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The Di Rupo government’s recovery strategy

On July 18, the Di Rupo government completed its budget review and decided on a recovery strategy. By safeguarding consumers’ purchasing power, enhancing competitiveness and creating jobs, the government aims to revive Belgium’s economy in a sustainable way.

A key priority for the recovery plan was a minimal impact on the budget in order to safeguard the growth-promoting budget consolidation. Therefore, the elaboration of the recovery plan was accompanied by a budget review, which plans to limit the budget deficit to 2.8% of Belgium’s Gross Domestic Product (GDP) for 2012 and aims to balance Belgium’s finances by 2015.

The government’s recovery strategy focuses on five major areas. First, it aims to safeguard consumers’ purchasing power by increasing employee’s take-home pay and making work more attractive compared to unemployment benefits. Attention is also paid to the self-employed, for whom the government aims to increase pensions to the level of employees.

A second group of measures seeks to increase employment, more specifically for younger and older employees (55+) facing unemployment figures of 18.7% and 38.7% respectively. Therefore, the government approved the employment plan by Minister of Employment, Monica De Coninck, which will create 10,000 new internship positions for the young unemployed with only a secondary education. Additionally, a number of measures provide for a reduction of employers’ contributions, which will effectively bring down wage costs.

Third, the recovery plan aims to improve companies’ competitiveness and better support SMEs. In line with the European priorities for growth and employment, the government is committed to increasing the number of entrepreneurs from 7% to the European average of 12% and get 73.2% of the population in employment by 2020 (67.8% in 2011). Therefore, entrepreneurship will be encouraged through a number of measures focused on SMEs, such as the recently approved Federal Actionplan for Administrative Simplification 2012-2015.

Fourth, the government wants to better regulate and control energy prices in order to prevent sudden fluctuations from impacting inflation and triggering the automatic indexation mechanism. A fifth and final group of measures aims to increase the positive macro-economic impact of innovation and R&D by increasing cooperation with BRIC-countries and relieving fiscal and administrative burdens for companies engaged in R&D. In practice, the government will increase the percentage of wage exempted from tax from 75% to 80% for all researchers.

In addition to the measures in the recovery plan, the government also engaged in an open and continuous dialogue with the Communities and Regions and the social partners (the Group of Ten) which identified eight work themes in order to come to a global agreement. The Federal Planning Bureau (FPB) is charged with determining a number of criteria to measure the evolution of the recovery strategy with every six months.

AmCham Belgium’s position

AmCham Belgium is pleased that the Di Rupo government has agreed on a recovery strategy before the summer recess. The plan contains a number of measures that will improve competitiveness of companies in Belgium and, if fully implemented, these will strengthen Belgium’s economic position in these crisis times. More importantly, the measures in the recovery strategy clearly point to the government’s awareness that wage costs are currently an impediment to economic revival in Belgium. Therefore, AmCham Belgium hopes that this enlightened government will continue simplifying and encouraging business in Belgium for SMEs and multinational companies once the summer recess is over. For AmCham Belgium’s recommendations for growth and stability, please see our 2012 Priorities for a Prosperous Belgium.