EC orders Belgium to cut labour costs


The European Commission has formulated a number of recommendations to make the Belgian economy more competitive on the international stage. 

While the Commission politely welcomes the reforms set in motion by Prime Minister Elio Di Rupo’s government, it feels that the reforms should go further and that they should be speeded up.

The Commission has made seven recommendations. Belgium must limit its budget deficit to less than 3% of national output. Wages should not be allowed to rise faster than in neighbouring economies, and the Belgian economy should be made more competitive.

On taxation the EC says that Belgian tax levels, especially on labour, are among the highest in Europe and this must change. It suggests cutting tax on labour and increasing taxes on pollution and energy. One way this could be achieved is by axing tax breaks on company cars.

Last year the Commission singled out the annual index, the mechanism that keeps public sector wages and benefits in step with inflation. This year the index does not come under fire.