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Business leaders: “No guarantee of new jobs under tax shift”

08:38 27/07/2015

The federal government’s budget and tax shift, announced last week, was intended according to prime minister Charles Michel to fulfil three objectives: jobs, jobs and jobs. However, according to an informal survey by newspaper De Morgen among business leaders, this result is far from guaranteed.

“I have a problem with the simplistic reasoning that a lowering of costs will automatically bring jobs,” said Wouter Torfs (pictured), CEO of the shoe-shop chain that bears his name. “No employer can give that guarantee. What these measures do is give oxygen to the economy, and that’s important.”

“Industry has been asking for a long time for a cut in salary costs,” said Fernand Huts, owner of logistics company Katoen Natie. “But whether more jobs will result is impossible to say. That’s dependent on too many factors.”

Belgium has a competitive disadvantage against its neighbours when it comes to how much it costs to employ someone. According to the Federation of Belgian Enterprise, the government’s measures, including a cut in the employer’s contribution to social security from 33% to 25%, will reduce Belgium’s handicap compared to neighbouring countries from 16% to 10%. A calculation made for Volvo Cars in Ghent estimates the company’s savings over a year at €17 million. A similar calculation for Belfius has the bank saving €36 million.

“The cost reduction is an excellent move, but let’s be clear,” said former female entrepreneur of the year Danielle Vanwesenbeeck of marketing company MasterMail. “This is not the jobs bonanza the government would make it out to be.”

Meanwhile, the government made two clarifications to information issued at the end of last week’s all-night talks to reach the budget agreement. The increase of VAT on electricity prices from 6% to 21% will take place in September, and not immediately as reported, and the €100 a month bonus promised for those on low to middle wages will go to those earning less than €2,400 gross per month, and not €3,200 as previously understood.

Written by Alan Hope