1. EMPLOYER REPRESENTATION AND SOCIAL DIALOGUE IN BELGIUM Split, 28 & 29 September 2011 Michèle Claus First Advisor, Social Department, FEB 1Split - 28 & 29 september 2011

2. I. Belgium & Croatia: some figures II. Federation of Enterprises in Belgium (FEB) III. Industrial relations in Belgium 1. Actors 2. System IV. Main challenges and current debates V. Special topic: wage negotiations in 2011 2Split - 28 & 29 september 2011

3. 3 2009BelgiumCroatia Population10.4 m4.5 m GDP per capita$37,800$17,400 Economic growth2%-1.4% Unemployment rate8.5%17.6% Public debt98%55% Below poverty line15.2%17% Government typeFederal MonarchyRepublic I.Belgium & Croatia: some figures Source: CIA World Factbook Split - 28 & 29 september 2011

4. 4 GDP per capita in PPS in Europe Split - 28 & 29 september 2011

5. II.Federation of Enterprises in Belgium (FEB) 1. What is FEB? 2. History 3. Role of FEB at federal level 4. Role of FEB at European and international level 5. Structure and organisation 5Split - 28 & 29 september 2011

6. 1. What is FEB? l Multi-sectoral employers’ organisation representing companies in Belgium, from both the industrial and services sectors l Voice of businesses in Belgium l Represents more than 50 leading sectors, over 48,000 businesses (of which 41,000 SMEs) and 1,600,000 employees 6Split - 28 & 29 september 2011

7. 2. History l 1895: Central Committee of Industrial Labour l 1913: Central Committee of Industry l 1946: Federation of Belgian Industry l 1973: Federation of Enterprises in Belgium (FEB) 7Split - 28 & 29 september 2011

8. 3. Role of FEB at federal level (1) l Defending business interests in dealings with l government - public authorities - trade unions l Representing business federations in several institutions and bodies l Central Economic Council - National Labour Council - National Social Security Office - Consumer Affairs Council l Action strategy l in-depth studies and analyses l definition of a shared business viewpoint l communication of this viewpoint to members and the press 8Split - 28 & 29 september 2011

9. l Within the National Labour Council: multi-sectoral negotiation of collective labour agreements applying to: l all companies l all private-sector employees l Cooperation with the regional business federations: l Flanders – Wallonia - Brussels l Contact with NGOs l better understanding of each other’s views l structural negotiations 3. Role of FEB at federal level (2) 9Split - 28 & 29 september 2011

10. 4. Role of FEB at European and international level l Important role as 60% of total Belgian production is exported l Member of BusinessEurope l Advocate for companies at the European institutions (Parliament, Commission, Council) l Member of international organisations l ILO - BIAC - ICC l Promoting foreign trade l establishing contact between Belgian and foreign companies 10Split - 28 & 29 september 2011

11. 5. Structure l Departments l Social Affairs Department l Economic Affairs Department l European and International Department l Legal Affairs Department l Communication Department 11Split - 28 & 29 september 2011

12. l Collective agreements l Employee representation l Wage policy l Working conditions and labour organisation l Unemployment benefits l Health insurance l Pensions l Family benefits l Annual leave l Accidents at work l Occupational diseases l Social security contributions and benefits Issues handled by the Social Affairs Department 12Split - 28 & 29 september 2011

13. III.Industrial relations in Belgium 1. Introduction: main characteristics of Belgium 2. Actors l Trade unions l Employers l Government and social policy 3. System of industrial relations l At interprofessional level l At sector level l At company level 13Split - 28 & 29 september 2011

14. 1. Introduction: main characteristics of Belgium l Political structure l Economy l Public finances l Political parties l Some basic social statistics 14Split - 28 & 29 september 2011

15. 15 Political structure Split - 28 & 29 september 2011

16. 16 l Six Governments l National (federal) level – Federal Government l Prime Minister Yves Leterme l Minister for Employment and Equal Opportunities Joëlle Milquet l Regional Governments l Flemish Government l Walloon Government l French Community Government l German-Speaking Community Government l Brussels Region Government Federal and regional governments Split - 28 & 29 september 2011

17. 17 2. Actors l Trade unions 7 pluralism 7 membership 7 legal status l Employers 7 structure 7 membership 7 decision-making process 7 legal status l Government and social policy Split - 28 & 29 september 2011

18. 18 l Blue-collar and white-collar workers l Private and public sector l Pluralism: Christian (founded 1886): ACV-CSC 55% of membership Socialist (founded 1885): ABVV-FGTB 40% of membership Liberal (founded 1892): ACLVB-CGSLB 5% of membership A. Trade unions Split - 28 & 29 september 2011

19. 19 B. Employers: FEB 75% of the 2.5 million employees in the private sector FEB 35 sectoral federations 48,000 companies (41,000 SMEs) Industry: e.g. technology, chemicals, wood, food, textiles, clothing, iron, steel, and so on Services: e.g. banking and insurance, retail, transport and energy Construction Split - 28 & 29 september 2011

20. 20 l Negotiations with trade unions l Bipartite: wages and working conditions l Tripartite: e.g. “Solidarity Pact between Generations” l Lobbying at national level l Lobbying at European level FEB: role in social affairs Split - 28 & 29 september 2011

21. 21 1) At national level l Interprofessional Agreement (IPA): general framework for the private sector (2 years) – Group of 10 l Informal agreement between employers’ and employees’ organisations about wages and working conditions l e.g. 2011-2012 wage moderation (indexation of wages + small increase); l Advisory committees l National Labour Council (NLC): social policy l Central Economic Council (CEC): economic policy l High Council for Prevention and Protection at Work: occupational health and safety l Boards of several public services (unemployment, sickness and disease, pensions, and so on) System of industrial relations Split - 28 & 29 september 2011

22. 22  Interprofessional dialogue Christian socialist liberal FEB President (FEB) SMEs agriculture “GROUP OF 10” Group of 10

23. 23 Social dialogue 2) At branch level l Implementation of national agreement at branch level l Conciliation in joint bodies at branch level 3) At company level l Large companies (≥ 250 workers): 5% of companies but 50% of employment l Formal dialogue: +50, +100 l Small and medium-sized enterprises (SMEs) : Informal dialogue: -50 Split - 28 & 29 september 2011

24. 24 Belgian social dialogue model l Themes of collective labour agreements: employer- employee relationship l Wages l Employment contract, terms of notice for blue- collar and white-collar workers l Working time, flexibility l Work/life balance: time credit, parental leave l Lifelong learning l Early retirement l Peaceful industrial relations l and more besides Split - 28 & 29 september 2011

25. 25 IV. Main challenges l Wages and labour costs l Job creation l Ageing population l Employability l Peaceful industrial relations Split - 28 & 29 september 2011

26. Background to negotiations: SWOT analysis of our socio-economical and political system 26Split - 28 & 29 september 2011

27. STRENGTHS - Location - Education - Brussels, capital of Europe - Strong clusters WEAKNESSES -High labour costs - Rigid wage formation - Poorly functioning labour market - Public investment too low OPPORTUNITIES - Growth potential - Stock of significant unused labour force - Enormous efficiency gains possible in the public sector THREATS - Ageing population - Sanitation of public finance - Political and social instability 27Split - 28 & 29 september 2011

28. Strengths 28Split - 28 & 29 september 2011

29. Well-trained workers… Forces 29Split - 28 & 29 september 2011

30. ... and clusters of different strengths Forces 30Split - 28 & 29 september 2011

31. Weaknesses 31Split - 28 & 29 september 2011

32. Belgium has a growth problem... Weaknesses 32

33. ... and is losing market share in the international context Weaknesses 33

34. We are facing higher wage costs... Weaknesses 34

35. … mainly due to a high tax burden (EUR source: IDW Köln) Weaknesses 35Split – 28 29 september 2011

36. Wage formation is very rigid Weaknesses 36

37. Structural unemployment remains high… Weaknesses 37

38. … and there is a large gap between insiders and outsiders on the labour market Weaknesses 38

39. Example: low employment rate among over-55s Weaknesses 39

40. Threats 40Split - 28 & 29 september 2011

41. Population ageing is fast becoming a reality 2011 Threats 41

42. Opportunities 42Split - 28 & 29 september 2011

43. Great potential to improve our prosperity Opportunities 43Split - 28 & 29 september 2011

44. Keeping people at work longer to finance the ageing of the population Opportunities 44Split - 28 & 29 september 2011

45. Slow down the growth of healthcare spending Opportunities 45 Efficiency gains in health care (in % of GDP; source: OECD) Split - 28 & 29 september 2011

46. Increase the efficiency of the public authorities Source : OECD Opportunities 46

47. 47 1. Labour costs (wage moderation) 2. Ageing population (early retirement) 3. Work/life balance (leave systems) 4. Harmonisation of labour law for blue-collar and white-collar workers 5. Peaceful industrial relations Current topics in collective bargaining Split - 28 & 29 september 2011

48. Common theme: the Europe 2020 strategy l Five targets: l Employment: 75% of people aged 20-64 l R&D/investments : 3% of the EU's GDP l Climate change/energy : 20%- 20%-20% l Education: school drop-out rate below 10% and 40% of people aged 30-34 completing tertiary education l Poverty/social exclusion: - 20 million 48Split - 28 & 29 september 2011

49. The government has set an ambitious employment target: 73.2% (+ 570,000 in 10 years) 49

50. The labour cost handicap will need to be eliminated 50 Konings and Abraham, 2010 Eliminate labour cost handicap (3.5%) = 60,000 to 72,000 jobs in four years Link between the evolution of the labour cost handicap and the employment rate if the labour cost handicap, which was created in 1996, is phased out (compared to retention of the labour cost handicap) Split - 28 & 29 september 2011

51. 1. Derailed labour costs (1996 = 100) 103.9% 99.0% 100.0% 101.0% 102.0% 103.0% 104.0% 105.0% 106.0% Evolution of cost per hour worked compared to three neighbouring countries 51 ? Split - 28 & 29 september 2011

52. 52 1. Derailed labour costs l Reasons for derailed labour costs: l Wages automatically indexed to changing prices (branch- level CLA) l Plus wage negotiations (0.3% in 2012 under two-yearly agreement) l Result: hourly labour cost in industry, IDW 2008: l Belgium: €35.80 l Netherlands: €31.30 - Germany: €32.70 - France: €32.30 l High wages and considerable tax and parafiscal burden (social security contributions) Split - 28 & 29 september 2011

53. 53 2. Ageing population l Ageing (‘greying’) of the Western Europe’s population l Post-WWII ‘baby boom’ generation now retiring l Birth rate is too low l Reforms are necessary l Working longer to finance pensions and healthcare costs (‘Generations Pact’) l Integrating the long-term unemployed, young people, women, migrants, disabled people and other groups into the labour market l Positive role for experienced workers Split - 28 & 29 september 2011

54. 54 2. Pensions - early retirement Age pyramids for EU-25 (source: Businesseurope) Split - 28 & 29 september 2011

55. 55 l Average exit age from the labour market: 59 2. Pensions - early retirement Split - 28 & 29 september 2011

56. 56 l One in four part-time jobs is ‘subsidised’ by social security 3. Leave systems – work and family Evolution of number of workers taking a career break or working part-time with an allowance from the National Employment Office (Source : ONEM)

57. 57 l Very long notice periods for white-collar workers Notice period after 20 years of contract – blue-collar and white-collar workers (source: OECD) 4. Labour law for blue-collar and white- collar workers Split - 28 & 29 september 2011

58. V. Wage negotiations 2011-2012 58Split - 28 & 29 september 2011

59. Wage formation l Framework: law of 26 July 1996 to promote employment - safeguarding competitiveness l Basis for IPA negotiations l Striking a balance between increasing purchasing power and controlling wage costs 59Split - 28 & 29 september 2011

60. Wage formation: Steps l Technical report of the Central Economic Council (CEC) l Fragile recovery l Uncertain economic prospects l Labour costs derailed 2009-2010: 0.4% l Automatic adjustment of wages to rising prices 2011- 2012: 3.9% l Correction: 1.1% l Evolution of labour costs in the reference countries, 2011-2012: 5% 60Split - 28 & 29 september 2011

61. Wage formation ●Balance between wage moderation and purchasing power ●Call to sectors → sense of responsibility o Nothing in 2011 o Possible salary increase or other benefits only in 2012  Absolute margin: max. 0.3% of wage costs * Margin : 0% - 0.3% * Content to be defined * Recurrent – non recurrent ●Research on indexing mechanism by CEC (2011) o Reducing volatility (mainly energy prices) 61Split - 28 & 29 september 2011

62. Conclusion: still much to be done l Ongoing discussions on: l Working longer l Job creation l Appropriateness of automatic wage increases(indexing mechanism) l Financing leave systems 62Split - 28 & 29 september 2011

63. Sources 63 l CRB 2010-1600 Technisch verslag van het secretariaat over de maximale beschikbare marges voor de loonkostenontwikkeling (9 November 2010) l Pieter Timmermans & Geert Vancronenbrug: a SWOT- analysis of the socio-economic and political system in Belgium l Klaas Soens: Statistical factbook FEB 2010 l Manou Doutrepont: A new wage standard? Split - 28 & 29 september 2011

64. 64 Internet sites (English version) l Federation of Enterprises in Belgium (FEB) www.feb.be l Federal Public Service Employment, Labour and Social Dialogue : www.meta.fgov.bewww.meta.fgov.be l Federal Government: www.belgium.bewww.belgium.be l Businesseurope: www.businesseurope.euwww.businesseurope.eu l http://ec.europa.eu/europe2020/targets/eu- targets/index_en.htm http://ec.europa.eu/europe2020/targets/eu- targets/index_en.htm Split - 28 & 29 september 2011