Several schemes have been introduced to make work
more financially attractive and to make it easier for people to go into
paid employment rather than not working. Thanks to these measures, the
worker's net income can be increased without generating any additional
costs for the employer.
The extension of the rise in flat-rate
professional expenses allowances is leading to a general reduction in
the tax burden on earned incomes. The increase in 2006 of the first
tranche of these expenses was doubled in 2007. The ceiling on
tax-deductible expenses has also been raised. This measure has been
extended for 2008.
Moreover, there will be an improvement in net
earnings of low-wage workers thanks to the targeted increase in the
tax-exempt quota as of July 2008. The scope of this measure will also be
widened in future. A further step will be taken by the new government to
limit the number of intermediary tax brackets.
The "work bonus" system, which consists of a
sliding-scale reduction in personal social security contributions, is
being extended once again to combat unemployment traps. The amount of
the allowance and the pay threshold below which the bonus is granted has
been raised in the context of the central agreement for 2007-2008(1)
. In addition, funds are earmarked in the 2008 budget for extending the
measure. The new government wants to put the emphasis on the lowest
income groups.
In addition, a flat-rate reduction in income tax
was introduced in 2007 by the Flemish Region to help workers living in
this Region. Initially targeted on low wages, this reduction is being
widened in 2008 and will apply to all workers in 2009.
As a complement to these reductions in charges,
interregional worker mobility is fostered through granting premiums and
employment for older workers favoured by raising the income ceiling
allowed after retirement. Initiatives will also be developed for
encouraging workers to actually stay in earned employment until the
statutory retirement age. A better work-life balance will also incite
workers to stay in the job market longer.
Moreover, the activation measures for job seekers
introduced in 2004 are bearing fruit. According to the assessments made
so far, the reduction in unemployment has been greater in the age groups
targeted by the activation plan than in other segments. This trend
suggests that the drop in unemployment is not exclusively attributable
to the improvement in the economic situation, but also to the measures
implemented. The assessment of this activation policy will enable the
new government to improve assistance for job seekers, in the framework
of a strengthened follow-up.
(1) These increases
compensate for the double rise in the average minimum monthly wage as at
1 April 2007 and 1 October 2008. Compensation is also envisaged in terms
of reductions in charges for employers.
