Rosetta plan launched to boost youth employment

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In September 1999, the Belgian Minister for Employment, Laurette Onkelinx, revealed the broad lines of a "youth employment plan." Without prior consultation of the social partners, she announced her intention to provide all young people with a job no later than six months after they have completed their studies. The announcement elicited harsh criticism from employers, irritated the trade unions and set off a flurry of proposals for amendment. In November, the government finally settled for a modified scheme that tries not to offend the various regional and social sensibilities.

In line with the European Union Employment Guidelines (EU9909187F), a "youth employment" bill was approved on 12 November 1999 by the Belgian Council of Ministers. The scheme is more commonly referred to as the "Rosetta plan", after a Belgian film that won the Cannes film festival Golden Palm award, about a young woman, Rosetta, faced with the difficulties of finding a job. The plan's objective is to prevent young people from becoming stuck in unemployment, by offering them the opportunity of a first job or of rounding off their school education with an additional vocational qualification.

Youth unemployment statistics for 1998 show that over one half of people aged under 25 who have completed their studies are still unemployed six months later (72,000 out of 133,000 in 1998).

First draft meets social partner opposition

Initially, the "youth employment" plan presented by the Minister for Employment, Laurette Onkelinx, on 22 September 1999 included the requirement for all private and public enterprises to hire one young person aged under 25 for every 25 workers employed by the enterprise - ie a number of young employees equivalent to 4% of the firm's workforce. Employers were to be exempted from paying employer's social security contributions in respect of the new recruits during the first year and to be entitled to a monthly payment starting at BEF 8,000 for employees with a salary of BEF 42,702, and declining as the salary increased. The system thus envisaged was not intended as an additional provision but as a replacement for all existing measures to help young job-seekers.

The employers' reaction was swift: they claimed that the plan placed small and medium-sized enterprises in a position that was hard to accept. The employers opposed any quotas or penalties, even though the plan lacked clear definitions of ways to implement such penalties.

For their part, the trade unions approved the basic principle of the proposal. They insisted, however, that the government should ensure that the extra BEF 4 billion of reductions of employers' social security contributions and of financial incentives would actually translate into additional employment. The system of training placements previously in force did not cost the state anything, so the logic of financing a new programme was that it should be effective in providing concrete additional employment.

There was a lively debate about the group to be targeted by the scheme. The plan concerned only young people aged under 25 with low qualifications and hence could not be applied in the same way in all the country's sub-regions: in some of these, particularly those in Flanders, there is virtual full employment. How then to adapt the plan's objective to regional disparities?

The discussions led to a "cascading" system for selecting beneficiaries of the scheme. On the basis of labour shortages, employers will be able to turn: first to people under 25 within six months of leaving school; then to all job seekers under 25; and finally to job-seekers under 30. Through application of this principle, the differences in youth employment that may exist between the country's various labour markets can be taken into account.

The discussions also addressed the possibility of extending the scope of the plan to the public sector. The Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO) insisted that it should be possible to help young people to acquire a first experience of work within the public service sector, stating that private enterprises are already the systematic targets of obligations concerning training placements for young people, "whereas the public authorities have been neglecting their legal obligations in this matter for years."

Government amends plan

The government finally opted for a plan that respects the Minister for Employment's initial objective but has been modified to a large extent. The bill adopted on 12 November aims to be interventionist and dynamic. The war against youth unemployment will be waged by means of a hiring obligation on employers and a financial incentive that ensures targeting of the least qualified individuals.

Concretely, the plan will offer young people either a full-time employment contract for a minimum of one year or a half-time employment contract accompanied by a training programme.

The criteria for mandatory hiring have been lowered. Enterprises with more than 50 workers on their payroll will be obliged to hire additional young workers in numbers equivalent to 3% of their workforce (the obligation had been initially set at 4% of the workforce for enterprises employing 25 workers).

However, the overall objective is that the number of young people recruited under the plan - whatever the size of the recruiting company - will equal 4% of the total workforce of all enterprises with more than 50 workers. Thus, when smaller enterprises recruit a young worker who meets the plan's requirements, this recruitment will be counted towards the calculation of the total figure of 4% of the workforce of firms with over 50 employees.

One year after the law has been in force, the bipartite National Labour Council (Conseil National du Travail/Nationale Arbeidsraad) and Central Economic Council (Conseil Central de l'Economie/Centrale Raad voor het Bedrijfsleven) will assess the overall accumulated number of young workers taken on, and whether it is equivalent to 4% of the workforce of companies with over 50 workers. They will also examine the gender balance of the young people recruited. Pursuant to this assessment, and based on the National Labour Council's recommendations, improvements to the plan or penalties could be adopted.

Under the scheme, the employer will pay the usual social security contribution for each young person hired on a first employment contract. However, for each young person with low qualifications (ie whose qualifications do not go beyond the level of upper secondary education) who is hired, the employer will have the right to deduct a fixed amount of BEF 20,000 per quarter from overall social security contributions, for one year. The plan also encourages enterprises to go beyond the minimum requirements: for each additional young person with low qualifications who is hired (beyond the required equivalent of 3% of total personnel), the employer will be able to deduct BEF 45,000 per quarter, while employers who voluntarily hire young people in numbers equivalent to 5% or more of the workforce will be able to deduct BEF 45,000 per quarter for every young person with low qualifications recruited.

To promote vocational training of young people, half-time employment contracts coupled with a supplementary training programme will be regarded as equivalent to full-time contracts in terms of meeting hiring obligations. In these cases, the financial incentives will apply for two years.

The bill imposes financial penalties on enterprises that do not meet the hiring requirements: any enterprise employing more than 50 workers that fails to hire young people in numbers equivalent to 3% of its personnel will be fined BEF 3,000 per day.

The bill also concerns the public sector, but its provisions in this respect are vague. The plan calls for "a doubling of recruitment [of young people] in socially significant action programmes such as security contracts, urban policies etc." The education sector is not affected by the plan.

The "cascade" principle for the targeted groups has been retained. The extension of the scheme to all young people under 25 or under 30 allows for expansion of the pool of labour that can be drawn on. The sub-regional employment committees will be in charge of organising this process.

Commentary

The Rosetta plan has thus been adopted, not without some difficulty, by the Council of Ministers. Its enactment could start as early as the beginning of 2000. FEB/VBO has released a statement, claiming that "the plan has been markedly improved, at last bringing some clarity to a key issue." This is indeed the case. It could be said that that the new Minister for Employment, who has been in office for five months, endeavoured to present a rather ambitious project at the start , without consulting the social partners, but ended up with satisfactory results after all. As PF Lovens wrote in an editorial in the La Libre Belgique newspaper: "Laurette Onkelinx obviously underestimated the role played by the social partners in a field such as employment, which, in accordance with one of our country's (sound) traditions, is the province of social concertation. (Catherine Delbar, IST)"

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