OECD encourages Belgium to make economy more robust

The Belgian economy has weathered the pandemic relatively well, but rising inflation, labour shortages and current supply problems require reforms to make the whole system more robust. This is what the OECD says in a new analysis of our country's economy. Among other things, the organisation advocates putting more people to work.

With an employment rate of just over 70 percent, Belgium lags far behind Germany and the Netherlands. In those neighbouring countries, about 80 per cent of the population between the ages of 20 and 64 are in work. "But I see no reason why Belgium cannot achieve the same employment rate," OECD Secretary-General Mathias Cormann said Tuesday at the presentation of his report, accompanied by Prime Minister Alexander De Croo.

The OECD notes that mothers with young children, migrants and people with disabilities participate too little in the labour market - an analysis made in many international reports on the Belgian labour market. One of the solutions is to reduce the tax on labour and to increase the benefits for those in work. In the framework of the already planned tax reform, the OECD advocates the introduction of a progressive tax on capital income.

Pensions are also on the OECD's radar. In order to raise the average effective retirement age, it advocates the introduction of incentives for those who stay in work longer than the legal retirement age and penalties for those who retire early.

Furthermore, the OECD asks the Belgian social partners to conclude a wage agreement for the period starting in 2023. The organisation has no problem with the system of automatic wage indexation, but it could be applied more effectively, it says.

More generally, the OECD calls for public spending to be kept under control. It assumes that the debt ratio will rise to more than 107 per cent in 2023.

© BELGA PHOTO/DIRK WAEM - OECD (OCDE-OESO) Secretary Mathias Cormann and Prime Minister Alexander De Croo pictured during a press moment from the OECD, presenting the new OECD Economic Survey of Belgium, in Brussels, Tuesday 14 June 2022. The study examines the risks to Belgium's economic recovery arising from rising inflation, supply-side pressures and other consequences of the war in Ukraine. A special chapter examines how Belgium can improve its education, employment and housing policies to promote the social mobility of vulnerable groups.