Belgium falls out of the top five most expensive countries in Europe for employers, according to new research by Deloitte Belgium, although labor costs remain a challenge, particularly at higher salary levels.
Deloitte Belgium’s ninth annual European Salary Survey compares employer costs to net income, across five salary levels, in 19 European countries.
Following the further reduction of employer social security contributions as part of the tax shift, Belgium is now the 6th most expensive country for employers among those surveyed. This ranking is based on average employer costs, but there are important differences between salary levels. Belgium remains among the top five most expensive countries in Europe at higher salary levels (above €125,000 per year), because social security contributions are uncapped – that is, they increase in proportion to the salary, without limit.
High employer costs do not necessarily translate into high net income for employees. Belgium has one of the lowest net/cost ratios. Low and average wage earners (€25,000 and €50,000 per year, respectively) have seen their take-home pay increase, thanks to the tax shift. However, higher wage earners in Belgium have comparatively low take-home pay. Net income at the highest salary level (€250,000), for example, is the lowest in Belgium among the surveyed countries.
It is important for Belgium to be competitive at higher salary levels in order to attract senior management and other high-profile positions. These positions have a positive effect on job creation and investment in general.
The Employee Tax Subcommittee – am initiative of AmCham Belgium’s Legal & Taxation Committee – is looking into the introduction of a cap on employer social security contributions and the impact of such a cap at different salary levels, in the belief that a cap will discourage the move from employment into one-person management companies by the higher paid and will allow companies to bring top talent to Belgium.
AmCham Belgium will publish the next edition of its Priorities for a Prosperous Belgium (PPB) in February 2019, which will formulate the recommendations of the international business community in Belgium to the next government. Stay tuned!