The announced “tax shift” measures of the government, together with skipping of the automatic annual indexation of salaries in 2015 and applying an additional salary moderation in 2015 and 2016, adds to the fact that labor cost increases have undergone a steady slowdown in Belgium since 2010.
According to international studies, Belgium – and Flanders as a region – is ranked among countries with the highest labor costs. It's true that the nominal rate of the employer’s social security contributions (SSC) is high, but the outcomes of such studies need to be qualified in opposite ways, since the effective labor cost is much lower than the nominal one.
First and foremost, there are several reductions on paying SSCs, from which starting employers in the private sector benefit significantly (structural reductions, reductions for first hirings, etc.).
Subsequently, there exists an elaborate SSC-free system of fringe benefits and partial exemptions from advance tax payments for researchers, night and shift work and employees working in certain regions of Flanders that needs to be taken into account.
Finally, the Belgian federal government announced in 2015 a considerable decrease in the SSC of employers in the context of the so-called “tax shift” (i.e. a shift from taxes on labor to taxes on property and consumption in order to generate the necessary revenue to finance the proposed reduction in salary costs). The government’s proposal to lower the rate from 33% to 25% flat by the end of the current legislative term (2018) will probably result in simplification of the current rules, just as the system of structural reductions will.
Apart from that, the gamma of insurances covered by these SSCs is much more elaborate compared to other countries. In addition, we do not focus yet on the very high productivity of Flanders’ employees – one of the highest in the world – and their multilingual skills, our flexible labor regime and state-of-the-art educational system.