This past March, President of France, François Hollande, promised to dramatically reduce the administrative burden on businesses – a “choc de simplification” he called it – and thereby promote growth. The first concrete measures were announced by the French Government last month. Can the Belgian Government learn something from the French example?
Reduce labor costs, cut corporate taxes, raise research subsidies… much is being asked of the Belgian Government. But the government’s ability to act is limited by the funds it requires to operate – and that may just be where the answer lies. Administrative simplification, as France is currently undertaking, is one obvious means to improve government efficiency.
For every euro collected by the government from a company or an individual, how much is put back into the economy? And how much is lost to bureaucracy?
When it comes to the efficiency of public services, there is certainly room for improvement. Last week, we reported that while Belgium is the third highest social spender in the EU, it ranks only sixth with regard to the quality of its social services. Clearly, there are ways of spending less while achieving more.
By reducing its own operational costs, the government could redirect spending to more important areas. A penny saved is a penny earned. This would enable the government to pursue long-term reforms which would make the country more attractive for local and foreign investors, such as a reduction of labor costs and corporate taxes.
In a recent interview, Karel De Gucht, current European Trade Commissioner and former Belgian Foreign Minister, echoed this sentiment.
“Today, you can only reduce labor costs by increasing taxes. Social services already represent 54% of Belgium’s worth. Only when these are reduced will we find room to maneuver. The state must become ‘meaner and leaner’. Its costs should drop by at least 5%.”
Belgium’s complicated and multilevel governance structure generates needless red tape that has been the bane of both local and international businesses. Excessive paperwork and redundancies at the different levels of administration cost not only money, but also time and frustration, to both the companies and the local, regional and federal entities.
The 6th State Reform, passed in July, aims to partially mitigate this problem by transferring more responsibilities to the regions. Now is an appropriate occasion, it would seem, for Belgium to take a lesson from France and consider its own “choc de simplification”.