A well-functioning and flexible labor market is key to ensuring a strong economy and to attracting investment. The labor market is driven by supply and demand, connecting people with the right skills to jobs. The legal and administrative framework for attracting, rewarding and retaining employees should be simple, efficient and cost competitive. Despite Belgium’s strengths, its labor market is not always perceived to be competitive, flexible and attractive for either employers or employees.
Foreign investment generates a significant amount of direct and indirect employment in Belgium. Although international companies continue to invest here, they are creating fewer jobs in general, fueling the prospect of “jobless investments”.
While Belgium boasts a talented, highly skilled and multicultural workforce, the exceptionally high cost of labor is a deterrent to job creation. This concerns all job levels, but is especially pertinent for senior management and other high-profile positions, because there is no ceiling on social security contributions. Social charges in Belgium increase – without limit – in proportion to the salary. Moreover, Belgium’s pervasive wage indexation system further drives up the cost of employment and decreases overall competitiveness.
Talent and flexibility
In addition to the concern about cost competitiveness, digital technologies are changing both the way companies operate and what they look for in employees. The COVID-19 crisis has only accelerated this trend, for instance via the unavoidable work-from-home regimes.
Belgium has a 3.5% job vacancy rate, the second highest in Europe, while at the same time companies often struggle to find the right talent. This points to a skills mismatch – jobseekers do not have the skills that are sought in today’s labor market. It is this talent shortage which drives the increasingly fierce competition between companies for qualified workers. With the rapid pace of technological change, countries will need to invest in STEM education and digital skills as well as reskilling and lifelong learning programs.
The growing importance of e-commerce, the so-called platform economy and other new business models is changing the organization of work. Belgium risks missing opportunities due the lack of flexibility in its labor market, such as around night work and weekend work.
A healthy workforce
Besides more flexibility and cost-competitiveness within the labor market in Belgium, it is also important to have a healthy population. Current challenges such as the aging population, chronic diseases, long-term sick leave and the increasing amount of burnouts must be tackled. Add to this the potential disruption caused by large-scale epidemics, such as COVID-19, and it becomes all too clear that investment in effective healthcare, ranging from prevention policies to disease management, is essential to maintain and improve economic growth in Belgium.
Belgium in the ranks
AmCham Belgium recommends
To improve business and investment opportunities
- Improve the flexibility of work organization and remuneration
- Facilitate talent acquisition
- Reduce labor cost and introduce a ceiling on employer social security contributions
Improve the flexibility of work organization and remuneration
- Increase the possibility to organize work in a flexible manner, especially in terms of night, weekend and seasonal work. Combine it with simplifying employee timekeeping. Relax the rules on the lending of personnel to stimulate skill-sharing between different entities/companies.
- Create a platform economy credit to support initiatives in this field.
- Simplify and harmonize existing legal framework(s) of extra-legal benefits.
- Relax the language regulations and make English a possible official working language, in line with neighboring countries.
- Introduce the concept of exceptional teleworking (next to structural and occasional teleworking); this should be less formalistic, and it should also be possible to address ad hoc situations by ad hoc teleworking. We would also be in favor of reducing the administrative burden of structural teleworking.
Facilitate talent acquisition
- Facilitate the immigration of qualified talent through an efficient implementation and execution of European immigration directives. Avoid gold-plating or implementing Belgian-specific requirements or restrictions.
- Invest in reskilling employees.
- Stimulate dual-learning and extend the duration of internships.
- Increase the number of STEM graduates.
- Stimulate cooperation between universities and companies.
- Stimulate the digital approach as an accelerator for a faster and better exchange of knowledge, talent and competences, both nationally and internationally
Reduce labor cost and introduce a ceiling on employer social security contributions
- Continue lowering employer social security contributions.
- Re-introduce a ceiling for employer social security contributions to attract more highly qualified people to Belgium, in line with neighboring countries.
- Adjust the automatic wage indexation to apply only up to an agreed salary level to ensure that the wage increases are targeted at those with low incomes.
International companies are part of the solution
Read more about our recommendations on Labor Market!
International companies believe in Belgium and are committed to helping find solutions to make the country and its governance more efficient and more attractive for foreign investors. We stand ready to work with all levels of government, whatever their political affiliations, to facilitate dialogue and collaboration between the international business community and policymakers, on the basis of our Priorities for a Prosperous Belgium, in pursuit of our common goal of a better and more prosperous future.