Government reforms labour market and social security

16 December 2016
Government reforms labour market and social security

The government has approved the Workable and Agile Work (Werkbaar en Wendbaar Werk) law and thoroughly reformed the 1996 law on wage norms, along with financing of Social security Social security is currently managed at the Federal level in Belgium. The most important pillars of Belgian social security are: sickness and invalidity insurance (NIDHI), pensions, unemployment insurance and child allowances. In addition, occupational illness, occupational accidents and annual holidays are dealt with at this level. Some Flemish parties have been campaigning for years for (large parts of) social security to be transferred to the Regions and Communities. social security. “In that way it demonstrates a commitment to a modern and competitive labour market,” the N-VA states. “At the same time, it increases accountability in the social security system.”

“This majority allows our labour market to adapt to the needs of the 21st century, without threatening the average 38-hour working week,” the N-VA explains. This means the Workable and Agile Work Law has provided a legal framework for flexible working hours and working from home or teleworking, to include during strikes. In addition, the law simplifies the rules about part-time work. “Through these reforms we guarantee an increase in flexibility for employer as well as employee, without the administrative red tape that used to be involved in the past,” the N-VA remarks.

Wage cost: avoiding further derailment

The wage norms law of 1996 is twenty years old and is now being thoroughly reformed. As a result of the Tax shift There is a tax shift when a new tax is implemented or an existing tax is increased in order to reduce or get rid of another tax. The N-VA is a proponent of a shift of the burden on labour to that on consumption or environmental pollution, for example, but not of a tax that increases the total burden of taxation. tax shift and wage indexation, within a mere two years’ time (2015-2016), the government has fully eliminated the Wage handicap The extent to which salaries in a certain country are higher than in one or more competitive countries. As a general rule, a wage handicap has a negative impact on economic growth and on the creation of jobs. This is why there has been a law in force since 1996 which stipulates that we may no longer build up any additional wage handicap. wage handicap that had accumulated since 1996. “With these reforms we prevent wage costs from derailing anew,” the N-VA states. “We create a safety margin of at least 0.5% per inter-professional agreement. And tax cuts effected in the tax shift are applied to reduce the historic wage handicap. In that way we boost Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness and job creation for our companies, both large and small.”

Social contract: no more passing the financial buck

The N-VA is also quite pleased with the reform of social security financing. It means that for social contracts involving fiscal impact, social partners are first asked whether alternative cuts are possible. “This puts an end to the tradition in which social contracts entail costs that are passed on to the taxpayer via a makeshift third-party payer system. In future, social partners will be made accountable for reducing the social security budget deficit. Moreover, at the same time, we increase democratic control of alternative financing of social security through tax income,” the N-VA concludes.

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