Di Rupo's General Policy Statement read with "social law" glasses (1)

Part 1

News On 21 November 2012 Prime Minister Di Rupo presented the General Policy Statement of the federal government to the federal parliament.
In line with tradition, this statement caused, already during the negotiations, a lot of turbulence, with the press playing a major role on the basis of guesses and strategic leaks. 

From a social law point of view, four elements of the General Policy Statement catch the eye: 1) increasing the competitiveness of our enterprises by eliminating the salary gap with our surrounding countries; 2) further increasing the competitiveness of our enterprises by lowering the social charges; 3) increasing job opportunities for younger and older workers; and 4) stimulating the continued training of the workers. In this newsletter, we will concentrate on the elimination of the salary gap with our surrounding countries. In the newsletter of end December we will elaborate on the other elements of attention.

In order to eliminate the salary gap with our surrounding countries, the partners in the social dialogue are called upon in the first place: they are urged to provide in the upcoming interprofessional agreement (IPA), which should normally be entered into at the beginning of next year, that during the lifetime of the IPA (in principle 2 years) no salary increases, other than salary index increases and category increases, will be applicable.

By doing so, the federal government scores three times by one single hit: 1) it does not set the partners in the social dialogue against itself by not deciding itself, over and above the heads of the partners in the social dialogue, on a delicate subject such as the salary moderation; 2) it avoids the tricky item of a (temporary, unique) index skip by blocking the system of automatically linking the salaries and the social security allowances to the consumer price index; and 3) it can maintain, head up, that it did not impose a (total) salary freeze.

Nevertheless, the fact that the government calls upon the partners in the social dialogue in the first place in order to exclude salary increases in the years to come, does not imply that the government leaves total freedom to the partners in the social dialogue: a review of the law of 26 July 1996 to promote employment and to safeguard preventively the competitiveness is kept as the big stick; proposals within that context are even announced by the end of the year.

One will recall that this law of 1996 created a mechanism aiming at measuring the increase of the salary cost in the surrounding countries and at keeping the increase of the salary cost in our country within the same limits, the final purpose of this mechanism obviously being the avoidance of an (increasing) salary gap with the surrounding countries. During the final years of the 90ties and the early years 2000, this mechanism seemed to be efficient. However, the last years a strict implementation of the mechanism was progressively lost out of the eye, resulting in ... again an increasing salary gap. It seems like Di Rupo (I) is now determined to reactivate and to optimize the mechanism.

The untouchable taboo of the system of automatically linking the salaries and the social security allowances to the cost of living index is formally not affected. However, that does not imply that the mechanism will survive without any changes. In the Policy Statement corrective measures are very prudently – almost in a disguised way – announced by the confirmation that the government “…  will see to it that the index will reflect the real consumer behaviour of households in a better and accelerated way.” This refers most probably to an intention to modify the calculation of the index in such a way that it increases less rapidly.

Such an exercise was already put into practice in the past by the introduction of the health index and by linking the salaries to this health index rather than to the consumer price index. Within that context certain products were excluded from the calculation of the index, as a result of which the index increased less rapidly (and therefore also the salaries and the social security allowances). As a result of that operation, the health index is now largely two points lower than de consumer price index: for the month of October 2012 the health index amounted to 119.87, while the consumer price index amounted to 121.79

Although nothing is officially known, it is to expected that the government Di Rupo (I) will introduce measures with comparable effects. By way of example, rumours circulate that also prices, applicable during sales periods, will be taken into consideration for the calculation of the index.

Finally, the question remains to what extent the measures aiming at eliminating the salary gap with the surrounding countries constitute an income freeze. The Di Rupo government firmly maintains that such is not the case. Compared with measures taken in the course of the 80ties by one of the Martens governments, the present measures seem to be rather soft. At that time, not only the global salary masses of enterprises were examined, also individual salary arrangements were scrutinized (and could lead to sanctions). Anyhow, based on the text of the General Policy Statement, the present situation does not constitute in any way a global “income freeze”, but rather a “salary moderation”.

A scrupulous follow-up of the measures yet to come will of course be necessary in order to guarantee a continued efficient service to the employers / enterprises.

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Leila Mstoian

Leila Mstoian