Higher Council for Employment issues controversial report

Belgium has both more poorly qualified people as well as more highly qualified people than France, the Netherlands or Germany. This is one of the major conclusions of a report published in late January 1998 by the Higher Council for Employment on the eve consultations over employment policy between the Government and the social partners, who gave it a low-key reaction. Nevertheless, well before the contents of the report had been formally made known, opinions over its value were divided.

The Higher Council for Employment (Hoge Raad van de Werkgelegenheid/Conseil supérieur de l'Emploi) is a body recently set up by the Federal Government to "evaluate measures to promote employment and examine job-creation proposals" (BE9708114N). It was clear from the time of the Council's creation that the contents of its report on employment would be controversial. The body's origins were themselves controversial, as part of a political agreement, and all sorts of political manoeuvring apparently took place concerning the composition of this "council of experts" from which the social partners were deliberately excluded. The Council's political balance had been meticulously weighed up which meant that, right from the start, its image as an objective and independent scientific body was called into question in some quarters, before a single letter or figure had been committed to paper.

Planning, composing and editing the Council's report all took longer than had been agreed (BE9801129F). Some members reportedly could not agree with the methods of the deputy chair, who is also a director of the National Bank of Belgium. The draft texts - for comment - were drawn up by the research department of the National Bank, which meant that some experts reportedly felt beforehand that they had been misled and presented with a fait accompli. Consensus was reached on the published report only once numerous divisive elements had been removed: a proposal concerning sectorally differentiated wage standards; a proposal concerning one-off wage indexing; an attitude towards reduced working hours perceived as overly negative; and an attitude towards part-time work perceived as overly positive. The report was published on 30 January 1998 on the eve - whether by coincidence or design - of the start of consultations between the Government and the social partners over the possibility of a central intersectoral agreement on employment policy. Whether many other reports will follow is still an open question, as many experts seem to have been left reeling from this experience.

Belgium, land of the poorly qualified

The report claims that the high number of poorly qualified people in Belgium is the country's Achilles' heel. The normal composition of a European workforce seems to be 25:50:20 - that is, 25% poorly qualified, 50% with average qualifications and 20% highly qualified. This is the average picture in Belgium's neighbouring countries. However, Belgium is an exception to the rule: it has both a far higher proportion of poorly qualified people (40%) and a higher proportion of highly qualified people (26%), while only one-third of the workforce has average qualifications - in other countries this latter group forms approximately half the workforce. Particularly worrying is the fact that this phenomenon is not something seen purely amongst the older generations. On the contrary, the trend continues amongst young people (aged 25-29): of this group, 25% are poorly qualified, 40% have average qualifications and 35% are highly qualified, while the proportions in surrounding countries are on average 20%, 60% and 20%. The situation does differ from region to region - Flanders scores more favourably than Brussels and Wallonia, where the Council refers to the situation as "dramatic". In all regions, these poorly qualified workers are predestined to remain in long-term unemployment unless more is invested in adult education and training.

Three-speed regions

At socio-economic level, too, the three regions perform differently. In Flanders, economic growth in the period 1987-95 was almost half as high again (2.7%) as in Wallonia (1.9%) and more than double that in Brussels (1.1%). Unemployment, as calculated by the International Labour Organisation, amounted to 6.2% in Flanders, 14.2% in Wallonia and 16.1% in Brussels. Flanders produces approximately 60% of Belgium's workers, Wallonia remains stable at 30% and Brussels produces fewer than 10%. In Flanders, 58% of the population of working age are in work, while in Wallonia and Brussels this figure is barely 52%. The three regions do, however, have some common features. Their scores compare with those considered "normal" for France, the Netherlands and Germany when it comes to the level of activity of those aged 25-49, but are considerably lower for the level of activity among younger people - due to later entry into the labour market and less "registered student work" - and for the level of activity of those aged over 50, many of whom take early retirement as part of workforce reduction programmes, or where companies close.

Excessively high non-wage labour costs

The difference between the cost price of labour and the net wages received by the employee is considerably greater in Belgium than in neighbouring countries. Out of the total labour costs for a Belgian employee, 54.8% goes on taxation and social security, while the employee keeps only 45.2%. In the three neighbouring countries, the ratio is almost the reverse: fiscal and parafiscal pressure represents an average 47%, while the employee retains approximately 53%. The social security contribution paid by the employer (19%) is almost the average of what the employer pays in the three other countries: 15.9% in Germany, 23.4% in France and 8.3% in the Netherlands. The employee's own contribution is considerably less: 9.6% in Belgium, compared with 14.1% in Germany, 12% in France and 23% in the Netherlands.

Caution is the watchword

The theme running through the recommendations of the Higher Council boils down to a plea for caution. At macroeconomic level, Belgium does not score too badly at present: the prospects for economic growth are favourable, inflation is under control, interest rates are low and the budget deficit is falling. All the conditions are present for potential growth in employment. Excessive wage rises, overly drastic cuts in wage costs and overambitious moves to reduce working hours are therefore out of the question. The path of wage-cost reduction must be pursued further albeit gradually and, preferably, at a fixed price per job.

Reductions in working hours also possible

The position which the Council would ultimately adopt regarding a reduction in working hours was eagerly awaited. Previous versions which argued outspokenly against a reduction in working hours leaked out prematurely and caused much comment (BE9801129F). The conflicts within the Council were thus exposed, arguably almost entirely destroying its credibility, which had not been high to begin with. Ultimately, it rejected a collective or overall formula (such as a four-day week). Nonetheless, negotiated formulae, which are adapted to the specific situations of companies and sectors, must be possible and may even be encouraged by the Government, provided they do not lead to increased wage costs.

Commentary

For once, all the social partners spoke with one voice: the report was a nuisance which made social consultations more difficult. However, it was only one of many reports, they said, playing it down. Nonetheless, all parties found something in it to suit them.

The trade unions were pleased that the report had broached the subject of reducing working hours and clearly stated that any alternative form of funding social security could not be borne by families. They were less encouraged by the recommendation that it would be best to continue with the current system of wage moderation. This recommendation was welcomed by the employers, which were less encouraged by the announcement that the high-wage "handicap" seems to have been eradicated. They said that it was not because wages were currently in line with those in neighbouring countries that the competitive handicap had been eliminated. However, all the social partners did agree on one thing: the report contained interesting figures, even though they had not requested them. (Steunpunt WAV)

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