Verhofstadt under pressure over social reform

19th September 2005, Comments 0 comments

19 September 2005, BRUSSELS – Belgian Prime Minister Guy Verhofstadt faces a challenging week as he struggles to reach a deal with his governing coalition on social security and pensions reform.

19 September 2005

BRUSSELS – Belgian Prime Minister Guy Verhofstadt faces a challenging week as he struggles to reach a deal with his governing coalition on social security and pensions reform.

Verhofstadt must meet a Wednesday deadline to find a compromise between the government's ruling factions over the fractious issue.

Unions have already been angered that the proposal was delayed from 13 to 21 September because no agreement could be found.

The unions, who had been planning to draft their own response to the
proposal on 20 September, have postponed their own meeting until Friday. They must give their official reaction by next Tuesday.

Verhofstadt faces a race against time as he has to present the newly drafted proposal in his speech marking the opening of the new parliamentary term on 11 October.

The prime minister is under pressure to made solid proposals on the issue after his credibility was undermined by the high profile collapse of major dossiers, including the fight over DHL's contract in Belgium.

Government sources have indicated that the Liberal and Socialists factions are moving closer together on the proposal but Monday and Tuesday have been dedicated to find a strong agreement.

Agreement already exists on lowering social contributions for those on basic salaries and employees over 55.

The reduction of taxation for teams working together is also on the table, in an effort to help Belgian companies face growing international competition.

Social Affairs Minister Rudy Demotte says the reduction of social security payments would cost the state in the region of EUR 1.3 billion.

It is still unclear how the government would make up the shortfall although it may lead to increased VAT on certain goods.

Problems also remain in negotiations over pensions and companies that
restructure. Business groups have already protested plans to pay six months wages to those who are made redudant, complaining that this would be too heavy a burden on industry.

[Copyright Expatica 2005]

Subject: Belgian news

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