After 50 years Belgium doesn’t want to get rid of older workers anymore
The end of June is a sad moment for Belgian companies that look for a cheap way to reduce their workforce, and for older workers who are tired of working. As of Tuesday, the central system for early retirement in Belgium will cease to exist. It’s the end of a measure that was both very popular and very controversial.
At the end of 1974, in the aftermath of the oil crisis, Belgian employers and trade unions (“social partners”) agreed on a system for additional advantages for older workers who were fired. Those people got an unemployment allowance with important additional benefits, paid for by employers and social security.
The logic at the time was simple: in the current economic circumstances, there are too many workers, so we let the older ones (50? 55? 60?) go, allowing their jobs to be passed on to the younger ones.
Economists today condemn this logic: work is not a zero-sum game. The more people work, the more economic growth there is, the more work there is. But this is logic at the macroeconomic level. Within companies, the reasoning is very different.
For workers, early retirement was a perfect way to earn a comfortable income without having to work for it. For companies, it was an easy way to reduce the workforce when needed. Firing older workers didn’t lead to strikes, and the cost was partly transferred to social security.
The Belgian government has tried for decades to limit the use of early retirement, because it’s bad for the economy and bad for public finances. Due to resistance from both employers and employees, this was a long-term project. The minimum age was raised several times, and the conditions for receiving an early retirement allowance have become much stricter over time. For example, today, people in early retirement are still required to look for a new job, whereas in the past, nobody cared.
Economic and societal conditions also changed. Belgian companies lack workers today. And older workers are today more inclined to continue working, because they like their job and/or still need full pay.
Today, people in early retirement are still required to look for a new job, whereas in the past, nobody cared.
The effect on the numbers is apparent, says Geert Vermeir, from HR services provider SD Worx. At its peak, more than two decades ago, some 120.000 workers got an early retirement allowance (in a working population of 4 million). Today, there are only some 10.000. In recent years, approximately 2,000 new workers have entered the system each year. In recent months, some companies presented their restructuring plans, so as to still be able to use the system.
Is early retirement completely impossible as of Tuesday? No, says Manou Doutrepont, from HR consultant Social Dialogue Network. The Belgian labour market is regulated by a complex system of laws and agreements between social partners. There are a couple of (very small) exceptions that still lead to early retirement. And there’s also a system whereby older unemployed people get an additional allowance on top of the standard unemployment allowance. However, this is nothing like the previous numbers.
Trade unions vigorously defend(ed) early retirement. | © BELGA PHOTO BENOIT DOPPAGNE
