Wage costs crippling competition

Belgium has lost 20% of its international market share over the years since 1990, as a result of its high wage costs, according to VKW, the entrepreneurs’ organisation. Belgian wage costs were a major disadvantage to trade in the 1970s, the organisation explains in its latest “September note” to the government, reaching a point where Belgium was 15% more costly than its closest competitors.

In 1982 the government of Wilfried Martens brought in measures to reduce wage costs, but the effect was short-lived, VKW says, and things began to get out of hand again at the beginning of the 1990s. Since 2004, Belgium has had a net trade deficit, which according to the Organisation for Economic Cooperation and Development (OECD) accounts for half of the country’s current negative economic growth.

Elsewhere, a study carried out by the think-tank VKW Metena and the University of Hasselt claims that Belgium’s wage-cost handicap is too great to be compensated for by positive factors such as government policy, an entrepreneurial climate or flexible labour laws. In a list drawn up of competitive position, Belgium slipped from ninth to 12th place in the rankings of 32 industrial countries. Sweden and Finland led the table.

(September 23, 2009)