Presentation is loading. Please wait.

Presentation is loading. Please wait.

Is Belgium Working? From Diagnosis to Therapy prof. dr. Marc De Vos Ghent University Lontings & Partners Advocaten - Avocats.

Similar presentations


Presentation on theme: "Is Belgium Working? From Diagnosis to Therapy prof. dr. Marc De Vos Ghent University Lontings & Partners Advocaten - Avocats."— Presentation transcript:

1 Is Belgium Working? From Diagnosis to Therapy prof. dr. Marc De Vos Ghent University Lontings & Partners Advocaten - Avocats

2 20 September 2005prof. dr. Marc De Vos2 Diagnosis and Challenge  The Lazy Man of Europe  Reform is necessary and urgent  My purpose: indicate areas in dire need for reform Lontings & Partners Advocaten - Avocats

3 20 September 2005prof. dr. Marc De Vos3 Variety of Structural Reasons  Main problem: sluggish economic growth and labour unfriendly economic growth  Variety of reasons: Entrepreneurial culture & investment climate Tax burden Government expenditure as a share of GDP Welfare state & incentives Labour market regulation … Lontings & Partners Advocaten - Avocats

4 20 September 2005prof. dr. Marc De Vos4 Labour Market Diseases  Ideology  Consensus model  Lump of labour fallacy  Labour cost  Share of public sector employment Lontings & Partners Advocaten - Avocats

5 20 September 2005prof. dr. Marc De Vos5 Legislation Steeped in Ideology  “Labour is not a commodity” – the labour market is not a market  Labour exploitation – paternalistic reaction  Result: Working time and (in)flexibility A-typical work: part-time, student, residential, on call, temporary work, secondment… Costly redundancy rules Costly administration Lontings & Partners Advocaten - Avocats

6 20 September 2005prof. dr. Marc De Vos6 Consensus Model: Now a Handicap  A union’s nirvana  Domination of labour regulation and the welfare state  Structural representation in companies  Result: Wage premium + “indexation” Centralisation and collectivism v. flexibility Insider / outsider conservatism Unions lack incentives to modernize Lontings & Partners Advocaten - Avocats

7 20 September 2005prof. dr. Marc De Vos7 Lump of Labour Fallacy  Fall out of the first oil shock  Early retirement, subsidized non- activity and prohibition of activity  Jungle of employment plans for specific segments of the population  Result: Wrong incentives for economic activity Low employment rate Administration cost & discrimination Lontings & Partners Advocaten - Avocats

8 20 September 2005prof. dr. Marc De Vos8 Direct Labour Cost  Result: Unemployment Wage drift and disincentive to work Shadow economy Labour is too expensive a production factor Competitive disadvantage within EU15 Total cost310 Social S contribution 110 Income Tax (at 50%) 100 Net income100 Lontings & Partners Advocaten - Avocats

9 20 September 2005prof. dr. Marc De Vos9 Share of Public Sector Employment  Approximately 1 public sector employee for every 3 in the private sector  Growth in employment in the last 30 years: only in quaternary sector  Result: Lower productivity & more inflexibility No growth incentive Tax consumption/redistribution v. tax production Lontings & Partners Advocaten - Avocats

10 20 September 2005prof. dr. Marc De Vos10 Conclusion  Labour market is a growing factor of international competitiveness  State of urgency in Belgium  Enormous and structural resistance to change  Likely scenario: limited changes – gradual decline – point of no return somewhere around 2015 Lontings & Partners Advocaten - Avocats


Download ppt "Is Belgium Working? From Diagnosis to Therapy prof. dr. Marc De Vos Ghent University Lontings & Partners Advocaten - Avocats."

Similar presentations


Ads by Google