Transcript De Wet Bestrijding Discriminatie

Lontings & Partners
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Is Belgium Working?
From Diagnosis to Therapy
prof. dr. Marc De Vos
Ghent University
Lontings & Partners
Lontings & Partners
Advocaten - Avocats
Diagnosis and Challenge
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The Lazy Man of Europe
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Reform is necessary and urgent
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My purpose: indicate areas in dire
need for reform
20 September 2005
prof. dr. Marc De Vos
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Variety of Structural Reasons
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Main problem: sluggish economic growth
and labour unfriendly economic growth
Variety of reasons:
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Entrepreneurial culture & investment climate
Tax burden
Government expenditure as a share of GDP
Welfare state & incentives
Labour market regulation
…
20 September 2005
prof. dr. Marc De Vos
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Labour Market Diseases
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Ideology
Consensus model
Lump of labour fallacy
Labour cost
Share of public sector employment
20 September 2005
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Legislation Steeped in Ideology
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“Labour is not a commodity” – the
labour market is not a market
Labour exploitation – paternalistic
reaction
Result:
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Working time and (in)flexibility
A-typical work: part-time, student,
residential, on call, temporary work,
secondment…
Costly redundancy rules
Costly administration
20 September 2005
prof. dr. Marc De Vos
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Consensus Model: Now a Handicap
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A union’s nirvana
Domination of labour regulation and
the welfare state
Structural representation in companies
Result:
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Wage premium + “indexation”
Centralisation and collectivism v. flexibility
Insider / outsider conservatism
Unions lack incentives to modernize
20 September 2005
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Lump of Labour Fallacy
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Fall out of the first oil shock
Early retirement, subsidized nonactivity and prohibition of activity
Jungle of employment plans for
specific segments of the population
Result:
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20 September 2005
Wrong incentives for economic activity
Low employment rate
Administration cost & discrimination
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Direct Labour Cost
Total cost
310
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Result:
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Social S
contribution
Income Tax
(at 50%)
Net income
20 September 2005
110
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100
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100
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prof. dr. Marc De Vos
Unemployment
Wage drift and
disincentive to work
Shadow economy
Labour is too
expensive a
production factor
Competitive
disadvantage within
EU15
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Share of Public Sector Employment
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Approximately 1 public sector
employee for every 3 in the private
sector
Growth in employment in the last 30
years: only in quaternary sector
Result:
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20 September 2005
Lower productivity & more inflexibility
No growth incentive
Tax consumption/redistribution v. tax
production
prof. dr. Marc De Vos
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Conclusion
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Labour market is a growing factor of
international competitiveness
State of urgency in Belgium
Enormous and structural resistance
to change
Likely scenario: limited changes –
gradual decline – point of no return
somewhere around 2015
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prof. dr. Marc De Vos
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