Belgian unions have criticised a fresh round of austerity measures announced over the weekend by the federal government as a missed opportunity for ‘tax justice’.
The government already plans as part of a €11.3 billion cuts package agreed when the current administration took office at the end of 2011 to increase the retirement age from 59, balance its public sector budget by 2015 and raise an array of taxes.
Now it is planning to raise more taxes and postpone €1.82 billion of spending commitments, including on welfare, the promotion of generic medicines and foreign aid.
The coalition government plans to reduce its public sector deficit to 2.8% of GDP in 2012, from its 2011 level of 3.8% in order to meet EU demands for deficit reduction. If it fails to cut its deficit to a level of a maximum of 3%, it could face EU fines.
To justify more austerity, the government has opted to use the central bank’s forecast of a 0.1% contraction in the economy this year, instead of the more optimistic 0.1% growth predicted by the Federal Plan Bureau, which generally provides the estimates used in drafting budgets.
In 2011, Belgium’s economy, the sixth largest in the eurozone, grew 1.9%. A contraction would require greater savings than those already planned.
The FGTB trade union central, which led the first general strike in almost two decades on January 30, said that the measures had omitted any funding to turn the economy around, and contained no ‘significant’ initiatives to make the tax system fairer, something that could be achieved through a crackdown on tax avoidance, a wealth tax and a register of the rich. Promised funds for parental leave are now going to be withheld, it added.
The FGTB did, however, welcome a retreat from plans to axe automatic indexation of wages: ‘The government has listened to the demand of the unions, and the FTGB, not to touch purchasing power.’ The FTGB also welcomed a temporary freeze on energy prices and a tax on the stock exchange, which it described, however, as ‘insufficient’
‘We fear the debate has been limited to competitiveness..and wage costs. We need a genuine growth plan that maintains and creates quality jobs and contributes, together with [Belgium's] regional governments, towards building an economy that is more innovative and sustainable.’
The FTGB also called for action at a European level against austerity policies imposed on EU member states.
In its statement the FGTB ended with a question: ‘While nation states and workers burn, the banks get a trillion euros at 1% from the European Central Bank. Why?’