Belgium: Social partners sign national agreement for 2017–2018
On 2 February 2017, representatives of the national social partners and the National Labour Council concluded the Interprofessional Agreement 2017–2018, the first such agreement since 2010. The agreement covers the wage norm, improvements in welfare benefits, the extension and adaptation of the agreements on early retirement, and an agenda for further consultation and negotiation.
Renewed start for social dialogue
The Interprofessional Agreement (IPA) 2017–2018 (PDF) was signed on 2 February 2017. The IPA follows informal negotiations in the private sector – at national level – that take place every two years outside the permanent official bipartite structure; that is, outside the National Labour Council (CNT-NAR). The result is a national cross-sectoral agreement that defines the wage norm, that is, the upper limit for sectoral and company-level pay increases for the following two years.
The bargaining group, known as the ‘Group of Ten’, meet in private and consists of key representatives of the national social partners recognised by the Central Economic Council (CCE-CRB) and CNT-NAR. The Group of Ten is led by a representative of the largest employer federation, the Federation of Enterprises in Belgium (FEB-VBO).
These ‘social programming’ agreements constitute political and moral commitments, and are considered very influential, although they are, in principle, not legally binding. In the absence of a final agreement, however, the government may legally enforce parts of it in law. While wage increases are further specified in sectoral collective agreements, non-wage elements of the agreements are often implemented by national collective agreements settled in the CNT-NAR. It could, therefore, be argued that these agreements are the functional equivalent of a bipartite social pact, but reached in close interaction with the government.
Expected pay rise of 4%
On the basis of the technical report issued by CCE-CRB, the social partners agreed in the IPA to set the wage norm for the period 2017–2018 at 1.1%. Representatives from both sides of industry agreed that, in the private sector and over the next two years, wages can increase up to 1.1% above the index that keeps wages in line with the rise in the cost of living. Over the same period, the index top-up is expected to be 2.9%, meaning that people are in line for a total wage increase of up to 4%. This wage norm was transposed by a national collective agreement of the CNT-NAR on 21 March 2017, making the rule binding for all employers and employees in the Belgian private sector.
Besides extending a series of temporary agreements on early retirement provisions (officially unemployed benefits with an extra-premium from the employer), the agreement also distributes funds made available by the government to raise certain social benefits. Since the 2006 Generation Pact, it is the prerogative of the social partners to organise this, ‘making benefits to follow the increase in cost of living’, which includes raising one-parent family benefits.
The negotiators also committed themselves to tackling the following important labour market challenges in the period 2017–2018:
- youth (un)employment (compared with the follow-up of the European agreement);
- home–work traffic and the mobility budgets/benefits available to employees;
- notice periods and probationary periods in the first year of an employment contract;
- burnout, work–life balance, sustainable work and new forms of work organisation;
- administrative simplification;
- further implementation of the harmonisation of the white-collar and blue-collar employment statute (including merging and redrafting of demarcation lines of sector joint committees of collective bargaining);
- digitalisation, the new sharing economy and ensuring ‘equitable’ competition.
The work on these points will be mainly organised in the CNT- NAR and the CCE-CRB. The Group of Ten will evaluate the progress made on these different points of discussion at the end of 2017.
Reactions of the social partners
Trade unions and employer federations were relieved and delighted to reach a ‘full’ agreement after a period of no such deals and the freezing of state interventions in wage setting. Unions stressed especially the importance of an agreement for the whole private sector, guaranteeing that everybody will have an increase in purchasing power the next two years. Employers, too, are satisfied with the deal. Pieter Timmermans, head of FEB-VBO, said ‘The margin for wage increases means that Belgian wages will increase 1% less than in neighbouring countries. This boosts our competitive position and results in jobs’.
Key elements of revised wage bill
The agreement also adopted – to a large extent – the new and stricter rules of the revised wage norm bill, even though the bill was only approved by parliament in March 2017. The state looks to balance the automatic indexing of wages and the sector-level bargaining in Belgium, with a strict law on monitoring and intervention in the wage-setting system. Since 1996, the forecast weighted growth of foreign hourly labour costs (a weighted average for France, Germany and the Netherlands) acts as the wage norm for wage negotiations.
The revised bill contains the following important elements.
- The maximum margin available for an increase may be calculated by using the ‘available national and international forecasts’ instead of the current Organisation for Economic Co-operation and Development (OECD) figures, which are generally regarded as being too optimistic. This new calculation base will allow the CCE-CRB to make the calculations in accordance with the principle of prudence to avoid an overestimating forecast.
- The principle of the biennial setting of the wage norm between the social partners, or by the Council of Ministers if no agreement is reached between the two sides, remains in place. However, the wage norm margin will be laid down in a generally binding collective labour agreement, set by the CNT-NAR, or by royal decree if no agreement is reached between the two sides. In the first instance, it can no longer be framed as an ‘IPA gentlemen’s agreement’ that has to be implemented by the sectoral agreements.
- Automatic wage indexation and seniority-based increases (compared with key sector and company pay scales) remain outside the scope of defining the wage norm.
One new element concerns the implementation of subsequent mechanisms to correct unjustified increases in the previous period. In this regard, the following steps are taken.
- The remaining margin is to be calculated every two years by the CCE-CRB, as is the macroeconomic productivity advantage.
- Most of the cost savings resulting from the tax shift currently being implemented by the Michel government and including a social tax reduction for employers, and at least 50% of new tax savings, will be used exclusively to reduce the historical ‘gap’: the labour cost gap dating from before 1996 – a highly disputed issue between the social partners. However, it remains unclear how all these kind of calculations will be taken into account.
- If Belgian wages grow slower than those of neighbouring countries and when the historical handicap is still negative, at least half of the surplus should be dedicated to further reducing the historical backlog.
- A safety margin has to be provided in the calculated wage norm to absorb potential errors in the earlier forecasts (the index development and hypothesised wage trends in neighbouring countries). This safety margin will be a quarter of the margin and at least 0.5%. If this safety margin remains unused, it will be added on top of the margin for the next period.
- Employers who exceed the maximum wage norm will be penalised by an administrative fine ranging between €250 and €5,000 per employee.
- Calculation of the margins will be the sole responsibility of the secretariat of the CCE-CRB – an autonomous civil service agency – and no longer a point to be settled by the bargaining social partners. These national ‘bargainers’ can only discuss how and to what extent the calculated margins will be used (with all the corrections prescribed by law taken into account).
As the comments of the different social partners show, the agreement is important for social dialogue in Belgium which, since the euro zone crisis, has been hampered by state intervention and, since 2014, by a more critical government; Belgium was one of the countries examined in recent ILO report (PDF) on social dialogue and industrial relations trends since the crisis.
Following this ‘renewed’ start, the social partners are gathering together an ambitious list of topics which they want to tackle in the coming year. However, it remains to be seen if social dialogue really will take off with a government pressing for structural socioeconomic reforms that many actors, the unions especially, are very negative about.