Working longer hours will spur economic growth
Senior federal ministers devoted much time in recent days to the quest for formulas that will increase economic productivity. One of the solutions they came up with is an expanded and cheaper overtime system. At present there is a special tax reduction for a maximum of 65 hours of overtime a year, but the government wants to raise the ceiling to 200 hours. This means that companies will be able to extend the work week de facto from 38 hours to 40 in order to deal with production peaks, where necessary. The government is also considering shedding one public holiday, being either Whit Monday or a different public holiday each year that falls on the weekend. An additional working day will mean an immediate rise of 0.1 percent of the annual GDP. There is no doubt that these moves will complicate the talks between the trade unions and employers, but the unions have already made one major gain – there will be no indexation jump skip one adaptation of wages to rising consumption prices, ed.. It was proposed by the liberals and the CD&V, but turned out to be a bridge too far for the PS and SP.A. However, the socialist parties have still consented with a mini-reform to the indexation system, amending the indexation basket with representative consumer goods by taking greater account of cheaper products during the sales season and of cheap 'white products' in the retail chains. Using such an adapted indexation hamper, the threshold for the indexation of wages will be harder to exceed and wage costs will consequently rise slower. There is also much support in the government to amend the competition act, which dates from 1996. The law saw the introduction of what came to be known as the wages standard – a preventive adjustment of wages in order to avoid excessive wage discrepancies between Belgian companies and its competitors in major neighbouring countries. Despite the law, this wage discrepancy has again risen to 5.2 percent. The amendment entails mirroring the actual Belgian wage growth in the last two years with those of neighbouring countries, instead of using the uncertain forecasts for the next two years as a comparative standard.