VBO: Crisis in industry spreads to other sectors, private employment falls

The number of sectors expecting a decline in their activity has doubled in six months: from 22 percent in May to 45 percent today. Profitability is also under pressure: 40 percent of the sectors expect a decline in profitability, compared to 30 percent in the previous survey.

In addition, private employment is also declining: 55 percent of the sectors indicate that employment has declined over the past six months. In May that was still 30 percent. More than half (55 percent) also expect a further decline in employment in their sector over the next six months.

And the business survey also shows a worrying evolution with regard to investment plans: investments are mainly being made in digitalization and greening, but there is virtually no interest in expansion investments anymore. The FEB points out that this is also due to the low occupancy rate of the existing production capacity.

“Triple Handicap”

“We are on the brink of a recession. After the Covid crisis and the energy crisis, we are now gradually entering a competitiveness crisis,” chief economist Edward Roosens of the VBO illustrated the current situation. Reference is made to the “triple handicap” that Belgian companies face: higher labor costs, higher energy prices at European level and more administrative burdens.

“This is a dangerous development for a country that is dependent on exports. People still rely too much on domestic consumption” for economic growth, CEO Pieter Timmermans warned. He had a clear message for Arizona’s government negotiators: Enact reforms that strengthen the economic fabric, which will also help fix the budget. “Conversely: if the economic crisis is not stopped, one will never get the finances in order unless with a tsunami of taxes.”

Unemployment benefit limited in time

Timmermans also suggested taking the same measures as in neighboring countries, especially regarding the labor market, pensions, etc. “If unemployment benefits are limited in time there, that is also possible here. If night work starts at midnight there, why here at 8 p.m.?” At the same time, the VBO CEO warned against “doing any tax reform that burdens success”.

Based on the latest figures, the wage cost handicap compared to neighboring countries is 13 percent, or 750 euros extra wage costs per month for an average employee, the VBO calculated. “We still have to wait for the CRB report within a few weeks (which sets the wage standard, ed.), but when I see these figures, I think we should be very careful with structural wage increases,” says Timmermans.