Revolutionising the Belgian model

Date: 11/04/1996

By Jean-Paul Marthoz

ALFONS Verplaetse, Belgium's central bank chief, was in a rather buoyant mood at the end of last month when he summed up the country's economic situation in front of an audience of institutional investors.

Prime Minister Jean-Luc Dehaene did not look flustered either when he once again emphasised Belgium's capacity to respect the deadline for economic and monetary union.

“Belgium,” he declared, “can avail herself of a low inflation rate, an increase in corporate profits, low interest rates and a 'comfortable' surplus on the current account. I can state with some proudness that 1996 will be a special year for Belgium: for the first time since the early Seventies, the public budget deficit will reach 3&percent;.”

As portrayed by its masters, Belgium seems nearly as idyllic as it appears on tourist board posters. Some critics, however, could not help sneering at what they regarded as Belgian complacency.

Many European expatriates would tend to agree. Even though most do not follow Belgian internal politics closely and take their cue mainly from the sparse and skimpy articles that their own national media deign to devote to Belgium, they would certainly swear that something was wrong in their adopted country.

Most remember two figures that put Belgium on the wrong side of the tracks: an unemployment rate of 14&percent; and a debt of 134&percent; in relation to GDP.

Nearly every day in the European quarter around rue de la Loi, they find themselves stuck in traffic jams caused by demonstrating students or teachers blocking the streets.

Almost every week, they are forced to observe despairingly the cancellation notices on the departure boards at Zaventem airport where Sabena employees or air traffic controllers have developed a particular taste for surprise industrial action.

After France's winter of discontent, is Belgium on the verge of a spring of anger?

Although they acknowledge a certain nervousness on the social front, very few observers would go that far and most emphasise the stability of the national government.

The federalisation of the country has split responsibilities and pushed out to the regions competencies - and problems - that earlier would have threatened the national coalition.

The teachers' lingering frustrations are first and foremost a francophone issue. As long as the French-speaking community does not ask the federal government to come to the rescue - a move which would trigger a renegotiation of the present division of powers between the regions and the federal state, and open the gates towards deeper regional autonomy - and as long as the problem does not get out of hand in terms of public order, Dehaene can brush aside the issue and devote all his energy to domestic and international issues.

One of the priorities of the Belgian government is to square a difficult circle: how to reform social security, squeeze the budget deficit and strangle the country's debt without destroying the Belgian model of a social market economy.

Based on negotiated agreements between employers' federations and workers' unions and on the role of powerful intermediary institutions, such as mutual aid societies, in the management of social security, this model is a dogma within the present government coalition.

“I believe that the role of the social partners can be substantially increased within the EU,” Foreign Minister Eric Derycke said last January in a plea for a social Europe. “The Belgian model of social consultation could provide a useful example.”

This system is also broadly supported by the public. The disappointing electoral results of the VLD (the Dutch-speaking liberal democrats) under the leadership of 'Thatcher liberal' Guy Verhofstadt seem to confirm that not many Belgians have the stomach for a radical overhaul of their welfare state.

The protection of the 'golden nest' is one of the major themes of a consultation exercise which has been going on at Val-Duchesse under the sponsorship of Dehaene.

Having failed to impose his 'social pact' in 1993, this time the prime minister wants both the employers and the unions to accept his plan to reduce unemployment by 50&percent; within five or six years.

The strategy is based on austerity (the reduction of state expenses and wage moderation) and on 'positive' measures aiming at reinforcing the country's economic base. The sharing of working time and increasing flexibility of the work force are also major issues.

“Between the employers who want a blank cheque and the union leaders who want a job behind every franc, we should imagine more concrete proposals,” Dehaene has declared.

“This would need a real cultural revolution,” Le Soir has warned. “Are the employers ready to commit themselves in favour of employment? Will the unions agree to commit themselves on wages, foregoing part of pay increases on behalf of jobs?”

In plain and simple language, the Belgian model will only survive if the dogmas of the Belgian model are broken.