The IMF found more efforts were needed to address educational gaps, improve the quality of training and lifelong learning and reduce barriers to mobility. Linking wages with productivity can help to improve the allocation of resources and support overall competitiveness.
The IMF report said that reforms to reduce the fragmentation of the labor market are key to supporting higher, more inclusive growth. It found what they referred to as “vulnerable groups”—especially non-EU immigrants, the young, and the low-skilled—remain largely excluded from the labor market. Moreover, regional disparities in competitiveness and unemployment persist, and labour supply-demand mismatches are widespread.
This message will be issued as part of the Fund’s annual review of the Belgian economy. The Washington delegation gave the Michel-I government good points. “Some of the recommendations we have been putting forward for years have been implemented by this government,” says delegation leader Delia Velculescu.
Velculescu believes that the early termination of the Michel-I government is an important risk factor. This threatens to delay the growth path. “But our discussions with the members of the government show that they are determined to continue the reforms,” says Velculescu.
In another area of economic policy, the IMF called on the government to unlock the economy’s growth potential by removing bottlenecks to business growth. It found Belgium suffers from weak business dynamism and a feeble entrepreneurial culture, as evidenced by low rates of entry and exit of firms and a relatively low share of high-growth firms. The organisation commended the government’s initiative to promote equity financing and develop an ecosystem for young, innovative firms with growth potential. But it felt further efforts were needed to harmonise regulations, increase investment in infrastructure, including in energy, improve the efficiency of R&D spending and strengthen competition in services (particularly in regulated professions).
The IMF delegation informed the Minister of Economic Affairs Alexander De Croo (Open VLD) of its findings this morning. He says he has understood the message. “It is extremely important that the socio-economic plans we have drawn up are implemented as much as possible. If we don’t do this, it will cost jobs and weaken the competitiveness of our companies,” says De Croo in a Twitter message.
The findings also praised Belgium for achieving significant economic progress, supported by ambitious reforms: “The economy has experienced nine consecutive years of expansion. Real GDP per capita has surpassed pre-crisis levels and employment is at historical highs. The government has contributed to these positive outcomes by delivering on much of its economic reform agenda, including a key pension reform, an overhaul of the corporate income tax regime, a reduction in labor taxes under the ‘tax shift’, and other labour market reforms to promote flexibility and strengthen competitiveness.”