Monday 22/07/2019

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Keep calm and carry on Belgium

Chief Economist

Belgium has seen quite a number of strikes in recent weeks, reinforcing the image of a ‘failed state’. But the latter of course stands in clear contrast with what the actual figures tell us and therefore makes no sense. That said, the figures suggest there is significant room for improvement. We illustrate this by shortly commenting on the following three graphs.

 

 

In contrast to what many seem to believe, overall confidence in government economic policy in Belgium is not collapsing. In fact, as of today, it is higher than the average witnessed over the past 25 years. In many European countries this is completely different.

Following the terror attacks of March 22, the image of Belgium as a ‘failed state’ has gained attraction. But the graph below, which compares Belgium to other OECD countries, illustrates that this is not supported by the figures. That said, Belgium’s scores are mediocre at best suggesting that there is significant scope to catch up. The burden of government regulation and transparancy of government policymaking stand out in this respect and require urgent policy action.

Belgium has seen quite a number of strikes in recent weeks against the back of the government’s labour market reforms. The number of protests that have risen against those reforms seem to suggest that these reforms are excessive and extreme. Yet, that is not what the numbers say. As the graph below illustrates, Belgium’s labour market is not very flexible compared to other OECD countries. Moreover, labour market participation is rather low because heavy taxation reduces supply of and demand for employment. Reforming Belgium’s labour market should indeed be a key priority. In this context, a better relationship between employee and employer organisations would by highly welcome. Keep calm and carry on.

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