Working on labor cost reduction in Flanders
Labor costs in Belgium – and Flanders as a region – may seem relatively high at first sight, but they are offset by various factors. Here’s a nuanced look at the matter.
Effective labor costs are much lower than the nominal perception
According to international studies, Belgium is ranked among the 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 hires, 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 considered.
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.
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