National Reform Programme 2018

National Reform Programme 2017 April 2017 Inhoud 1. Introduction ............................................................................................................................................................... 1 2. Macroeconomic scenario ......................................................................................................................................... 2 3. Country-Specific recommendations ....................................................................................................................... 3 3.1. Budget consolidation (Recommendation 1) 3 3.2. Competitiveness and labour market (Recommendation 2) 3 3.2.1. Wage formation was revised 3 3.2.2. The activation policy was allocated to the regions and simplified 4 3.2.3. Education and vocational training have been reformed 5 3.2.4. Additional attention to people from a migrant background 6 3.3. Competitiveness and competition (Recommendation 3) 7 3.3.1. Capacity to innovate 7 3.3.2. Competition in business services 8 3.3.3. Investments in transport and energy 9 4. Europe 2020 objectives .......................................................................................................................................... 11 4.1. Employment 11 4.1.1. Tackling long-term unemployment and industrial restructuring processes 11 4.1.2. Modernise the labour market and facilitate combining work and private life 12 4.1.3. Take full advantage of the potential of the digital economy 12 4.2. R&D and innovation 13 4.3. Education and training 16 4.3.1. Higher education 16 4.3.2. Early school leaving 17 4.3.3. Inequalities in education 18 4.4. Energy and climate 20 4.5. Social inclusion 23 4.5.1. Ensuring the social protection of the population 23 4.5.2. Reduction of child poverty 24 4.5.3. Active Inclusion of people far from the labour market 24 4.5.4. Fight against inadequate housing and homelessness 25 4.5.5. Reception and integration of people from a migrant background 26 5. Other reforms and use of structural funds ........................................................................................................... 27 5.1. Industrial Policy 27 5.2. SMEs and the business climate 28 5.3. Administrative simplification 29 5.4. Structural funds and investment funds 30 6. Involvement of stakeholders ................................................................................................................................. 31 Annex 1: Reform programme of the Walloon Region ............................................................................................ 33 Annex 2: Reform programme of the Flemish Region and the Flemish Community ........................................... 55 Annex 3: Reform programme of the Brussels Capital Region ............................................................................ 101 Annex 4: Reform programme of the French Community .................................................................................... 133 Annex 5: Reform programme of the German Speaking Community .................................................................. 141 Annex 6: Reporting table on the assessment of the policy response to CSRs: qualitative assessment ....... 151 Annex 7: Reporting table on the assessment of the policy response to CSRs: quantitative assessment ..... 159 Annex 8: Reporting table on national Europe 2020 targets and other key commitments ................................ 161 Annex 9: Opinion of the Central Economic Council and the Federal Council for Sustainable Development 167 1. Introduction In its most recent Country Report, the European Commission is relatively positive about the progress Belgium has made with the structural reform of its economy. While the report was being compiled, the Federal Government and the governments of the communities and regions had the opportunity to add comments and further clarifications to the draft text. They considered this particularly valuable. In this National Reform Programme, the various governments report on the structural reforms since the Country-Specific Recommendations of 2016, indicating which measures can be expected in the near future. The measures are complementary to the budget measures outlined in the Stability Programme. In the opinion of the governments, they are in line with the conclusions of the Country Report, the Country-Specific Recommendations 2016, the priorities of the Annual Growth Survey and the process for achieving the Europe 2020 objectives. The most visible measure is the review of the Labour Cost Law of 1996. This review must ensure that the labour-cost handicap, which has grown since 1996 compared with the neighbouring countries, does not increase more, something for which the original law did not prove sufficiently effective. Under the new law the historic labour-cost handicap may even potentially be eliminated, achieving an approxi- mately equal evolution in wages and productivity. As such, the country’s competitiveness will be strengthened, which in turn may give rise to further job creation. The Country Report already indicated that the latter was robust, albeit with a side note that certain groups do not sufficiently reap the fruit of this situation. In 2016, a Federal Poverty Reduction Plan was launched to, among other things, address this issue. Moreover, the regions are granting reductions on the social security contributions of certain target groups and implementing a targeted activation policy for unemployed persons. Two other important issues that Belgium is working on are the investment pact and the energy transition. In September 2016, the Federal Government announced a National Pact for Strategic Investments. This follows on from the European Investment Plan and must serve as an incentive for public and private investments in strategic sectors. The energy transition is part of the forthcoming phase-out of nuclear energy, but also serves the energy and climate objectives. In both cases, there will be strong interaction between the federal and regional levels. Progress has been made in several areas thanks to a number of measures. This relates, among other things, to the tax shift, the promotion and funding of innovation, the single market for regulated pro- fessions, the modernisation of industry (Industry 4.0) and the promotion of entrepreneurship. Finally, initiatives have also been undertaken to reform education and increase competition in retail. The communities and regions - both the governments and the parliaments - and the social partners are closely involved in the structural reform process. The reform plans of the communities and regions have been included in full in this report as Annexes 1 through 5. They offer a detailed explanation about their measures to implement the Country-Specific Recommendations. These programmes also high- light the progress in terms of the regional Europe 2020 objectives and the supporting measures. The advice of the social partners has also been included as an Annex. 1 2. Macroeconomic scenario The projection has been drawn up based on unchanged policy and unchanged legislation. The Board of Governors of the National Accounts Institute (INR/ICN) approved the figures on 20 March. As a result, the measures of the 2017 budget review could not be taken into account. The forecasts for 2017 are largely consistent with those of the 2017 Economic Budget, which the Federal Planning Bureau published on 9 February. Nonetheless, these forecasts were updated to take into account more recent developments and additional information from the national accounts for 2016. Table 1: Key figures of the macroeconomic scenario 2015-2019 Evolution in %, except when mentioned otherwise 2016 2017 2018 2019 2020 2021 2022 GDP in volume 1.2 1.4 1.5 1.5 1.6 1.4 1.3 Consumer price index 1.5 2.2 1.6 1.7 1.6 1.7 1.7 Domestic employment (change in ‘000) 58.8 50.9 41.1 35.2 49.1 42.9 37.7 Domestic employment (change in %) 1.3 1.1 0.9 0.7 1.0 0.9 0.8 Employment rate (persons aged 20-64 years) 67.8 68.3 68.8 69.3 70.0 70.6 71.3 Unemployment rate (FPB definition) 11.2 10.6 10.3 10.1 9.6 8.9 8.3 Unemployment rate (Eurostat definition) 8.0 7.6 7.5 7.4 7.1 6.6 6.1 Government financing balance (% of GDP) -2.6 -1.9 -1.9 -2.1 -2.2 -2.1 -2.1 Gross public debt (% of GDP) 106.6 106.2 105.5 105.2 105.0 104.7 104.2 Current account balance (National Accounts - % of GDP) 0.7 0.7 0.7 0.6 0.4 0.3 0.3 This year, the Belgian economy is expected to maintain a growth rate of 0.3% to 0.4% per quarter driven by domestic demand, while net exports make a zero contribution. As a result, annual economic growth increases slightly to 1.4% in 2017. During the 2018-2022 period the Belgian economy should post growth of 1.5% on average, which is in line with European GDP growth. The Belgian output gap would gradually be reduced, amounting to about zero in 2021-2022 1. For the 2017-2022 period, a total of 257,000 jobs are expected to be created. The number of salaried employees in the private sector should increase by 217,000 and the number of self-employed by 47,000, whereas employment in the public sector is to be reduced by 7,000 units. Measures aimed at reducing labour costs for wage earners support employment growth mainly in 2016, 2017 and 2020. The employment rate (persons aged 20-64 years) should gradually increase to 70% in 2020 - thus remaining below the objective of the Europe 2020 strategy (71.3% in 2020). The number of unemployed persons (includ- ing non-jobseeking wholly unemployed persons entitled to benefits)

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