflecting the position of both the main union confederations (CSC/ACV and FGTB/ABVV), the president of the FGTB/ABVV declared to the daily newspaper Le Soir on 8 October that "it would be particularly difficult to carry out the ambitions of the joint declaration in support of employment: it was too easy for the Government to ask the social partners to do the job for them."

For the Federation of Belgian Enterprises (Fédération des Entreprises Belges/Verbond van Belgische Ondernemingen, FEB/VBO) the future of any pact was compromised; it said that it could not force the sectoral associations affiliated to it to enter into new commitments for jobs "if they knew that the reduction of social contributions that they were counting on had been postponed" (according to Tony Vandeputte, FEB managing director, quoted in Le Soir, 10 October).

Commentary

Even though the proposals made in the Government budget declaration have compromised the signing of a social pact at national level, that failure could still help to relaunch negotiations at regional level and thereby enhance the role of the regions in this respect. However, the Government itself might undertake new initiatives, in particular in a field that it has been keen on in the past: the "activation" of unemployment benefits and the use of "odd jobs" as alternatives to unemployment. (Philippe Dryon and Estelle Krzeslo, Point d'Appui Travail Emploi Formation - ULB)

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