National Bank: "Belgium to create 18,000 jobs in 2102"
Thanks to a slight upswing as from the second quarter, the National Bank of Belgium NBB has set its prospects for economic growth next year at a modest 0.5%. Bank governor Luc Coene has however warned that stringent budgetary savings could have a negative impact on consumer demand and force growth downwards. On the upside, NBB estimates that a total of 18,000 new jobs will be created, mostly due to service vouchers, health care and other subsidised jobs. Businesses that are sensitive to economic fluctuations, however, will see a drop of almost 16,000 in wage earners, and with the working population growing faster than the demand on the job market, unemployment is set to rise. In 2011 about half the jobs that were created were in the public sector or subsidised job market. The 2012 budget will have a reduced effect on job opportunities as the price of service vouchers will only increase in 2013. Analysts at BNP Paribas Fortis Bank and KBC on the other hand expect the economy to continue its downward trend until March next year, foreseeing a drop in employment opportunities and job cuts of between 5,000 to 10,000. Following earlier reports in newspapers, Coene confirmed an increase of the budget deficit from 3.6% the target to 4.2% of GDP in 2011, but put it in perspective as it is based on incomplete data: “Considerable uncertainty still exists in terms of income and expenditure. It’s a bit premature to refer to a derailment of the budget”. He said that at this stage it was impossible to estimate the exact impact of the 2012 budget and coalition agreement, adding that the high and volatile inflation remained a thorny issue. The National Bank hopes to complete its study on indexation during the next few weeks. “We will come up with proposals to limit the effect of volatile energy and food prices on the consumer price index,” he assured. “But we will not propose any adjustments to wage indexation.” The National Bank further reiterated its concern about the Belgian competitive strength. “The increase in wage costs per production unit will probably be considerably higher than with our key trading partners. The significant acceleration of hourly wage rates is mostly due to automatic wage indexation.”