EMCC European Monitoring Centre on Change

Belgium: ERM Comparative Analytical Report on ‘Public policy and support for restructuring in SMEs’

  • Observatory: EMCC
  • Topic:
  • Published on: 14 May 2013



About
Country:
Author:
Ajzen Michel
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Belgium is a land of SMEs. Indeed, many things are done to help them grow. However, the current Belgian legislation does not consider SMEs as an atypical company which needs specific laws. Therefore, laws for SMEs or bigger companies are quite the same, except for the ‘Renault procedure’ (information & consultation) for collective dismissals. Indeed, related to the number of workers in the company, the workers’ representatives will not be the same.

QUESTIONNAIRE

Part 1: Overall policy context

1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:• If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?• Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?• Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context?• Was the specific case of SMEs as subcontractors a topic for discussions?• Did the discussions rather deal with the enterprise perspective or with the employee perspective or both


The Small Business Act in Belgium

Belgium is a land of SMEs. Indeed, 99% of Belgian firms are SME. This is why the Ministry of Economy, SMEs, Middle Classes and Energy decided to include this point within their twelve strategic axes. In line with the Lisbon Strategy, which defines a more dynamic and competitive Europe, Belgian policies where defined to improve firms and so, decrease the number of negative restructuring cases. Unfortunately, the global recession did not help and the debate becomes more difficult. In fact, as for many countries, each political party has an idea in the way of considering SMEs and restructuring but when the country faces 540 days without a Government, it becomes harder to take decisions.Fortunately, before the political crisis in Belgium, the Government has incorporated the Small Business Act (SBA) within the Belgian legislation. This European agreement is a strong signal from the European Commission to recognise the major importance of SMEs for the European economy. It defines an overall political context for the European Union and its Members. This is articulated around 10 standards built on several indicators, namely entrepreneurship, second chance, think small first, responsive administration, state aid and public procurement, access to finance, single market, skills and innovation, environment and internationalisation.

The European Commission established SBA factsheets for each country. For 2010/11, the Belgian report shows that the SME sector should find back to the level before the crisis in 2011. In a large number of standards, Belgium reflects or is higher than the European average, except for ’Entrepreneurship’. However, the factsheet explains that many intensive improvements were done on this field. It is important to understand what is being done ‘upstream’ (Small Business Act or Belgian policies to aid and support SME) as these have significant influence the restructuring at company level (‘downstream’). However, the mechanism from which the influence occurs is not always clear, and so the link between both levels remains unclear, too. Indeed, if the best measures are chosen, the number of negativerestructuring should decrease. This is why the Belgian Government has considered the SBA and its implementation through 40 measures as a specific challenge to support SMEs, but also to decrease the number of negative restructuring or bankruptcy. Also, regional measures were developped to stimulate and develop positive restructuring: the ‘Marshall Plan (2. Green)’ in Wallonia and the ‘Vlanderen in Actie’, in Flanders.


Federal, regional and sectoral measures

In Belgium, there are several levels of decision making. The first one is the federal level where the Secretary of SMEs, Self-Employed, Agriculture and Scientifical Policies has developed 40 measures in a ‘Federal Plan’ named ‘New horizon for SMEs’, inspired by the SBA to improve policies and conditions for SMEs. Among those measures, we can find five different kinds of targets:

- Reinforce owner-manager’s security. (For instance: Create a legal form of company for ‘starters’ to facilitate the start-up process). Stimulation of the creation of firms concerns all kinds of SMEs. Moreover, those measures were developed to facilitate the SMEs’ life and thereby, stimulate the entrepreneurship and the innovation. The more the country is perceived as innovative and with a high level of entrepreneurship (through SMEs), the more foreign investments could occur and so, positive restructuring as well (according to the authorities). Thereby, by promoting the current companies (a.o. improves the access to bank facilities) and by developing innovation and entrepreneurship, as well, the future or the younger SME could benefit from the previous investments. Indeed, if the country begins to be known under those criteria, all companies in Belgium could benefit of it.

Also, the Secretary also wants to improve and facilitate the relationship between SMEs and banks (access to specific banking products). In addition, some measures plan to support the tax system of Business Angels (persons who invest their own money in a company with a high innovative potential and make available their abilities, knowledge and work experience). A last example is the support of second chance entrepreneurship (mainly related to image initiatives concerning the stigma of failure), which is very constructive and motivational.

- Improve the relationships between SMEs and public authorities. For instance: Simplify all administrative procedures. Also, create a call center to raise awareness about the invitation to tender on the ‘public market’ and therefore avoid that the SMEs could be curbed by the difficulties of the procedures. Finally, implement the ‘Think Small First Approach’, which means, considering the specificities of SMEs in terms of size and needs. Indeed, when authorities are elaborating new regulations, they often do not take into consideration the specificities of SMEs (but rather larger companies). Thus, this project aims to sensitise persons who will take decisions and consistently proceed to a monitoring of the decisions’ impact on SMEs. Being closer to the specificities of SME could help to support them better, in general and in restructuring situations.

- Improve the labour market for SMEs. This point is jointly treated with the Secretary of Labour and the Secretary of Social Services. However, the content of the ‘Cross-Sectoral agreement’ negotiated by social partners, will define measures and budgets which should be considered in 2012.

- Reinforce the self-employed status. The Belgian Government wants to stimulate entrepreneurship and continue to improve the self-employed status. Also, the Government involves itself to achieve the harmonisation of minimun services for the self-employed status in comparison with the general regulation. Finally, the government will continue to fight against discrimination between self-employed workers and paid workers. This is important for self-employed workers which often have a picture of volatility with regard to their activities (for all possible stakeholders). Being considered by all levels and all stakeholders in the society could support positive restructuring and avoid negative restructurings.

Beyond those measures, sectoral agreements already exist or should be considered in the Joint Committee where social partners are. Sometimes, the joint committee creates a special taskforce to work on special issues. As for the ‘hierarchy of norms’, all the decisions taken within the Joint Committees cannot contradict the federal measures. SMEs are not exempt from those measures and regulations in terms of positive (regulations on employment and social responsibilities) and/or negative (information and consultation) restructurings.

Each Belgian region has the opportunity to stimulate employment and the entrepreneurship at the local level. This is the second level of decision. Nevertheless, as for the Joint Committees, the regional decisions cannot contradict the Federal level.

1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?


Anti-crisis measures in Belgium

As for many countries across Europe, the Belgian Government developed a few anti-crisis measures. Many of those were active until 31st of December 2011. However, instead of stopping or extending their application, the Government has implemented them in the law. Nevertheless, this was done for every company and every worker in Belgium, with no differentiation between companies‘ sizes. Of course, workers from SMEs or SMEs can benefit of those measures, in function of the access conditions. Among the measures, we can find (BE0906029I): the reduction in working time by one fifth or a quarter; a collective, total or partial suspension of the employment contract; or based on existing time credit scheme (BE0108360F), parties decide to reduce working time by mutual agreement.

Also, Belgium always cared about SMEs, even before the global recession of 2008-2009. Indeed, some isolated measures already existed. However, with the recession, it seems that Belgian policies and social partners have taken into consideration the huge importance of innovation, entrepreneurship and the development of the economy through SMEs. This is why, in 2009, social partners in Flanders have developed the ‘Flanders in Action: Pact 2020’ Plan (Vlaanderen in Actie: Pact 2020) which includes 20 ambitious and figured objectives. The aim pursued is getting a region more competitive, innovative and flourishing. For the same reasons, Wallonia has developed in 2004, the Marshall Plan which aimed to upswing the Walloon economy. This plan was updated in 2009 and renamed Marshall Plan 2. Green (for political issues). In both regions, the plans concern SMEs, as well. Indeed, in promoting (foreign) investment, facilitate the procedures to start a business, but also all the regulations, regions want to stimulate the economy through SMEs.

1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?• If so, which (types of) organisations and at which levels?• What are their opinions, perspectives, recommendations?• Did they succeed in convincing governments or public authorities at various levels of their viewpoints?

As for many issues, social partners are involved in the public and policy debate on restructuring. Indeed, through the ‘cross-sectoral agreement’, they define the course of action and measures which should be followed. However, this is seldom on SME issues. In fact, they discuss about employment or entrepreneurship in companies (no matter the size). Also, social partners have a major incidence in sectors. Indeed, all the agreements on the joint committees are bipartite, and sometimes, at the regional level, tripartite. Beyond this involvement, there are specific employers’ organisations specialised in self-employed and SMEs. By contrast, there is no specific union for SMEs among the traditional ones. Indeed, Belgian unions are structured with a federal level (CSC/ACV, FGTB/ABVV, CGSLB/ACLVB) and sectorial level (for instance, SETCA/BBTK or CNE/LBC for white-collar workers, CSC/ACV Transcom for transport and communication sector, SLFP/VSOA for the public sector, etc.). Thus, from the unions’ point of view, SMEs depend on a sector and it is not necessary to have a specific union for SMEs.However, there exist a neutral union (in terms of independent from traditional unions) for self-employed workers and SMEs.

Part 2: Support instruments

2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees. • Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?• Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees that for larger firms? If so, why?

In Belgium, there are no really specific measures for restructuring in SMEswhich does not mean that any exists. Nevertheless, the Belgian law operates a differentiation between companies with fewer and more than 20 workers regarding collective dismissals. Here is an overview of restructuring support to companies and employees around three axes: Restructuring companies, attendant measures, anticipation of restructuring.


Restructuring companies

Collective dismissals

In this case, the management has to inform the workers’ representatives and ask their opinions. Also, the regional employment office has to be informed of the collective dismissal plan. Then, the ‘Renault procedure’ starts (Collective agreement n°24). This is a period of information and consultation of 60 days (a second period of 60 days could be used, if needed). Depending on the number of workers, the discussion could take place at different levels:


Level of discussion

Company size

Level

More than 100 workers

Work Council

Between 50 and 100

Workers' delegate

Less than 50 (but obligatory only if the employer has 20 or more staff)

Workers or trade unions

During this period, the management has to give all relevant information as defined by law to workers. Workers or their representataives have the opportunity to ask all questions concerning the plan. When this period is over, the negotiations between social partners to define the number, the conditions and all other legal aspects of the final collective dismissal plan start.

Closure or Bankrupcty

In case of closure or bankruptcy, the employer has to inform the workers, unions and authorities. Also, the management has to pay special redundancy payements. However, when a bankruptcy happens, the employer might not able to pay those compensations. This is why in Belgium, it exists a ‘Closure fund’. Every firm in Belgium has to contribute financially to this fund. Therefore, if a bankruptcy happens, the amount the employer had to pay (compensation as well as outstanding wage payments) will be paid by the ‘Closure fund’. Except for SMEs fewer than five people.

Business transfer

The law provides that a change of employerdue to transfer of ownership and management of the firm which continues its business activities does not allow for any layoff. However, in some cases the transfer may come from a juridical decision. Indeed, through the ’continuity law for firms’, a company may be placed under an administrator provided by the court for a specific period. The aim pursued is to maintain employement and the firm’s activities. This law also allows the employer to come to an amicable agreement with the creditors.


Attendant measures

Outplacement

The Outplacement is a set of services and advice provided on behalf of the employer for the benefit of the worker to help him to find as quickly as possible a new job with another employer or to become self-employed. These services are provided by an outplacement office. Nevertheless, this is compulsory for companies which have more than 20 workers and which proceed to collective dismissals.

Employement unit

Employement units are central into the management of restructuring. This concept of active management, established by the Generation Pact, reflects the need to better manage restructuring by helping laid off workers to remain on the job market. In this context, the establishment of employment units tends to spread and be accessible to the greatest number of redundancies as part of restructuring of a company employing more than 20 workers.

The royal decree of 9th March 2006 considers the assimilation of conversion measures and the return to work that are organised at regional level and of the German Community to an employment unit. Specific provisions arising from this decree are therefore applicable in the different regions. There is an agreement between regions; this is the protocol of cooperation between VDAB, FOREM, ACTIRIS, ADG and BRUSSELS FORMATION regarding layoffs by which workers in another region are concerned.

Early retirement

Early retirement is a system created in 1974 that allows, under certain conditions, a dismissed worker to combine unemployment benefits with an additional allowance called the early retirement and paid by the former employer or a fund. To receive the additional payment of early retirement the following conditions must be met:- Being fired,- Be entitled to unemployment benefits,- Presence of a collective agreement on the early retirement,- Reaching the age and professional background required;

For this last point, the law considers that the age to be reached to get early retirement is 60 years old. The dismissed worker of 60 years has to prove a track record of 30 years (for men) and 26 years (for women). The equalisation of the duration of past professional men and women will be held as follows:


Equalisation

Year

Career - Men

Career - Women

2008

30 years

26 years

2012

35 years

28 years

2016

-

30 years

2020

-

32 years

2024

-

34 years

2028

-

35 years

Under certain conditions, early retirement before the age of 60 is possible. These plans, called derogatory, reflect the particular requirements of certain sectors in certain trades or certain workers.- Heavy trades- Long service- Workers disabled or has serious physical problems

However, all measures above are available for every companies, whatever the size. The Belgian legislation does not make the difference between SME and other kinds of companies through the instruments. Excepted for the negative restructuring where the differences are made between companies with less and more 20 workers.


Anticipation of the restructuring

Temporary unemployment

In cases of economic hardship, the employer may establish a system of temporary unemployment for workers in totally suspending the execution of the employment contract or by establishing a system of short-time working, applicable to a certain number of employees and only after exhausting their recuperation days. Total (during all days of the week) or partial (at least keeping two working days a week) suspension of employment contracts is possible for a period of at least one or two weeks and up to a maximum of 16 or 26 weeks a year. This is a way to suspend temporarily the execution of the employment contract when the activities of the companies are not good, instead of cutting jobs. Temporary unemployment is often used by SMEs in Belgium to temporarily suspend employment contracts when activities of the companies are not good, to avoid cutting jobs.

Measures in favor of the employment

Workers registered to the employment unit normally receive a discount card of restructuring from the National Employment Office (Office National de l’Emploi/ Rijksdienst voor Arbeidsvoorziening). Several advantages (e.g. reduction of contributions) are associated with the discount card of restructuring for the employer, the worker returns to work and his new employer. This is not specific for SMEs, but concerns all workers.

Temporary crisis measures

To enable employers to face the reduced volume of work, without having to lay off, the law provides a diminishing of social security contributions in case of temporary and collective reduction of working hours. This reduction in social security contributions is increased when the reduction of working hours is accompanied by the introduction of the four-day week. Otherwise, a company in financial difficulties may proceed to a working time reduction by one fifth or half for a minimum period of one month and up to a maximum period of six months. Normal conditions of the time credit scheme do not apply – temporary reduction of working time is not considered an employee’s right in this case. This is applicable to full-time employees only and it should be agreed individually. However, a collective reduction of working time exists. This is a reduction in working by one fifth or a quarter. This concerns all employees or a specific category of employees.

2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?• Are the activities of different support service providers coordinated? If so, how and how well does this work?• Which phases of restructuring do they target?• Which types of restructuring do they target?• Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?• Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement?


The Marshall Plan (2. Green)

The Marshall Plan was launched in 2004 with the aim to upswing the Walloon economy. Among many general measures, investments in SMEs were a key factor. Indeed, to relaunch the activity, the Walloon Government invested in their firms which means public support (investments for instance), but also trying to get SMEs known abroad to attract potential investors. Among Walloon investments, we can find many grants and reductions of contributions to help people to start a business and attract foreign investors. Moreover, investments were done on research and development; and training, as well, to get competitiveness poles, to be more innovative but also to develop the entrepreneurship.

This plan had a great success; the Walloon economy became more stable and more than 27,000 jobs were created between 2004 and 2008. Also, the rate of SMEs’ creation never stopped to increase, in Wallonia, from 2004 to 2008. From 2008, there was a decrease in the number of SMEs created. Global recession effect or not, an updated plan ’Marshall Plan (2. Green)’ was launched. This new plan wants to reinforce what was already done in 2004, but also incorporates further administrative facilities to support SMEs.


The Flanders in Action plan: Pact 2020

For the same reasons, Flanders developped, in 2009, its Flanders in Action Plan: Pact 2020 (Vlaanderen in Actie: Pact 2020). This plan aims to reinforce entrepreneurship in Flanders across five points:

Enterprises and banks ready for growth: financial institutions provide loans more easily for SMEs; continue to stimulate corporate investments and facilitate access to risk capital (monitoring of lending operations by banks, extension of financing measures (inter alia guaranteed loans, win-win loans and more support for companies in the field of preventive business management).

More and reinforced entrepreneurship: High quality and strong starters in Flanders:

•cultivate a sense of entrepreneurship in Flanders;

•create a favourable business environment for all companies;

•create room for starting businesses and businesses that want to expand or relocate.

A greener economy: Eco-efficient materials, products, services and energy production reduce environmental pressure. Moreover, they provide a number of green jobs and increase the competitiveness of our companies:

•The Flemish economy will be turned into a real green economy by using the following instruments:

•A master plan for a green economy;

•Greening of the economic policy instruments (environmental grant, eco-efficiency scan and energy scan, and SME portfolio).

More growing companies

•Encourage companies to grow and give maximum support to fast-growing companies in order to avoid possible ‘growing pains’.

•Stimulate innovative and knowledge-intensive economy

•The States-General for Industry (Staten-generaal voor de Industrie) must create a leverage effect for the conversion of the industrial sectors into competitive value chains.

Part 3: Good Practice


  • Name of the instrument in national language and English
  • Justification for selecting this measure as Good Practice
  • Date of launch of the instrument and end date (if applicable)
  • Initiator/administrator (organisation)
  • Other involved actors and their roles
  • Source of funding
  • Target group/eligibility/coverage
  • Phase of restructuring targeted
  • Type of restructuring targeted
  • Purpose/content/characteristics/description of services provided
  • Outcome of the instrument (e.g. number of beneficiaries, effects)
  • Strengths/success factors of the measure
  • Weaknesses/bottlenecks of the measure
  • Was the instrument formally monitored/evaluated? If so, please specify (by whom, how, what were the finding and how were the findings used etc.)
  • Weblink
  • Information sources used for filling this section

According to the European Commission- Enterprise and Industry, one of good practices in Belgium is the company SOWACCESS (Société Wallone d’Acquisitions et Cessions d’Entreprises / Walloon company of merger/acquisition and closure/bankruptcy). This company was created in 2006 and is a subsidiary of SOWALFIN which was created at the initiative of the Walloon Government in 2002; the SA SOWALFIN - Walloon Social Credit and Guarantee of Small and Medium Enterprises - commonly called 'the dome of SMEs’ aims to provide financial support for SMEs and VSEs in Wallonia.

SOWACCESS is a good practice because its aim pursued is to facilitate the transfer of VSEs (companies of less than ten workers or a balance sheet of less than € 2 million per year) and SMEs by creating systems for matching and assisting potential sellers and buyers. This has two main activities:

- Raising awareness and informing entrepreneurs of what is at stake in the transfer/takeover of a business and thus of the importance of preparation and professional support during transfer for both the seller and the buyer, in order to ensure continuity and the development of local economic fabric.

- Establishing contact between potential buyers who have gone through an initial filter (based on their skills, experience and available assets) and sellers accompanied by recognised advisers, contributing to greater market transparency (VSE/SME).

In 2009, SOWACCESS platform contained

- 90 affiliate partners (e.g. lawyers, banks, advisors, accountants, etc.),

- 112 sellers brought to the platform by the affiliate partners,

- 167 affiliate buyers,

- 800 connections between sellers and buyers.

Moreover, from a strategic point of view, SOWACCESS wished not limit its activities in outreach transferors /acquirers to Wallonia, but extended its presence to Flanders and the Netherlands through an exclusive partnership agreement with the private company MKBase. In the same spirit it has entered into collaboration, also exclusive, in November 2008 in France with the national association ‘CRA - buyers and sellers of business’. The three companies jointly manage a platform (TRANSEO) covering the territories of Belgium, the Netherlands and France with in 2009: 2,000 businesses for sale (industry, trade, construction work, business services, primarily 5 to 30 people); 3,100 potential buyers including 900 companies considering external growth through acquisitions; and 470 private sector partners. In addition, this partnership organised in 2009 the First European Forum on SMEs’ Transfers.

Commentary

Belgium is a land of SMEs. Indeed, 99% of Belgian firms are SMEs. However, for a long time, public authorities have put the priority on the biggest companies, because those are more valuable in term of contributions. Nevertheless, since 2004, Wallonia has understood the importance to invest in their SMEs. Indeed, SMEs creates jobs, bring foreign investments and therefore, create a value-added for the region. The proof is that the Marshall Plan had a great success with more than 27,000 jobs created. Unfortunately, the global recession arrived but Flanders and Wallonia have preferred to relaunch the economy through SMEs rather than apply austerity policies. Even if it is too soon to show the results of the ‘Marshall Plan 2. Green’ and the ‘Flanders in Action: Pact 2020’, the Belgian considerations on SMEs have changed. Indeed, we can see everywhere adverts for starting a business, for studying entrepreneurship, etc. Even in universities, the management field is developping studies and courses in entrepreneurship, innovation and SMEs’ management.

Finally, even if the crisis is still there, SMEs seem to be the more solid way to upswing the economy. Now that the autorithies have understood this, SMEs will have a nice future, in Belgium.

Michel Ajzen, Institut des Sciences du Travail - UCL



Useful? Interesting? Tell us what you think. Hide comments

Add new comment