In 2009, Belgium was ranked 3rd most productive country in the world by The Conference Board, an American research institute, who conducts an annual economic survey of labor productivity.  

The United States accomplished a rise in their productivity level that resulted in an added value of 57.2 USD, taking them to 5th place.

This comprehensive research compares the gross domestic product per hour of work, expressed in purchasing power, among 39 countries.
For every hour worked, Belgian employees generate an added value of 58.5 dollars (USD), this is approximately 41 euros. This constitutes as one of Belgium’s strong points, as this will attract new investors.

Although Belgium went up one rank, leaving only Luxembourg and Norway ahead, its labor productivity during this period experienced a downturn of 1.6%. This is not surprising as the world wide recession caused World Productivity Growth to decline in 2009 by 1%, a first decline in almost two decades. Nevertheless, on a more positive note, it is projected to recover significantly in 2010 according to The Conference Board.

Although Belgium has a high productivity score, it might not be all good news. Firstly, the results could be influenced by the fact that only 34.5% of its employable population aged 55 to 65 are actually working and in turn this group may be less productive in hard labor.

Secondly, Belgian salaries are on average 11% higher than those of neighboring countries (the Netherlands, Germany and France). Some economists believe that Belgium’s high productivity level per hour isn’t beneficial for companies with a large workforce, given the higher labor costs. This will place Belgium at a disadvantage as it makes it a less attractive place to do business. It will in turn encourage more automation where possible, which will reduce its employment level. According to Philippe LeDent, an economist at ING, “it would be more beneficial to occupy a lower rank, with a lower productivity level, and consequently attain higher employment”.

AmCham Belgium’s position
In Priorities for a Prosperous Belgium AmCham Belgium underlines the importance of increasing workforce participation, particularly amongst older workers and reducing the overall cost of labor by lowering employer social costs.

In order to maintain its position as an attractive country to do business and to attract new investors Belgium needs to, firstly, increase the older population’s activity rate which will make a valuable contribution to Belgium’s social and economic future. It’s necessary to modify certain schemes so that for a 55 year old it would be more interesting to continue working. AmCham proposed the following actions, increase early retirement age, modify pre-pension schemes and encourage continued training.

Secondly, Belgium should streamline the automatic wage indexation causing real wages in Belgium to increase by 4% at the beginning of 2009, which no doubt is one of the predominant causes for Belgian salaries to be higher.

These measures will enhance Belgium’s competitiveness and give Belgium the possibility to successfully compete with its neighboring countries.

For more information on AmCham Belgium’s recommendations, click here for our Priorities for Prosperous Belgium section.