EMCC European Monitoring Centre on Change

Tackling the recession: Belgium

  • Observatory: EMCC
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  • Published on: 12 July 2009



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Emmanuelle Perin
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The recent recession caused a high number of restructuring processes and collective redundancies throughout the first trimester of 2009. According to the latest statistics, the number of unemployed people was 436,095 in March 2009, which corresponds to an increase of 5% in comparison to March 2008. This increase is higher in Flanders, the region the most concerned by important restructurings, with an increase of 11.8%.

Introduction

Men are affected by the increase in unemployment, with 21,008 additional unemployed men while women seem to be less affected with a decrease of 131 unemployed women. According to the Minister of employment, the important measures of temporary unemployment allowed to alleviate the effect of the crisis on structural unemployment. Currently, 313,200 people are in temporary unemployment, which corresponds to three quarters of the total number of unemployed.

Measures taken by government to assist businesses and protect jobs

Support to businesses

What formal or legal arrangements (such as job subsidies, bank guarantees, loans or special credit facilities) are in place in your country for supporting firms which are at risk of having to reduce employment? (Please include only measures which are aimed principally at maintaining employment as opposed to those which are aimed, for example, at increasing competitiveness or supporting investment.)

Are the arrangements or measures concerned permanent features of the system in your country or have they been introduced in the recent past specifically to combat the effects of the present recession? Please give an indication of the number of firms receiving support of this kind and the number of jobs protected as well as the source of funding.

Do the measures apply generally across the economy or are they specific to particular sectors or regions? Please indicate the sectors and/or regions concerned.

Is there government support available for companies which introduce short-time working arrangements, give a temporary period of leave to workers or implement similar measures to enable workers to retain their jobs where there is insufficient work for them to do? If so, please give an indication of the extent of the support concerned and the number of companies, and the workers they employ, receiving support.

Are there are plans or proposals to introduce measures of the various kinds indicated above in order to assist businesses and protect jobs? If so, please describe them briefly.

A measure applied since 2003 allows the employers of the private sector and semi-public sector (public enterprises with an economical character- railways, mail company,…) , on a voluntary basis, to reduce the working time from 38 hours to a maximum of 35 hours and/or to a 4 days week. In this case, employers benefit of some tax exemptions. The measure has to concern a group of workers (all workers from one unit or all blue-collars…) and has to be temporary. The decrease of the working time has to be formally established by a collective agreement at sectoral or company level or in the company internal rules (the agreement of the trade unions is thus necessary).

Temporary unemployment is forecast for blue-collars in case of economic downturn, bad weather or unpredicted event.

At the end of December 2008, the Belgian government agreed on a stimulus plan to boost the economy in crisis. This plan essentially integrated the interprofessional agreement concluded by the social partners and added some measures to implement the agreement (BE0901019I). This plan was integrated in the law of the 7th April 2009 (Loi de relance économique/ Economische Herstelwet). The law understands measures aiming to sustain the competitiveness of the companies and to protect employment. Among those measures, the law forecasts:

  • An exemption of tax payment for overtime. Employers will benefit of an exemption until 130 hours overtime instead of 65 hours.
  • An exemption of tax payment for the employment of scientific researchers (increase from 65% to 75% of exemption).
  • An exemption of tax payment for night shifts ( increase from 10.70% to 15.60% exemption)
  • Possibility to delay the tax payment during three months for the tax payment of the first two trimesters 2009.

Those measures are applied for all kind of entreprises in every sector (private and semi-public companies) with the exception of the public sector (such as central or local administration).

The Minister of employment launched three new crisis measures that will be implemented from the 1st June 2009.

  • a collective decrease of the working time from 5 days to 4 days a week. The measure can be applied to every staff category of a company (can be applied to only one category or to the staff of one department or one plant). The measure is besides valid for private entreprises and ‘semi-public’ entreprises at the condition a collective agreement at sectoral level or company level include this measure.
  • A personal decrease of the working time from 1/5 or half of the time. The company (private or semi-public) has to have lost at least 20% of its turnover during the last four trimesters or the company has to have used temporary unemployment for at least 20% of its blue-collars. A collective agreement at sectoral or company level has to be concluded.
  • Partial or full-time temporary unemployment for all categories of workers (blue and white collars). It is a new kind of temporary unemployment specific to the crisis situation and applicable for all categories of workers. This is valid for private or semi-public entreprises if the company experienced a downturn of at least 20% of its turnover during the last four trimesters or if at least 20% of the blue-collars are temporary unemployed (for economic reason).

Those three measures are valid until 31st December 2009, unless a new government decision agrees to extend their validity.

In the Walloon region, the Walloon government established a framework of action against the crisis (5th December 2008). This plan understands measures to sustain employment in companies faced with a decrease in the demand.

The government extended the facilities given to enterprises to benefit from loans and extended its funds for vocational training. Besides permanent workers of the company, workers temporary unemployed, workers from the subcontractors, workers employed with a fixed-term contract or temporary workers will benefit from vocational training. Those measures are applied to all companies located in the Walloon region at the exception of the public administration.

Support to workers

What formal or legal measures (such as partial unemployment benefit or similar kinds of social transfer) are in place in your country to support workers who have been put on to short-time working by employers or who have been given temporary leave with reduced rates of pay (i.e. who still formally have jobs but who are either not working or working reduced hours)? Please describe the measures concerned and indicate the scale of support provided. Please also give any figures available for the number of workers receiving payments of this kind as well as the source of funding.

Are the measures concerned permanent features of the system in your country or have they been introduced in the recent past specifically to combat the effects of the present recession?

Has the coverage of the social benefit system which provides income support to workers who lose their jobs been widened in the present recession in order to ensure that those concerned are protected (such as, for example, through a relaxation of the rules and regulations governing the payment of unemployment benefits or other forms of social transfer or through an extension to workers not previously entitled to support)?

Are there any plans or proposals to provide income support for those working short-time or on temporary leave? If so, please describe them briefly.

The employment contract for blue-collars can be suspended in the case of a slowdown of the sector activities. In this case, the workers concerned (only blue-collars) are entitled to social provisions funded by the unemployment insurance (National Employment Office (Office National de l’Emploi/Rijksdienst voor Arbeidsvoorziening, ONEM/RVA)). The provision is assessed from the last monthly wage of the worker with a maximum of 2,206.46 euros per month. The worker will receive during the unemployment period either 60% of the salary if living in couple or 65% if living alone or in couple with children. These percentages were increased in the last law to boost the economy (7th April 2009), the amount rose from 60% to 70% and from 65% to 75% with an incease of the maximum salary of 300 euros. This measure is now (since the law of 7th April 2009) valid for temporary workers and workers employed with a fixed-term contract.

The three new ‘crisis measures’ introduced recently by the government forecast financial support to the workers concerned. In case of a reduction of the working time, the worker will receive a provision of around 400 and 500 euros per month. In case of temporary unemployment ( this last measure concerns white-collars) because of crisis, the worker will receive around 70 and 75% of its salary.

Number of unemployed temporary workers (March 2009)

  Brussels Flanders Wallonia Belgium (total) Month-1 Year- 1
Men

7717

167988

84125

259830

15407

114238

Women

2114

42556

8700

53370

8412

19604

Total

9831

210544

92825

313200

23819

133842

Source: National Employment Office ( Office National de l’Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA)

The Flemish government grants ‘encouragement bonuses’ for workers of enterprises at risks to reduce employment. The amount of the bonus was recently increased, on the 20th March 2009. The bonus is granted to workers reducing their working time in the framework of a company’s restructuring plan. The company must be in a process of restructuring or must face a decrease of at least 20% of its turnover or production. An extra-bonus will be granted for workers who will follow training during the reduced working time.

2. Action taken by companies to maintain workers in employment

What action, if any, has been taken by companies during the present downturn to keep workers in jobs in situations where the work for them has declined? Please describe briefly cases where companies have introduced short-time working (such as fewer hours per days or fewer days per week), temporary periods of leave or other means of maintaining people in jobs.

How extensive has such action been in terms of the number of companies and workers concerned and the sectors in which it has occurred?

Have particular types of company (e.g. multinationals or domestically-owned firms) or firms in particular sectors been more prepared to take this kind of action than others?

Has the action in question typically entailed a reduction in pay? If so, please give an indication of the typical extent of this.

To what extent has this kind of action been accompanied by the provision of training or education to the workers concerned – i.e. how far have companies taken advantage of the lack of work to improve the skills of their work force?

Measures generally introduced by companies to face an economic slowdown are temporary unemployment for blue-collars and a reduction of the working time. Those measures have to be in any case approved by the trade unions to be implemented.

Another measure adopted by companies is a wage freeze.

At ArcelorMittal (metal industry), additional amounts to salary such as compensation for posted workers or financial advantages for workers with several skills and involved in several types of jobs, will be cancelled. At Agfa-Gevaert, a chemical industry, middle and high management did not receive the traditionnal end of the year bonus in December 2008.

At Ford-Genk (automobile industry), the management introduced temporary unemployment in order to face the reduction of the orders and to work with two shifts instead of three.

In 2008, the sectors the most concerned by temporary unemployment for economical reasons were metal (including automobile) industries, textile industries, food industries and the construction sector. (Source: National Employment Office (Office National de l’Emploi/Rijksdienst voor Arbeidsvoorziening, ONEm/RVA)

For the beginning of 2009, we identified from a personal assessment that the automobile industries and metal industries were highly concerned with temporary unemployment.

The National Employment Office allows employers to propose training (in or outside the company) to workers temporary unemployed for economical reasons. However there are no statistics related to the number of companies that are actually proposing training in this situation.

3. Joint action taken by companies and trade unions to maintain jobs

How far has the kind of action described in Section 2 above been the subject of collective agreements between companies and trade unions? Please give summary details of the content of some of the most important collective agreements.

To what extent has other action been taken under collective agreements to reduce business operating costs so as to avoid job losses? Has there been an increase in instances of trade unions, or worker representatives, agreeing to accept cuts in pay, or to work longer hours without additional pay, in order to maintain employment levels? If so, please give an indication of the extent of such agreements and describe briefly typical cases.

Are such agreements more prevalent in some sectors than others?

What other forms of action have trade unions taken, apart from strikes and other action designed to put pressure on employers, in order to try to prevent job losses and maintain employment levels? How effective has such action been?

In December 2008, the social partners (Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV), Federation of Liberal Trade Unions of Belgium (Centrale Générale des Syndicats Libéraux de Belgique/Algemene Centrale der Liberale Vakbonden van België, CGSLB/ACLVB), Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) and Belgian Federation of Employers (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO)) agreed on an interprofessional agreement (general framework agreement for the next cross-industry and sectoral agreements) for the next two years 2009 and 2010. This agreement was entirely dedicated to the crisis with the aim to find a balance between competitiveness, purchasing power and the employment level (BE0901019I). However, no measure directly aims to the maintenance of jobs in firms at risks to reduce employment.

Measures such a working time reduction or temporary unemployment have to be always agreed by the social partners in a collective agreement at sectoral level or company level. For now, such measures are essentially agreed at company level.

The 120 workers of the company Outokumpu Copper, a manufacturer of copper tubes located in the region of Liège (Walloon region), accepted to work 37 hours instead of 38 in order to allow the company to reduce its wage costs and to maitain all jobs on the site. Workers have also accepted to not receive ecovouchers this year. (Echovouchers are equivalent of meal vouchers but are intended to buy green products or services)

The white-collars of Duferco, metal industry, in Clabecq (Walloon region) accepted to work 4/5 of their working time for one year. The proposition was made by the management in order to avoid any restructuring process because of the slowdown of the economy.

Employees and members from the middle and high management from Volvo in Gent accepted to reduce their working time of 90% during 4 months in order to maintain jobs. The part of the wage lost could be partly covered by a provision granted by the Flemish government. Last October, 250 jobs were to be suppressed through the non replacement of the retirees.

At Syngenta (chemical industry), a decrease of the working time has been agreed by the trade unions and the employer in order to reduce the number of redundancies. However, still 48 people instead of 60 will be concerned by a collective redundancy.

4. Measures to provide income support

To what extent do collective agreements include provision for higher rates of compensation in the event of workers being made redundant than they are entitled to under national legislation? How far do collective agreements providing more generous compensation than the statutory amount vary between sectors?

Has there been an increase in the number of collective agreements which include such provision during the present downturn?

To what extent are redundancies being concentrated on older workers, i.e. taking the form of early retirement, in the present downturn? Is there any evidence that the use of early retirement as a means of effecting reductions in employment has increased in importance during the present downturn

The interprofessional agreement 2009/2010 established the social provisions, such as unemployment benefits and pensions, will follow the rise of the cost of living and will be then increased. On the 1st January 2009, a royal decree increased the maximum wage basis to calculate the amount of unemployment benefits and assure these benefits are linked to the rise of the cost of living.

In some sectors, such as the metal industries, a collective agreement guarantees the payment of a daily allowance in addition to unemployment benefits in case of temporary unemployment or unemployment for economic rea sons.

The number of early retirees was of 117,056 in March 2009. The number increased from 1,697 in one year (1.5%). Since 2005, people of age for early retirement (45 and ) and made redundant through a restructuring process cannot benefit automatically to early-retirement but are encouraged to return to work through outplacement measures (BE0412306F, BE0602304F). Early retirement cannot be a measure to alleviate the effects on restructuring anymore. However, we can notice early retirements are still demanded by the trade unions in case of restructuring in order to avoid to much jobs losses among the younger workers.

Since the law of 27 March 2009, measures of outplacement are now obligatory for every worker who lost its jobs through a restructuring whathever its age is. Measures for outplacement have been established within 159 companies in 2008, 92 in 2007 and 18 in 2006.

5. Lessons from research studies

Have any studies been undertaken in the past in your country on the effectiveness of attempts made in previous periods of recession to maintain employment levels similar to those covered here? If so, please outline the studies concerned and their main findings.

If partial unemployment benefit, short-time working or similar schemes which provide income support to those working short hours are a permanent part of the social security system in your country, please briefly describe any studies which been undertaken on their effects and the main conclusions to emerge from them.

In the 1990’s, several studies showed a general reduction of working time favoured a better employment rate if this reduction took into account the work organisation of the company and if this reduction did not entail a salary reduction.

Among those studies: Plasman, R., Soudan, C., Aménagement et réduction de la durée du travail: pistes pour la région de Bruxelles Capitale, Dulbéa, Février 1998.

Charlier, J-M. et alii. (1995), Le temps de travail et son aménagement, Fondation Roi Baudouin, Bruxelles.

A study was conducted for the Federal Planning Bureau (Bureau Fédéral du Plan/Federaal PlanBureau) on the macroeconomic impacts of additional tax exemptions for employers. Bossier, F., Hendrickx, K., Streel, C. Impact macroéconomique des réductions supplémentaires de cotisations patronales du Plan d’Action Belge pour l’emploi/Macroeconomische impact van bijkomende patronale bijdragevermindering in het Belgische ActiePlan voor Werkegelengeheid, Working Paper, Federal Planning Bureau, 1998.

These tax exemptions on the salary should encourage employers to recruit more workers. This study assessed the consequences of these tax reductions on employment without taking into account of any other measure such as working time reductions. In this context, the study forecasted an increase of 50,000 jobs in 2004, taking into account of a positive economic development in the years 2000.

Emmanuelle Perin, Institute for Labour Studies, Université Catholique de Louvain

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