1) Pensions: for an increase in the effective retirement age
The reform of our pension system is urgent to carry out to maintain the social and budgetary balance of our country. We cannot say that nothing has changed in terms of the pension system in Belgium, but we are still far from there and we have not experienced a major reform.
“A first measure to consider is raising the effective retirement age. This measure should be considered by eliminating, in certain sectors, the early retirement system and through a bonus-malus system linked to retirement age. Pensions policy must be seen in symbiosis with employment policy and, in particular, with the employment of older workers”, point out the economists. The cost of labor is higher for older people mainly due to the link between salary and seniority and the disconnection from productivity. This is the result of several factors including scale increases linked to experience and therefore, de facto, to age and the automatic indexation of salaries.
Unaffordable, the reform of inheritance taxes in Wallonia? “A lot of people will have to move to the south of the country!”
Among other factors slowing down the employment rate of older people, we can also note the social stigmatization of older people, hindering their re-employment and their professional mobility. They are perceived as less productive due to their supposed lower skills with technology. They are also sometimes perceived by customers as being more rigid, more demanding.
In addition, taxation affects the retirement decision. Replacement income (first retirement pillar in particular) benefits from preferential treatment which is contrary to horizontal equity but which is a residue of the time when social benefits were not subject to the IPP. The second and third pillars also benefit from favorable treatment.
It is therefore appropriate to use several levers to increase the effective retirement age. This will also involve elements being put in place to eliminate the weak financial incentive to work.
2) Work: social contributions should be restructured
The time has come to reinvent the societal and socio-economic model resulting from the post-war social pact but without abandoning the principles of both vertical and horizontal solidarity. To avoid any confusion between the different benefits and social contributions, this involves considering a restructuring of the financing of social benefits between a universal part financed by tax, or a generalized social contribution, and an insurance part financed by personal and employer social contributions.
“For the sake of consistency and transparency, the agreement should provide for a clear distinction between social protection interventions of a universal nature and those of an insurance nature”, indicate the EPC economists. However, the link between social contributions paid and social benefits received must be maintained.
“Belgium, European strike champion”
This is why it is also proposed that social contributions and benefits be capped. Remember that this is not currently the case. “Social contributions are not capped while benefits are. Belgium is the only country to practice this removal of the ceiling”, recall the economists. The corollary to the proposed harmonization and this capping will undoubtedly be that we will see the removal of mechanisms whose aim was to circumvent the non-capping of social contributions.
Benefits such as company cars, excessive contributions to group insurance, the transition from employee status to self-employed status, often within a company, with the tax optimization that accompanies this change, will undoubtedly prove less appropriate. if social security contributions are capped. This cap will be compensated by the increase in the marginal rate of the highest PPI. This measure would strengthen transparency, administrative simplification as well as the reduction of tax and social evasion.
3) Environment: broadening impact analyzes to the environmental field
To have a reasonable chance of keeping temperature increases below 2°C, we absolutely must reduce greenhouse gas emissions by around 40% over the next two decades globally and converge to the “net”. zero” by 2050. If we postpone these efforts, the costs relating to global warming will be exponential.
Becoming carbon neutral within thirty years will require that we drastically change the way we produce and consume. This will not only result in transition costs that will have to be managed but will also require investments. There are investments to be made which must be resolved by decisions taken today and in the years to come.
“We recommend that any measure taken by any level of power, whatever it may be, must be subject to a more complete analysis and not just an economic one. We must impose on all levels of power an analysis broadened to the environmental field,” estimate the EPC economists.
How can we ensure that the ecological transition does not leave anyone behind? “There are three reasons for the transformation into an ‘ecological social state’”
At all levels of power, the policies envisaged (and, gradually, those in place) are the subject of an impact analysis which covers the economic, environmental and social dimensions, including the redistributive aspects, so that these measures are socially inclusive. This measure makes it possible to create a coherent approach to the policies to be implemented in relation to the obligations recently imposed on large companies which, within the framework of the CSRD (Corporate sustainability reporting directive), must publish their environmental and social impacts according to the ESRS (European sustainability reporting standards).
When you enter a period of uncertainty, you need to be able to adjust quickly. This requires a system capable of quickly providing feedback on budget implementation based on measurements of relevant dimensions. Even assuming that a measurable set of indicators is identified, the ministry concerned as well as that of Finance must be able to react quickly.
