Belgium does not make it easy for industries like Caterpillar and Van Hool

Belgium does not make it easy for industries like Caterpillar and Van Hool
Belgium does not make it easy for industries like Caterpillar and Van Hool

The closure of Caterpillar, the bankruptcy of Van Hool or even the recent problems at Audi Brussels: all these companies have encountered difficulties in maintaining productive industrial activity in Belgium. In question ? “Salary costs higher than what is practiced elsewhere”, estimates a report from the IESEG of Management signed by Eric Dor.

European leader despite herself

Belgium is the European leader in terms of hourly wage costs in the manufacturing industry. This value has in fact “exceeded, in 2023, its equivalent measured in all other countries of the European Union”, states the report. At 52.5 euros per hour, the wage cost of Belgium’s manufacturing industry is now the highest in the entire European Union, ahead of Germany (46.2 euros), the Netherlands (44 .3 euros) and (40.6 euros).

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Concretely, the salary cost includes the gross salary, employer and social contributions, professional withholding tax and other extra-legal benefits. “The gap in industrial wage costs between Belgium and these neighboring countries is very worrying because they are direct competitors”, regrets the IESEG School of Management.

The situation leaves no doubt, Belgium is less attractive than its European neighbors for manufacturing industries. “Companies constantly re-examine the distribution of the location of their production between different countries, based on a series of criteria including salary cost. Keeping industrial production in Belgium requires offsetting the higher level of wage costs with strong growth in productivity based on strong robotization, which reduces employment, and on tax advantages that are very onerous for public finances.”, examines Eric Dor in the report, adding that “Belgium’s relatively high wage costs have long been an obstacle to the location and growth of industrial activities on the country’s territory.”.

The report also adds that the share of the manufacturing industry in Belgium’s total gross value added has trended downward, from 20.6% in 1997 to 13.2% in 2023.

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