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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Enhancing the Inclusiveness of the Labour Market in Belgium
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- Jens Høj1
- Author Affiliations
- 1: OECD, France
- 15 jan 2013
- Bibliographic information
The global crisis led to a smaller increase in the unemployment rate than in most other OECD countries as employment has been sustained through intensive use of reduced working time schemes. These schemes have mostly benefited workers with permanent contracts while the higher unemployment mostly affected workers with weaker labour market attachment. A main challenge for policy makers is therefore to avoid that the increase in labour market segmentation between insiders and outsiders that would hurt the most vulnerable. Over the medium term, labour market policies need to respond to the ageing of the labour force, which implies that an increasing number of workers with permanent contracts will retire. Thus, policies must focus on enabling the current labour market outsiders to get a stronger foothold on the labour market as well as to mobilize under-utilised labour resources. The wage determination system has allowed wages to increase faster than the main competitors and faster than productivity, leading to a gradual loss of cost competitiveness. Minimum wages are high by international standards, hampering entry to the labour market for many low-skilled workers. Unemployment benefits are relatively generous, and particularly for long-term unemployed. A complicated tax-benefit system has created high effective marginal tax rates and numerous labour market traps. This Working Paper relates to the 2011 OECD Economic Survey of Belgium (www.oecd.org/eco/surveys/Belgium).
- wage formation, ageing of the labour force, labour market traps, unemployment benefits, labour supply and demand
- Classification JEL:
- J11: Labor and Demographic Economics / Demographic Economics / Demographic Trends, Macroeconomic Effects, and Forecasts
- J2: Labor and Demographic Economics / Demand and Supply of Labor
- J31: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wage Level and Structure; Wage Differentials
- J64: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Unemployment: Models, Duration, Incidence, and Job Search
- J65: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Unemployment Insurance; Severance Pay; Plant Closings