The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.
Weak euro area growth and the sovereign debt crisis have had serious repercussions for growth and employment in the open Belgian economy. Moreover, Belgium is one of 13 countries identified by the Commission as experiencing macroeconomic imbalances, particularly when it comes to the loss of export market share as a consequence of declining shares in goods exports that can be related among others to the country's labour costs and the high level of public debt.
Belgium has made some progress in implementing reforms relating to the 2012 CSRs, though they vary in scope and ambition. Despite consolidation efforts, Belgium failed to meet its budgetary targets. A pension reform has been implemented, but the long-term sustainability of public finances is still at risk. Reforms are ongoing to improve cost competitiveness and competition and raise employment and education levels, but more sustained efforts will be needed to ensure their success. Belgium has taken effective measures to stabilise its banking sector.
Belgium’s challenges remain broadly the same as last year's and additional efforts will be needed to address public finances, competitiveness, labour and product markets, and greenhouse gas emissions. Overall, greater coordination between regional and national governments is essential.
2013 European Commission's recommendations for Belgium in brief
The Commission has issued seven country specific recommendations (CSRs) to Belgium to help it improve its economic performance. These are in the areas of:
- Sustainable public finances
Belgium's fiscal effort was not sufficient to end the excessive deficit situation and according to the Commission's estimates the transition towards debt reduction will not be respected in 2014, with debt rising to 102.1% of GDP. Belgium should pursue growth-enhancing structural reforms and co-ordinate adjustment needs across all levels of government.
- Social security for the elderly
Belgium needs to ensure the long-term sustainability and adequacy of social security for the elderly, yet it will already face in the period from 2010 to 2020 a very significant increase in total age-related public expenditure as a proportion of GDP, especially in long-term care and in pensions. Belgium should combine further pension reform with employment support measures for older workers and efforts to improve the efficiency of long-term care.
- Cost competitiveness and wage setting
As an open economy, Belgium needs to restore its competitiveness by working on all components of competitiveness at the same time, including wage setting. The wage norm mechanism has not always fulfilled its role and a fundamental reform is needed. At the same time, the transition towards a more knowledge intensive economy needs to be speeded up.
- Competition in network industries and services
Prices in Belgium in the retail and energy sectors are well above EU average. Belgium should improve competition in order to help keep prices down for consumers and manage the general price level that feeds the indexation system. Well-functioning markets are also crucial for Belgium's competitiveness whilst new opportunities in service markets can stimulate new growth.
- Shifting taxes from labour
Belgium has the highest implicit tax burden on labour in the EU for most types of workers, whereas it remains one of the countries with the lowest share of environmental taxes in overall tax revenue. There is significant scope to shift tax away from labour in Belgium towards taxes, which are less detrimental to growth. The government should also simplify the tax system and improve its efficiency.
- Labour markets
Belgium suffers from below average and stagnating labour market participation and high employment and unemployment disparities across regions and population subgroups, including those with a migrant background, the elderly and low-skilled young. Interregional labour mobility is low. Belgium should take steps to reduce disincentives to work, improve interregional labour mobility and develop social inclusion strategies for people from a migrant background.
- Greenhouse gas emissions
Belgium will fail to meet its 15% reduction target by 2020 and congestion is placing one of the highest burdens in the EU on the Belgian economy. Belgium should step up efforts to meet its greenhouse gas emissions target, including by ensuring a clear division of tasks between the regions.
See how Belgium compares with other EU Member States in key areas
European Semester Documents