Federal Government reaches agreement on the budget

The Federal Government’s Inner Cabinet has reached agreement on a number of measures to keep the budget on course. A total of 2.6 million euro has been found to keep the budget deficit within the constraints imposed on Eurozone countries by the European Commission.   

The so-call “Work Deal” was one of the political hot potatoes that was the source for much discussion during the talks. The Inner Cabinet that decided to make changes to the unemployment benefit system. In future those that become unemployed will initially receive more than the current rate of unemployment benefit for those that have lost their jobs. However, the level of unemployment benefit paid out will fall more quickly as time goes on than is currently the case.   

Just before 1am the Federal Prime Minister Charles Michel (Francophone liberal) announced via the social media platform Twitter that agreement had been reached in a number of areas of policy. Mr Michel was referring to the budget, the Work Deal and compensation for the many thousands of small investors that put their savings into Arco, a now defunct cooperative holding run by the Christian Workers Federations. The state owned Belfius bank will be part-privatised with 30% of the shares being sold. The money raised from this will be (in part) used to compensate the ARCO investors.    

The budget

The Federal Government needed to find 2.6 billion euro in order to keep the budget on course. A combination of a number of corrections being made to the books, income projections from measure taken in the battle against fraud and the Work Deal (itself good for a saving of 500 million) have meant that the government has been able to bridge the gap.    

The VRT’s Political Editor Marc Van de Looverbosch told listeners to VRT Radio 1 this morning "No new taxes, no hard savings. They are promising us that we won’t feel this in our pockets, but we will have to see”.

The Work Deal

Another topic that was the source of much discussion was the Work Deal. The aim of the Work Deal is to try and resolve the labour shortage that affects some areas of the economy.

In an effort to encourage those that have become unemployed back to work more quickly, the Federal Government has approved a number of reform to unemployment benefit payments. During the first six months that they are on the dole, unemployed people will receive a higher level of unemployment benefit than is currently the case. After six months the level of unemployment benefit paid out will fall more rapidly that it has done up to now.  

However, an absolute limit to the amount of time someone can claim unemployment benefit as proposed by the Flemish nationalists and the Flemish Liberals won’t come about

Over the past few weeks there has been much discussion about the SWT system. SWT is a system that effectively allows older people that are made redundant to retire early. In addition to unemployment benefit that receive an additional top-up payment until they reach pensionable age. The Federal Government wants to avoid a repeat of the situation whereby workers made redundant by the French-owned retail chain Carrefour were able to claim SWT providing they were over the age of 56. Previously it was agreed that the lower age limit for SWT should be 59 and 60 from 2020. This has now been set in stone.    

The Work Deal contains a host of other measure (more than 20 in total). The Federal Government believes that it will help a further 12,500 into work.

Arco and Belfius

It was also agreed that 30% of the shares in the state-owned bank Belfius will be floated on the Stock Exchange. Linked to this is the creation of a kitty that once full will contain 600 million euro.

The cash will come from the Federal Government, Belfius and the Christian Labour Movement.  

Those hit by Arco’s demise will be able to recoup 40% of what they had invested. The Flemish Christian democrats has long wanted a solution to be found for those that lost their savings through the Arco collapse. The measure must first be given the green light by Europe.