The government protocol
read through social glasses

The government protocol gave rise to quite some commotion
on the part of interest groups, not the least on the part
of the trade unions and the employers’ federations.
Traditionally, both took, completely opposite position.

Although the employers did find some positive ideas, they – also as tradition wants – considered the plans not going far enough. The trade unions, on the contrary, rejected the protocol as absolutely unacceptable. The actions, taken so far and those announced for the future, are in accordance with that position.

Yet, it is striking that it is emphasized repeatedly in the government protocol that the proposed measures constitute a continuation and/or an enhancement of the measures taken by the Di Rupo government. Moreover, Di Rupo himself commented scornfully that 70% of the announced measures were already initiated by his government.

The important difference between, on the one hand, the extreme reaction of the trade unions against this government protocol and, on the other hand, the moderate reactions of the trade unions following the Di Rupo government protocol is quite striking.

Could it be that the trade union actions so far and the actions, yet to come, are (also) somewhat politically coloured?

Below, some of the social aspects of the government protocol are more closely examined.

1. The social consultation model

One of the main reproaches on the part of the trade unions towards the government was the fact that – according to the trade union allegations – the government did not show any willingness, during the governmental negotiations as well as thereafter, to have social consultation with the industrial relations partners.

In the past, the politicians did sometimes set aside social consultation in cases of emergency: the special powers, granted by the parliament to one of the Martens governments, serve as a typical example.

However, this does not affect the firm fact that social consultation has always taken an uncontested important part in Belgian politics and that this role has not been challenged. A government, which would fail to appreciate the social consultation model from the outset, would certainly make life extremely difficult from the beginning and could even be suspected of having some masochistic tendences.

Contrary to the allegations of the trade unions, the government seems to consider social consultation very important: the second page of the government protocol is completely dedicated to the importance, according to the government, of social consultation to introduce reforms successfully, and to the undertaking of the government to get the industrial relations partners involved in the realization of its goals. Likewise, in the chapters of the government protocol, dealing with social items – in its broad sense –, reference is made repeatedly to consultation of the industrial relations partners.

Hence, the reproaches of the trade unions seem premature.

2. Reduction of the salary cost handicap

One of the main goals, which the Michel government imposed itself, is “maximum growth and job creation”. In order to accomplish that goal, the government considers it necessary to enhance the competitiveness of the Belgian enterprises.

One of the most important means within that framework is the reduction of the salary cost handicap in comparison with our surrounding countries (France, The Netherlands and Germany).

Three measures, announced within that context, are further commented on below:

2.1. Amendment of the law of 1996

The law of 26 July 1996 promoting employment and proactive safeguarding competitiveness was enacted due to the pressure, exercised by Dehaene, Prime-Minister at that time.

It was the first time that a measure was taken, which explicitly aimed at tuning the salary cost increase in Belgium on the salary cost increase in the surrounding countries. Based on this law, the authorized maximum salary cost increase in Belgium, including the increase resulting from the anticipated index increases of the salaries, was fixed each year in consideration of the salary cost in our surrounding countries.

However, during the last years, this legislation was no longer rigorously implemented.

The Michel government undertakes to at least undo by the end of its legislature the salary handicap, which arose since 1996 in comparison with the surrounding countries.

To achieve that goal, the government not only wants to see more strictly to the implementation of the law, but it also wants to amend the law (read: tighten the law).
The annual determination of the authorized maximum increase of the salary cost is in the first place left to the industrial relations partners. However, if they can not reach an agreement, the government will take over that task.
If the industrial relations partners agree, the agreement must be laid down in a collective labour agreement concluded in the National Labour Council. By using the mechanism of rendering compulsory, such a CLA is binding for the sectors.
The means for seeing to compliance are rendered more severe and an automatic correction mechanism will be introduced in the case of a failure to comply.

2.2. A reduction of the charges

The government wants to reduce the employers’ social security contributions by the end of the legislature in such a way that the basic percentage amounts to 25%.

Knowing that the normal rate at present amounts to 33% to 35% - depending on the number of personnel -, the achievement of that goal will be a true feat.

The real meaning of the notion “basic percentage” remains in any event an open question and it seems that the “box of Pandora” will be opened from time to time, particularly when reading some parts of the government protocol (by way of example: “The budget for the lump sum structural decreases, including the increases decided upon with the frame work of the competitiveness pact, shall contribute to this reduction of the basic rate” and “The budget for “high salaries” contributes to the reduction of the basic rate in such a way that the effective rate for the low salaries shall in any event not increase as compared to the situation at present, inclusive of the measures of the competitiveness pact.”).

It is, in any case, the intention that no single employer will be loosing as a result of these reforms, “… taking into consideration, however, the law on competitiveness.”

2.3. An “index leap” in 2015

It is not surprising that this measure, taking only two lines in the government protocol of almost 150 pages, is one of the most contested ones.

The automatic linking of the salaries to the consumer price index is a symbol for the trade unions of the social achievements in Belgium. It is, worldwide, an (almost) unique system, particularly because the salary increases follow automatically from the increases of the consumer price index. As a result, automatic salary increases are a fully integrated part of the system, contrary to the situation in the surrounding countries.

To break that spell, the government wants to apply an index leap in 2015.

The question remains what exactly is meant by “an index leap”. The way the system of linking the salaries to the consumer price index functions in practice, is worked out for each sector in a separate sector CLA.

So, in some sectors the salary is adapted once each year (mostly on the 1st of January of the year). In other sectors, the salaries are adapted only if and when the index has increased with a certain percentage (1.50%, 2%, …). In yet other sectors, the salaries are adapted much faster upon an index increase in such a way that several adaptations may occur in the course of a year.

So, what is meant with “an index leap in 2015”? Is it a blocking of the salaries during the whole year 2015? Is it a freezing of the first salary adaptation, which would occur in accordance with the sector system? Or is it a freezing of the salaries up to a certain percentage of the index increase?

In addition, the government yet holds another big stick: although the mechanism as such of automatically linking the salaries to the index has not been affected, the government reserves itself the possibility to reform the mechanism.

An example of such reform is the “health index”. Within that framework, the price evolution of some products is excluded for the purposes of the calculation of the consumer price index. As a result, the index rises more slowly. The government keeps the door open to introduce similar indirect manipulations.

3. The unified status blue-collar workers / white-collar workers

The rules concerning the determination of the notice periods for blue-collar workers en white-collar workers have been amended since 1 January 2014 in view of unifying the status of blue-collar workers and white-collar workers.

At the insistence of the Constitutional Court, which believes that the legal status of blue-collar workers and white-collar workers should be completely unified, the Di Rupo government had already decided that a continued harmonising of the status of blue-collar workers and white-collar workers should be achieved within a strict time framework.

This objective is taken over by the Michel government and, in particular, reference is made to the guaranteed salary (the government protocol provides for an extension of the guaranteed salary in case of illness up to two months), the annual vacation, temporary unemployment and the industrial relations legislation, including the reduction of the number of joint labour-management committees and the modernisation of the consultation process at sector level within the joint labour-management committees.

Which active part the government will take in that process, is not clearly stated. The Di Rupo government passed on this hot issue to the industrial relations partners and, considering the political parties participating in the Michel government, it would be rather surprising if this government would take the lead.

It is general knowledge that the industrial relations partners work discretely, but not less thoroughly, together within the framework of the National Labour Council towards balanced solutions and an active interference by the Michel government in these discussions is highly unlikely.

4. The end of the professional career

The rise of the legal pension age is a broadly debated item.

Within that framework the rules concerning the system of unemployment combined with an employer’s supplement are modified and rendered more severe. Also with respect to this item it is explicitly mentioned that “… the efforts of the previous government (…) to mitigate the use of the system of unemployment combined with an employer’s supplement (SUS) …” are continued.

As from 1 January 2015 the required age for applying the general system, as laid down in CLA n° 17, will be raised from 60 to 62 years. As from 1 January 2017, the required age for applying the SUS for enterprises in restructuring and for enterprises in difficulties will be raised to 60 years. As from 1 January 2015 the required age for applying the SUS will be raised from 56 to 58 years and as form 1 January 2017 to 60 years in the case of 33 years of professional activities (heavy occupations) and in the case of 40 years of professional activities.

As had been decided by the Di Rupo government, the possibility of applying the SUS as from the age of 58 subject to 38 years of professional activities will be abolished as from 1 January 2015.

Nevertheless, it is important to note that workers, who meet all conditions imposed by the previous legislation at starting date of the new legislation, in order to enjoy the SUS, but who did not yet apply or don't apply for the SUS prior to this starting date, the former terms and conditions still apply even if application for the SUS is introduced after the starting date. This transitional rule results from the “click-system”, as referred to in CLA n° 107. For this purpose, workers should apply, prior to that starting date of the new rules, for the certificate, as referred to in CLA n° 107, to the National Unemployment Agency.

5. Epilogue

The Michel government started, beyond any doubt, with lots of ambition and enthusiasm and it seems to become a very tough challenge for the government.

21 November 2014

Marcel Houben - marcel.houben@peeters-law.be

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