Belgian labor costs more than it does in any of its neighboring countries. As a result for Belgium, the best way to compete is through 'innovation'.

Eurostat data reveal that an employee costs € 20 per hour on average in the EU. The lower costs are found in Bulgaria (€ 1,89) and Hungary (€ 7,13), while a Belgian employee costs € 32,68. Only Denmark, Sweden and Luxembourg have higher hourly costs.

Since Belgian SMEs mostly do business with their neighboring countries, a comparison between Belgium and those countries is interesting, but produces worrying results. A German employee costs € 27,80 an hour, a French employee costs around € 25 and a Dutch employee € 27. These are significant differences of more than € 5 per hour.

For a long time, Belgian companies could compensate for this difference by increasing their productivity, but naturally other countries have done the same. Belgium should therefore now capitalize on its advanced technology and on the advantages offered by the European internal market for services.

Next to efforts to eliminate this cost difference, the best way forward to compensate for Belgium’s disadvantageous labor costs is through innovation. A good example of innovation working can be found in Belgium in the traditional textiles sector as a result of the introduction of highly advanced technologies. This has transformed textiles into a specialized sector.

AmCham Belgium’s position
The most significant impact on productivity results from innovation by domestic companies. As a result, AmCham Belgium urges the Government to increase its spending on research and development (R&D) by at least 25% in order to meet the EU average. To do so, the Government will need to reinforce its support measures for R&D.

In its publication Priorities for a Prosperous Belgium AmCham Belgium also suggests the development of a curriculum at Belgian secondary schools dedicated to entrepreneurship, and recommends that all first degree students should complete an obligatory internship.

These measures will address both the current low R&D expenditures and increase successful innovation in Belgium. Click here for more information about AmCham Belgium's Priorities for a Prosperous Belgium.