Belgium, the quest for sustainability, legitimacy and a way out of 'welfare without work'

Abstract

Conceived in the Bismarckian mould in response to The Social Question as it manifested itself in the late nineteenth century, the Belgian welfare system followed a fairly conventional continental trajectory up until the worldwide economic recession of the early 1970s. It was the same climate of social unrest during the recessionary 1880s that had led Ottovon Bismarck to institute the first labour protection laws and social security provisions in Germany that triggered the introduction of similar laws and provisions in Belgium. To be clear, social security arrangements had by then already emerged on a voluntary basis, usually within the context of mutual societies and such organizations, most of which had a much broader purpose than providing social security. These mutual societies and organizations were organized along ideological lines, the Christian-Democrat and the Socialist being the most prominent. The pluralist, decentralized and autonomous nature of social security and social welfare provision did not change once the state started taking up a regulatory and standardizing role. But out of a patchwork of arrangements emerged a compulsory and increasingly universal system of social security and health care (Deleeck, 2001). A long phase of incremental, though at times still erratic expansion of various, mostlyoccupationally segregated social security schemes culminated in the ‘Social Pact’ of 1944. Born in the exceptional atmosphere of solidarity and consensualism of the final days of the war, the Pact marked a consolidation of the welfare system. The Social Pact, while extending compulsory social security coverage, confirmed the subsidiary principle in the sense that non-governmental organizations (i.e. unions and mutual societies) remained responsible for the administration of benefits. In addition, national agencies were created for those not affiliated to such organizations. The role of the state remained, as before, very much in a regulatory and complementary role. The 1950s and 1960s were essentially a period of incremental expansion. Belgium’ssocial protection system came to maturity just before the economic crisis struck. With the main social security pillars in place, by and large in the Bismarckian mould, all thathappened laws on assistance (providing a minimum income guarantee to all citizens), the law on guaranteed child benefit (ensuring access to child benefits all to those not covered under the social security scheme) and the law on the guaranteed minimum pension (ensuring a minimum pension for all pensioners). It was just after these final pieces had been put in place that Belgium’s social protectionsystem was challenged in a most profound way. Belgium’s economy was particularly hard hit by the oil price shocks and the subsequent economic downturn of the 1970s and 1980s. An early industrializer, Belgium’s economy was still heavily reliant on manufacturing industry, much of which tended to be comparatively energy intensive and, therefore, particularly sensitive to the energy price shocks. The share of industrial employment (including mining and construction) in total employment, which was still around 40 per cent in 1975, fell rapidly in the years thereafter, reflecting major structural adjustments in steel, coal and textile industries. During the 1970s and also during the 1980s, Belgium recorded among the largest relative job losses in manufacturing industry in the Organisation for Economic Co-operation and Development (OECD) area. The consequences were particularly severe because entire cities and even regions remained heavily dependent on industrial employment. The collapse in the demand for labour occurred precisely at a time when many youngsters (the sizable post-war baby boom cohort) and women were entering the labour market. It was in this context that a massive increase in benefit dependency, particularlyunemployment benefit dependency, ensued. This happened in most continental European welfare states but virtually nowhere was it as dramatic, relatively speaking, as in Belgium. Today Belgium still epitomizes continental Europe’s ‘welfare without work’ conundrum. Belgium spends more on unemployment benefits, relatively speaking, than just about any other EU member state (Table 2.1). While its unemployment rate is around the EU15 average (Table 2.3), its employment rate remains among the lowest of the northern continental European Welfare Systems. Around one in four people of working age lives on some kind of replacement benefit. While still enjoying a comparatively low poverty rate, Belgium has been slipping down the tables during the lastboth political as the to move towards an ‘active welfare state’, Belgium’s corporatist system has not shown a real capacity to deal with the root problems of sluggish job growth and persistent high benefit dependency. In addition, Belgium is facing some very particular problems owing to its particular history of linguistic conflict, a problem exacerbated by regional economic divergence. This chapter sketches some of the key developments within Belgium’s welfare systemover the past three decades and discusses the principal challenges facing it today.