OECD Economic Surveys.

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Table of contents Basic statistics of Belgium, 2015 Executive summary Productivity gains have been modest GDP per hour worked Raising skills and work opportunities for vulnerable groups would make growth more inclusive Employment rate, % of population of working age in each group, 2016 Greater public investment to enhance productivity and inclusiveness while ensuring public debt sustainability Public investment, as a percentage of GDP Assessment and recommendations Figure 1. GDP growth has weakened since the crisis Figure 2. Belgium performs well on almost all dimensions of inclusiveness and well-being Figure 3. The pace of reforms has increased Figure 4. The level of productivity is high but productivity growth has slowed Figure 5. Regional disparities in well-being Box 1. Government of Belgium Figure 6. Regional disparities in student performance and unemployment are large Figure 7. Employment rate amongst some groups is low Macroeconomic developments and short-term prospects Growth has been modest Figure 8. Short-term macroeconomic developments Outlook and risks Table 1. Macroeconomic developments Table 2. Extreme vulnerabilities for the Belgian economy Fiscal, monetary and financial policies Figure 9. The fiscal situation is improving Figure 10. Private sector debt Figure 11. The housing market is a relatively moderate downside risk Figure 12. The banking sector has been strengthened Table 3. Past OECD recommendations on macroeconomic and financial policies Medium-term policy challenges to reignite productivity and strengthen inclusiveness Boosting public investment to increase potential output Figure 13. Interest rates have declined Table 4. Changes in the structural balance (efforts realised and planned) and the primary balance Table 5. Fiscal projections of main forecasting institutions Figure 14. Debt-to-GDP ratio simulations Figure 15. Public investment is low Table 6. Past OECD recommendations on public investment Box 2. Plans for a Strategic Investment Pact Making the tax mix more supportive of growth and jobs Figure 16. Taxation on labour has been reduced Table 7. Main federal and regional measures on taxation Table 8. Past OECD recommendations on taxation Figure 17. Tax rates relative to other OECD countries Figure 18. The statutory corporate income tax rate is high Continuing pension reform to promote active ageing Figure 19. Ageing and jobs Table 9. Past OECD recommendations on pension reform Box 3. Main elements of the 2015 pension reform Reducing barriers to SME growth Figure 20. SMEs’ access to finance could be improved Enhancing external competitiveness Figure 21. Ratio of export volumes to export markets Box 4. Amendments to the wage-setting system Table 10. Past OECD recommendations on wage-setting and competition policy Figure 22. Environmental challenges Table 11. Past OECD recommendations on green growth Making the business environment more supportive of productivity gains Figure 23. Multifactor productivity growth has slowed for frontier and laggard firms Strengthening innovation at the frontier Figure 24. R&D investment is around the OECD average Strengthening business dynamism Figure 25. Business dynamism is weak Table 12. Growth rate of the number and start-ups and failures in Belgium Figure 26. More should be done to foster entrepreneurship culture Table 13. World Bank Doing Business indicator for Enforcing Contracts Enhancing technological diffusion Figure 27. The distribution of labour productivity across firms is wide Figure 28. Some sectors remain highly regulated Raising and mobilising skills to boost growth and inclusiveness Making better use of existing skills Figure 29. The potential impact of regulation on skills mismatches Improving the employability of seniors for a more productive and inclusive society Figure 30. Participation in adult education and training is low Figure 31. Estimation of relative wages for seniors are comparatively high in Belgium Table 14. Long-term unemployment among seniors (aged 55+) Building the skills for the future and a future for all Figure 32. The progression of education attainment is slowing down Figure 33. The educational attainment of immigrants is low Table 15. Past OECD recommendations to enhance labour market integration of immigrants, mobility and skills Table 16. A persistent immigrant-native employment gap Table 17. Changes in the number of students, expenditure on educational institutions and expenditure per student in tertiary education Seizing the benefits of digitalisation and addressing related social challenges Figure 34. Public expenditure on active labour market policies Figure 35. Building skills for the future References Annex. Follow-up to previous OECD policy recommendations Macroeconomic and financial policies Public investment Taxation Pension reform Wage-setting and competition policy Green growth Enhancing labour market integration of immigrants, mobility and skills Other past OECD recommendations Thematic chapters Chapter 1. Making the business environment more supportive of productivity Figure 1.1. The level of productivity is high but productivity growth has slowed Box 1.1. The decline in productivity growth is partly a composition effect Figure 1.2. Productivity slowdown has been continuous since the 1970s Box 1.2. The challenge of measuring productivity Strengthening innovation at the frontier Tax incentives are generally supportive of R&D investment but could be streamlined Figure 1.3. R&D investment is around OECD average Trans-regional synergies are not fully exploited Box 1.3. Regional research support policies Fostering corporate dynamism Despite a sound business environment, enterprise creation is low Figure 1.4. Business dynamism is weak Figure 1.5. Administrative burdens on start-ups SMEs rely heavily on bank finance Figure 1.6. Venture capital could be strengthened Low enterprise culture influences rates of enterprises dynamism Figure 1.7. More should be done to foster entrepreneurship culture Figure 1.8. Intellectual asset generation and commercialisation are relatively weak Figure 1.9. Innovation outcomes are generally strong Enhancing technological diffusion throughout the economy Figure 1.10. The distribution of labour productivity across firms is wide Table 1.1. The productivity gap widens with distance to multinationals Continuing infrastructure and regulatory reforms Figure 1.11. ICT usage in Belgian firms is comparatively high Figure 1.12. ICT adoption by enterprises varies across regions Figure 1.13. Some sectors remain highly regulated Policy Recommendations on improving the business environment References Chapter 2. Raising and mobilising skills to boost productivity and inclusiveness Making the most of an ageing society Challenges ahead: strengthening inclusiveness and productivity of seniors Figure 2.1. The workforce is ageing Figure 2.2. The employment rate of seniors is comparatively low Supporting productivity and jobs of seniors Figure 2.3. Participation in adult education and training is low Box 2.1. Main barriers to the development of adult education and training (AET) Figure 2.4. Estimated relative wage for seniors is comparatively high in Belgium Preserving Belgium’s comparative advantage in education Figure 2.5. The rise of educational attainment underpins Belgium’s prosperity Educational attainment is high Figure 2.6. The progression of education attainment is slowing down Figure 2.7. Education mismatches remains comparatively moderate Box 2.2. Measuring over- and under-education Figure 2.8. The return from tertiary education is high in terms of gross wages and time in unemployment Improving compulsory education outcomes Table 2.1. Early drop-out and unemployment rates Figure 2.9. There is room to improve educational attainment Box 2.3. Main elements of education reforms in the communities Figure 2.10. Percentage of teachers who report having participated in professional development with content in teaching in multicultural settings Raising resources for tertiary education Table 2.2. Changes in the number of students, expenditure on educational institutions and expenditure per student in tertiary education Figure 2.11. Share of population aged 25-34 with tertiary education and share of public financing of tertiary education institutions Better matching skills with labour market needs Reallocation of workers to boost productivity Box 2.4. Skills mismatch Figure 2.12. Improving allocative efficiency of skills would boost productivity Box 2.5. The productivity of university-educated workers as a function of the distance to the efficiency frontier Figure 2.13. There is room to better allocate university-educated workers Establishing institutions to foster more efficient allocation of students and skills Figure 2.14. Geographical mobility and workers’ reallocation rates Figure 2.15. Decline in skills mismatch from easing product market regulation could be substantial The promises and challenges of digitalisation Figure 2.16. Building skills for the future Box 2.6. E-platforms, “alternative” jobs and the need for a relevant legal framework Policy recommendations to raise skills for higher productivity growth and more inclusiveness References Annex 2.1 Firm-level analysis of workforce composition’s impact on productivity The Hellerstein-Neumark Methodology Results Firm-level estimation of marginal labour productivity: age, gender and educational attainment 3 age groups: < 35, 35-49[ref], 50+ Annex 2.2 Wage premium