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No less than 80 billion euros to be gained from a reformed labor market

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An in-depth reform of the labor market, accompanied by a reduction in charges, would likely increase economic activity by as much as 16%. A potential still untapped to this day.

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At the end of October, the King, accompanied by our various employment ministers, went to Denmark to study how the Danes manage to bring more people into the labor market.

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There is a realization that too few people work in our country.

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The choice of this working visit shows at the very least that there is a awareness that too few people work in our country; that we can do much better; that this supposes efforts at both federal and regional level and that there is no need to reinvent hot water, but that we can learn from good practices in other countries.

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With an employment rate of 79%, compared to 70.5% in Belgium, Denmark is a good starting point in this regard. Further working visits to Sweden (81.1%), Switzerland (81.3%) and the Netherlands (82.3%) can already be planned. Because to reach the average employment rate of these countries, Belgium would have to employ some 700,000 additional people.

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The measures to be taken are known

Such working visits are probably interesting to check the concrete effects of certain measures, but we have known for a long time what is wrong with our labor market: a too heavy tax burden on labor, too little flexibility, from early retirement, too little lifelong learning, etc. The federal government has already put several of these items on the agenda, but their concrete implementation is still sorely lacking.

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In September, the Minister of Pensions, Karine Lalieux, presented her long-awaited pension reform, which was also to concern the question of the end of a career, but the latter turned out to be so insignificant that the subject has been put aside. On the occasion of the budget, the Minister of Finance Van Peteghem proposed a reduction in work charges, but with amounts on an annual basis of up to 50 euros for single people and up to 150 euros for couples who work, that is to say 4.2 or 12.5 euros per month, which therefore makes no real difference.

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The economic potential that we are leaving behind due to a poorly functioning labor market is enormous.

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Yet the economic potential that we are leaving behind due to a poorly functioning labor market is enormous. New OECD simulations show that a set of reforms focused on labor costs and the effective retirement age could ultimately increase economic activity by 16%. This corresponds to 80 billion euros today. In view of the long discussions that have taken place, in particular on the reduction of tax benefits for athletes (43 million) or the tax on flights (30 million), it is surprising to see how easily our policy makers overlook this potential.

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Bart Van Craeynest, chief economist of Voka, the Flemish employers.

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