the state of the welfare state in belgium 2007-2015 · the state of the welfare state in belgium...

Jozef Pacolet & Frederic De Wispelaere, Belgium – 19/10/2015, 15h10

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The state of the welfare state in Belgium 2007-2015

Jozef Pacolet and Frederic De WispelaereHIVA - Research Institute for Work and Society, Katholieke Universiteit Leuven

1. Conclusions of the previous four reports

2. Macro-economic performance: growth, stability and social protection

3. Major labour market evolutions

4. Financing social security

5. Major reforms in pension system

6. Major reforms in health and long-term care: devolution

7. The era of sustainability: what (3 European) ageing reports really means

8. Conclusions

2

Content


2

1. We are a rich economy and we remain that, but massive unemployment persisted

2. The ‘active welfare state’ was only at the beginning: too little and too late

3. Redistribution of income via social security persisted but growing indicating it is not sufficient

4. Financing of social security under pressure since the eighties: no room for reserves

5. Reduction of taxes and social contributions too early or too late: fear of further erosion of social protection and especially first pillar of pensions

6. Non-debate on desired level of first pillar

7. Uncovered needs can be substantial: health care was expanding after period of rationing

8. Priority for further debt reduction

9. Continued growth until the great economic crisis: in 2011 back at 2008 level

3

1. Conclusions of the previous four reports

1. Substantial population growth, comparable with the baby boom period

2. Population forecasts project further population increase

3. The economic crisis hits twice: the double dip materialised

4. We remain a rich economy, but GDP per capita has known for the last 7 years negative or zero growth

5. Budgetary discipline not maintained and disrupted by crisis: in 2015 back at situation of 1999 for deficit and 2002 for public debt: more than a decade of budgetary consolidation lost

6. New job creation remains mostly public

7. Fiscal consolidation more oriented to cuts in expenditures

8. Will tax reductions and reductions of social security contributions be again to early and to late

9. Tax shift with reduction of taxes on labour and increase of other taxes: among others reduction of employers contributions from 33 to 25% of wage, from 22 to 20,5% for independent workers

4

2. Macro-economic performance: Growth, stability and social protection


3

2. Macro-economic performance:Demography: 1995-2015 the greatest post-war population boom

5

0

2 000

4 000

6 000

8 000

10 000

12 000

14 0001/01/1945

1/01/1950

1/01/1955

1/01/1960

1/01/1965

1/01/1970

1/01/1975

1/01/1980

1/01/1985

1/01/1990

1/01/1995

1/01/2000

1/01/2005

1/01/2010

1/01/2015

1/01/2020

1/01/2025

1/01/2030

1/01/2035

1/01/2040

1/01/2045

1/01/2050

1/01/2055

1/01/2060

Population (in ,000)

prognoses 1988 Prognoses 2000 Prognoses 2008 Prognoses 2011

Prognoses 2013 Prognoses AWG 2015 Prognoses 2015

1947‐1967+1 093 810

1995‐2015+1 105 540

Source: SCcV and Ageing Report

6

2. Macro-economic performance: % change of GDP compared with previous year, by regions, 1996-2020: a double dip

‐4

‐3

‐2

‐1

0

1

2

3

4

5

6

% change with previous year

Brussels‐Capital Region Flanders Walloon Region Belgium

Source: Planbureau


4

-50,0

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

1953

1955

1957

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

201020112012201320142015

Billion euro

Yearly additonal GDP GDP (prices 2008)

2. Macro-economic performance: GDP in Belgium, 1952-2015 (prices of 2008)

7

Source: NBB

-5000

0

5000

10000

15000

20000

25000

30000

35000

1953

1955

1957

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

201020112012201320142015

euro in prices of 2008

Additional GDP/ capita GDP/capita

2. Macro-economic performance: GDP per capita in Belgium, 1952-2015 (prices of 2008): zero growth is back

8

Source: NBB


5

9

0

10000

20000

30000

40000

50000

60000

70000

80000

2008 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

GDP per capita in prices of 2008

GDP ageing report EU 2009

SCvV 2010

60 years to go from 10 000 to 30 000


25 years

2. Macro-economic performance: The past and the future


Source: SCcV and Ageing Report

10

2. Macro-economic performance: Comparing GDP with GDP per capita (2007 = 100)

90

92

94

96

98

100

102

104

106

108

110

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

% change with the previous year

BE, real GDP BE, GDP per capita DE, real GDP DE, GDP per capita

Source: Eurostat database


6

2. Macro-economic performance: Net financing requirement, 1980 - 2014 (as % of GDP)

-15,7

-2,6

-5,4

-3,1

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

2

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

% of GDP

Net Financing Requirement

11

Source: NBB

2. Macro-economic performance:Gross debt (as % of GDP), 1995-2014

12

86,8

106,5

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

Gross deb

t (as % of GDP)

Source: NBB


7

2. Macro-economic performance:Despite three waves of budgetary consolidation, growing useof fiscal expenditures, 1995-2014

13

0

2

4

6

8

10

12

14

16

18

201984

1991

1994

1997

2000

2003

2006

2007

2008

2009

2010

2011

% of GDP

Fiscal expenditures as% of GDP

Total missed taxrevenue as % of GDP

Fiscal expenditure andnotional interestdeduction as % of GDP

Budgetary consolidation 2014-2018, cumulative figures for 2015-2018, in billion euro

14

2.8

‐0.8

‐8.1

‐10

‐8

‐6

‐4

‐2

0

2

4

New taxes

Fiscal expenditures

Expenditures


8

2. Macro-economic performance:Social spending, by functions, 1990-2012: major systems maintained theirlevel of expenditures

15

0

1

2

3

4

5

6

7

8

9

10

11

Social spen

ding as % of GDP

Sickness/Health care Disability Old age Survivors

Family/Children Unemployment Housing Social exclusion


3. Major labour market evolutions: Employment (in ,000), by sectors of activity, in ,000, 2008-2014, Q4

16

Source: NBB

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2008/4 2009/4 2010/4 2011/4 2012/4 2013/4 2014/4

Employm

ent (in ,000)

Self‐employed

Other sectors

Professional activities

Health and social work services

Public administration and eduction

Trade, transportation,accommodation and food serviceactivities

Construction

Industry


9

3. Major labour market evolutions: The service voucher: number of employees, 2004-2014, Q4

17

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2004/4 2005/4 2006/4 2007/4 2008/4 2009/4 2010/4 2011/4 2012/4 2013/4 2014/4

Number of em

ployees

Number in FTE

Source: RSZ

3. Major labour market evolutions: Total job ‘creation’, by sectors of activity, in ,000, 2009-2014, Q4

18

‐27

4842

‐14‐10

161612 11 11

4 3

17 18 1511

61112

51

‐1

4

‐2

‐44

0

11

‐22‐26

‐12

‐60

‐40

‐20

0

20

40

60

2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4

Job creation (in ,000)

Total job creation (workers) By service vouchers

By health and social services By public administration and education

By cyclical sectors (i.e. industry, trade, construction)

Source: NBB and RSZ


10

3. Major labour market evolutions: The service voucher: impact on total employment, 2014, Q4

19

04%

08%

02%

0,52

0,83

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

00%

01%

02%

03%

04%

05%

06%

07%

08%

09%

10%

Total Woman

Working time

Share in total employemnt

Employment by service vouchers (as % of total employees)

Employment by service vouchers (as % of employees in FTE)

Working time employment by service vouchers

Total working time

Source: RSZ

3. Major labour market evolutions and reforms: Youth unemployment rate, BE and EU-28, 2007-2014

20

0

5

10

15

20

25

30

35

40

45

2007 2008 2009 2010 2011 2012 2013 2014

Unem

ploym

ent rate (15‐24 years)

EU28 BE Brussels‐Capital region Flanders Walloon region



11

3. Major labour market evolutions: Employment rate 55 to 64 years, BE and EU-28, 2002-2014

21

0

10

20

30

40

50

60

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Employm

ent rate (55 to 64 years)

EU28 BE

Change in p.p.BE 16.1

EU28 13.4


4. Financing social security: By type, as % of total receipts, 1990-2012 – further shift away from social contributions

22

0

10

20

30

40

50

60

70

80

% of total receipts

Social contribution General government contributions Other receipts



12

4. Financing social security: Number of benefit earners, 1999-2013

23

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

4 500 000

5 000 000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Allowance dependent elderly

Other allowance persons with handicap

Guaranteed Minimum Income

Income replacement and integration allowancepersons with handicapSickness (employees+independents)

Invalidity (employees+independents)

Career Interruption and Time Credit

Unemployed

Prepensioners

Income Guarantee Elderly

Pensioners (Governement Employees)

Pensioners (Independents)

Pensioners (Private Employees)

Source: Vade Mecum van de financiële en statistische gegevens over de sociale bescherming in België

5. Major reforms in pension system

24

1. A political cycle in the pension debate: green book on the pension reform before 2008 elections, white book announced for after elections, a pension reform commission installed since then, published their conclusions after the 2014 elections

2. Reduction of early exit possibilities (for instance time credit, career length and age conditions)

3. A continuum of parametric reforms from Generation Pact (2005) until reforms since 2011 and present government

4. Priority for improving and safeguarding minimum pensions

5. Progressive increase of real exit age

6. Growing attention for arduous jobs and making work workable

7. First reduction, then harmonising and finally dismantling of incentives for working longer (pension bonus)

8. Progressive dismantling of preferential pension regimes

9. First reductions in pensions of civil servants

10. So called ‘Silverfund’ (public pension reserve of € 20 billion) under discussion

11. In 2015 the increase of legal pension age is voted (66 in 2025, 67 in 2030)

12. By 2030 an automatic adaptation to adequacy and sustainable pension systems and introduction of a harmonised notional point system

13. Second pillar (occupational pensions) gets growing attention…but remains below ambition

14. Financial sector (life insurance) claims adaptation of required return and as such undermining the ambition of the government to reinforce that second pillar

15. There is no other alternative than increasing contributions since you cannot impose market returns

16. Risks to be in conflict or is at least in contradiction with ambition to reduce social security contributions


13

5. From Commission of experts to National Pension Committee1. 2013 Commission of pension experts installed; conclusions in 20142. Reinforcement of insurance principle in first pillar by relationship between career and

earnings, guaranteeing also link to inflation and earnings3. Maintaining of professional pillars4. Calculations harmonised between these pillars 5. Introduction of a notional point system ‘to make it more transparent to the citizen’6. Second pillar should be reinforced 7. Growing attention for working longer in arduous jobs and workable work8. Since the provided additional advises on arduous jobs and part time pension9. May 2015 National Pension Committee is installed10. National Pension Committee of social partners and federal government, situated close to

National Labour Council (NAR); Knowledge centre created; commission of experts continued as Academic council

11. Priorities for future pension plans of government• Arduous jobs: further discussion with the social partners• Return on second pillar: social partners • Prepare the reform by 2030 of notional point system and adaptation to adequacy and

sustainability

25

26

60

61

62

63

64

65

66

67

68

69

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

VK

VS

Duitsland

Spanje

Nederland

Denemarken

België mannen

België vrouwen

België anno 2015

5. Unexpected increase of legal pension age

Change of the legal retirement age


14

6. Major evolution and reforms in health and long-term care: devolution in the 6th state reform

27

28

Source: OECD, Health Data 2015

6. Public and private health expenses, in € billions and as % of GDP, Belgium, 2007

Public sector

Of whichTerritorial

government

Of whichSocial

securityPrivate sector

Of which Out of pocket Total

As % of GDPTotal health expenses 6.8 1.0 5.8 2.2 1.7 9.0Services of curative and rehabilitative care 3.4 0.1 3.3 1.0 0.7 4.4Services of long-term nursing care 1.6 0.6 0.9 0.4 0.3 2.0Ancillary services to health care 0.3 0.0 0.3 0.1 0.0 0.3Medical goods 1.0 1.0 0.7 0.7 1.7Prevention and public health services 0.2 0.2 0.0 0.0 1.7 0.2Health administration and health insurance 0.3 0.1 0.3 0.1 0.4

In current prices (in € billions)Total health expenses 23.3 3.3 20.0 7.7 6.0 31.1Services of curative and rehabilitative care 11.7 0.2 11.5 3.3 2.4 15.1Services of long-term nursing care 5.4 2.2 3.2 1.5 1.2 6.8Ancillary services to health care 1.0 0.0 0.9 0.2 0.1 1.2Medical goods 3.3 3.3 2.4 2.3 5.7Prevention and public health services 0.7 0.7 0.0 0.0 0.7Health administration and health insurance 1.2 0.2 1.0 0.3 1.5

In constant prices of 2005 (in € billions)Total health expenses 22.3 3.2 19.1 7.4 5.7 29.6Services of curative and rehabilitative care 11.2 0.2 11.0 3.2 2.3 14.4Services of long-term nursing care 5.1 2.0 3.1 1.4 1.1 6.5Ancillary services to health care 0.9 0.0 0.9 0.2 0.1 1.1Medical goods 3.2 3.2 2.3 2.2 5.5Prevention and public health services 0.7 0.7 0.0 0.0 0.7Health administration and health insurance 1.1 0.2 0.9 0.3 1.4


15

29


Public sector

Of whichTerritorial

government

Of whichSocial


Of which Out of pocket Total

As % of GDPTotal health expenses 8.0 1.2 6.8 2.3 1.8 10.2Services of curative and rehabilitative care 4.1 0.1 4.0 1.1 0.9 5.2Services of long-term nursing care 1.9 0.7 1.1 0.4 0.3 2.3Ancillary services to health care 0.3 0.0 0.3 0.1 0.0 0.4Medical goods 1.1 .. 1.1 0.6 0.6 1.7Prevention and public health services 0.3 0.3 0.0 0.0 .. 0.3Health administration and health insurance 0.3 0.0 0.3 0.1 .. 0.4

In current prices (in € billions)Total health expenses 31.5 4.6 26.9 9.0 7.2 40.5Services of curative and rehabilitative care 16.0 0.2 15.8 4.5 3.4 20.5Services of long-term nursing care 7.4 2.9 4.5 1.7 1.3 9.1Ancillary services to health care 1.3 0.0 1.3 0.2 0.1 1.5Medical goods 4.3 4.3 2.4 2.4 6.7Prevention and public health services 1.3 1.3 0.0 0.0 1.3Health administration and health insurance 1.2 0.2 1.0 0.3 1.5

In constant prices of 2005 (in € billions)Total health expenses 26.9 4.0 23.0 7.7 6.2 34.6Services of curative and rehabilitative care 13.7 0.2 13.5 3.8 2.9 17.5Services of long-term nursing care 6.3 2.5 3.8 1.4 1.1 7.8Ancillary services to health care 1.1 0.0 1.1 0.2 0.1 1.3Medical goods 3.6 3.6 2.1 2.0 5.7Prevention and public health services 1.1 1.1 0.0 0.0 1.1Health administration and health insurance 1.0 0.2 0.9 0.2 1.2

6. Public and private health expenses, in € billions and as % of GDP, Belgium, 2013

30


6. Public and private health expenses, % change 2013 vs 2007, Belgium

Public sector

Of whichTerritorial

government

Of whichSocial


Of which out of pocket Total

Total health expenses 21.0% 25.6% 20.2% 4.4% 7.5% 16.9%

Services of curative and rehabilitative care 22.7% 16.3% 22.8% 19.4% 24.3% 22.0%Services of long-term nursing care 23.8% 21.7% 25.2% 1.4% -1.4% 19.0%Ancillary services to health care 21.4% -19.0% 23.4% -16.6% 10.4% 14.3%

Medical goods 14.2% 14.2% -9.2% -6.0% 4.5%

Prevention and public health services 58.1% 58.2% 56.5% -91.0% 58.1%

Health administration and health insurance -11.6% -24.5% -8.8% -24.5% -14.3%


16

6. Public health expenditures still under control (real growth rate), 1995-2016

-5,00

-4,00

-3,00

-2,00

-1,00

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

11,00

12,00

13,00

Real growth of health expenditure Real growth other financing of hospitals Standard

31

6. Public health expenditures still under control (in million euro, prices of 2006, 1995 – 2016)

0

5 000

10 000

15 000

20 000

25 000Real amount of other financing of hospitals

Real amount of health expenditure

Real amount of health expenditure(standard)

32


17

6. Public health expenditures still under control: creation of a fund for the future financing of the health insurance and contribution to financial

equilibrium social security, 2007-2015, in million euro

0,0

200,0

400,0

600,0

800,0

1 000,0

1 200,0

1 400,0

1 600,0

1 800,0

2007 2008 2009 2010 2011 2012 2013 2014 2015

Future fund nominal

Future fund cumulativenominal

Financial equilibrium socialsecurity nominal

33

6. Long-term care: a highly developed system but still hardly recognised system

• As well in kind as in cash (on top of income)• In kind

– Developed within the health insurance, mainly: • district nursing• residential services for the elderly

– Social services, among others home care services– Residential and community care services for persons with

handicap – Service voucher topped it up for home help at federal level

• In cash– Care allowance for the elderly at federal level– Integration allowance for persons with handicap at federal level– Care insurance for as well community care as residential care

Flanders and those opting for it in Brussels

34


18

6. Long-term care after the 6th state reform

• As well in kind as in cash (on top of income)• In kind

– Developed within the health insurance, mainly:• district nursing: remains in health insurance • residential services for the elderly: devolved to the regions

– Social services, among others home care– Residential and community care services for persons with handicap – Service voucher topped it up for home help: devolved to the regions

• In cash– Care allowance for the elderly: devolved to the regions– Integration allowance for persons with handicap: remains federal level– Care insurance for as well community setting as residential setting in

Flanders and those opting for it in Brussels

35

6. The fair faces of LTC in Flanders, impact on public spending in budget 2015

36

Budgetin millioneuro

as % of totalbudget

as % of regionalGDP

Family benefits 3.557 9,6 1,5Residential home care 1.497 4,0 0,6Care for persons with handicap 1.426 3,9 0,6Service vouchers 1.062 2,9 0,5Home care 623 1,7 0,3Child care 568 1,5 0,2Care allowance for dependent older persons 387 1,0 0,2Youth care 377 1,0 0,2Care infrastructure 200 0,5 0,1Fiscal expenditures service voucher 198 0,5 0,1Flemish care insurance 125 0,3 0,1Geriatric services 102 0,3 0,0Total budget Flemish government 37.027 100,0 15,8GDP 234.547 100,0


19

37

7. The era of (3 European) ageing reports on future sustainability: what it really means

Source: Own calculations on European Commission, Ageing Report 2009, 2012 en 2015

AWG 2015(2013 prices)

AWG 2012 (2010 prices)


2013 2020 2060index 2060 2010 2020 2060

Index 2060 2008 2020 2060

index 2060

GDP(in billions euro) 381 417 871 228 352 419 812 231 331 443 863 261

Population(millions) 11,2 11,9 15,4 138 10,9 11,6 13,5 124 10,7 11,3 12,3 115

GDP per capita(in euro) 34.054 35.000 56.552 166 32.321 36.138 60.170 186 30.916 39.212 70.195 227

Population +65 ( million)

2,0 2,2 3,6 184 1,9 2,2 3,4 184 1,8 2,2 3,3 178in % of totalpopulation 18% 19% 24% 17% 19% 26% 17% 20% 27%

38

AWG 2015 (2013 prices) AWG 2012 (2010 prices) AWG 2009 (2007 prices)

2013 2020 2060index 2060 2010 2020 2060

Index 2060 2008 2020 2060

index 2060

GDP in billion euro 381 417 871 228 352 419 812 231 331 443 863 261

GDP in billion euro prices 2013 381 417 871 379 451 874 380 509 992Population (millions) 11,2 11,9 15,4 138 10,9 11,6 13,5 124 10,7 11,3 12,3 115

GDP per capita in euro 34 054 35 000 56 552 166 32 321 36 138 60 170 186 30 916 39 212 70 195 227Price index 100 100 100 93 93 93 87 87 87

GDP per capita in prices 2013 34 054 35 000 56 552 166 34 795 38 904 64 776 186 35 519 45 051 80 647 227

7. What future sustainability really means, now in real terms of 2013 prices



20

39

7. Real implications behind public cost of ageing as % of GDP


2013 2020 2060index 2060

GDP per capita in euro 34.054 35.000 56.552 166Health care as % of GDP 6,0 5,9 6,1 102

Long‐term care as % of GDP 2,1 2,3 3,7 176

Total health + LTC as % of GDP 8,1 8,2 9,8 121

Health care per capita in euro 2.043 2.065 3.450 169

LTC per capita in euro 715 805 2.092 293

Total health + LTC in euro 2.758 2.870 5.542 201

GDP‐ health and LTC, per capita, in euro 31.295 32.130 51.010 163


40


2013 2020 2060index 2060GDP per capita in euro 34.054 35.000 56.552 166Pensions as % of GDP 11,8 12,7 15,1 128Pensions + health + LTC as % of GDP 19,9 20,9 24,9 125

Pensions in euro per capita 4.018 4.445 8.539 213

Pensions + health + LTC per capita in euro 6.777 7.315 14.081 208GDP ‐ pensions – health – LTC, per capita 27.277 27.685 42.471 156

Persons above 65 as % of total population 17,7 18,9 23,7 134

Ageing cost of 65+ in euro per capita 5.755 6.402 13.219 230

Ageing cost in euro per person above 65 32.514 33.874 55.776 172

Rest of GDP per capita 28.299 28.598 43.333 153

Rest of GDP per person below 65 34.385 35.262 56.793 165

Ratio evolution resources +65/65‐ 1,04

7. Real implications behind public cost of ageing as % of GDP



21

1. Negative growth or zero growth of GDP per capita implies a changing of regime?

2. Growing concern about downgrading the first pillar of social security

3. But hesitation to reinforce the solidarity and insurance dimension of the first pillar

4. This is announcing a further privatisation of social protection

5. Financing: decline in the share of social contributions

6. Increase of subsidised employment especially by the service voucher

7. Increase of the legal age of retirement

8. Devolution

41

8. Conclusions

the state of the welfare state in belgium 2007-2015 · the state of the welfare state in belgium...

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