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Federations Magazine Article
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Social security brings Belgians to brink

major struggle is brewing
over Belgium’s social security
system and the battle could
alter the country’s federal
structures. What is at stake is Belgium’s
once-generous network of social services,
which could be considerably rolled back
as a result of recent national elections.
The tug of war over social security
began June 10 after the national elections
for the federal parliament. As there was
not a clear majority, King Albert II named
the leader of the largest party, Flemish
Christian Democrat leader Yves Leterme,
to form a coalition government.
But disagreement among the parties
over whether to devolve social security to
the regions of Belgium has led to a stalemate.
It is not known when a new
coalition government will be formed. In
the meantime, Guy Verhofstadt, the outgoing
prime minister, whose Flemish
Liberal party was defeated in the June 10
election, has agreed to govern as a
The communities in Belgium most at
odds over social security are the two that
make up the vast majority of the country:
Dutch-speaking Flanders in the north,
which comprises 58 per cent of Belgium’s
10.4 million population, and Frenchspeaking
Wallonia in the south, where 31
per cent of the people reside. Most of the
balance of the population is in Brussels, a
separate, largely French-speaking region,
surrounded by Flanders.
The struggle is playing out against a
background of disquieting talk of separation
where, in a recent poll, 43 per cent of
those polled from the Flemish north said
they favour separation from Wallonia.
Decentralizing social security
The fate of the Belgian social security system,
known as sécu, is at the heart of
debates between potential partners of an
“orange-blue” government coalition,
which would unite Christian Democrats
(orange) and Liberals (blue) against the
A clear winner at the polls on June 10,
Yves Leterme’s Christian Democrats
want greater weight to be given to the
federal constituent units (the communities
and regions). This is good news for
the Flemish nationalists. It is not at all
reassuring for French-speaking Belgians
of all political colours, who see in this the
seeds of destabilization of the federal system,
starting with social security.
The stakes are high. Each year, the
social security system provides income
to 1.7 million pensioners, 600,000 unemployed
and 150,000 pre-retirees. It also
pays family allowances to more than one
million families, covers 26 million days of
hospitalization and pays for 70 million
visits to the doctor.
But social security is operating in a
different context from the unitary Belgian
state in which it was founded in 1944, on
the private-insurer model of obligatory
universal insurance. Since that time, the
Belgian government has become largely
decentralized, with the regions and communities
taking over several jurisdictions
from the central authority, including
education, welfare and culture. For
Flanders, this is just the beginning: the
region also wants to have its say on health
and employment – two areas where
Social security brings Belgians to brink
“If our country splits up, we’ll all be worse off.”
Ricardo Gutiérrez and Bénédicte Vaes are Belgian journalists based in Brussels.
REUTERS/Francois Lenoir
bel g ium
OCTOBER | NOVEMBER 2007 Federations
Belgians tussle over their health-care system. Hospital workers recently protested lack of funding for the non-profit health sector.
social security plays a predominant role.
Leterme, the Flemish Christian-
Democrat leader, has translated his
voters’ desires into government proposals.
For example, his much-debated
federal proposal gives regions the right to
help determine salary costs through targ
e t ed reduc t i ons o f empl oy e r
contributions to social security. Implicit
in this proposal is the creation of three
different methods for the funding of
social security: one for Flanders, one for
Brussels and one for Wallonia.
Two conflicting visions of the future
Leterme, who is most likely to become
prime minister, speaks of a progressive
regionalization of health care. Flanders
wants to completely decentralize preventive
medicine, whereas French speakers
are advocating its remaining a federal
competence. Unemployment benefits
would follow: for a start, each
region would become responsible
for policies to reintegrate
the long-time unemployed.
For Robert Deschamps,
economics professor at the
Facultés universitaires de
Namu r and autho r o f
Fédéralisme ou scission du
pays (Federalism or splitting
up the country), “these measures
r i sk – wi thout i t
becoming clearly apparent –
an irreversible destabilization
of the federal system and, in
time, will result in a splitting
of the country to the advantage
of only one partner – the
richest and most powerful.”
Deschamps wrote that he
fears “a decline of the federal system,
basically to the detriment of the inhabitants
of Brussels and Wallonia, who are
the poorest.”
Might it go so far as to have a prosperous
and enterprising Flanders split off
from Wallonia, which is stuck in a postindustrial
crisis? This is a simplistic and
unhelpful scenario. A study published in
June by the Centre for Social Policy
Research of the University of Antwerp,
titled Social Security, Transfers and
Federalism, concluded that Wallonia
receives more social benefits than
Flanders, particularly in the areas of
unemployment benefits and early retirement
pensions. However, since 2003,
more social security payments have gone
to Flemish pensioners than to Walloons.
This trend probably will continue
because there is a larger aging population
in the Dutch-speaking north of the
The co-author of this study, Béa
Cantillon, defends the principle of financial
transfers managed by the social
security system: “Differences in income
within and among the Flemish and
Walloon regions are reduced. The ‘sécu’
therefore reduces, to a significant degree,
the risk of poverty.”
Yet many in Flanders are determined
to turn social security over to the regions.
And the sécu is not all that Flanders wants
the regions to control. Former Flemish
minister Eric Van Rompuy was recently
quoted as saying that a “new deal” was
necessary to put control of Belgium’s
“economic levers” under the regional
governments. An article on the Vlaams
Belang separatist party’s website claims
that in 1999, Flanders financed 64 per
cent of Belgium’s social security benefits
and received less than 57.6 per cent in
The University of Antwerp team evaluated
the effect of a major cut in
north-south transfers. In Flanders, the
average household income would
increase by seven per cent while in
Wallonia it would drop by four per cent,
exacerbating poverty levels.
Study co-author Cantillon said she
wondered whether the aging population
of Flanders would like to see a Wallonia
with low salaries and poor social security
developing on its doorstep.
Belgium trails other EU countries
in social security
Economist Deschamps agreed, saying:
“In a country such as ours, with multiple
interregional relationships, co-operative
arrangements, involving responsibility
and co-ordination, produce better
results than splitting, in terms of economic
growth and employment. In other
words, if our country splits up, we’ll all
end up worse off.”
The need for reform is pressing
because the social security system has
become less effective. In a February 2007
comparison of the Belgian system with
the evolution of European social policy,
Cantillon made a harsh assessment: “In
1997, we were champions of the fight
against poverty. We were ahead of
Denmark, Norway, France, Germany
and the Netherlands. Today, in
2007, our social safety net is comparatively
mediocre; we risk
heading towards minimal social
protection. We’re moving from
the Scandinavian to the British
But the mesh of the net could
become too wide. The risk of poverty
is particularly high for
families that depend entirely on
replacement income, namely
many single mothers and pensioners.
The Minister of the
Economy says that one Belgian in
seven (14.7 per cent) is poor,
which for a single person, means
living on less than 822 euros a
month. For a couple with two
children, it is less than 1,726
euros. This is the situation of 10.7 per cent
of the population of Flanders and 17.5 per
cent of that of Wallonia.
What is at stake here? Cantillon points
to the reduction of the family allowance
for the first child, which has lost onethird
of its value in 25 years. (Leterme
aims to increase it). She also cites pensions
– “among the lowest in Europe”
– which have failed to keep pace with the
cost of living. However, a measure to progressively
link the lowest pensions with
social assistance has been introduced
[please turn to page 30]
Protesters march on the residence of Belgium’s King Albert II in
Brussels in August with a banner reading “Now more than ever:
Flanders independence.”
REUTERS/Francois Lenoir
OCTOBER | NOVEMBER 2007 Federations
bel gium [from page 3] vene zuela [from page 25]
Missing: political unity over social
In August, the Fondation Roi Baudouin, a
Brussels-based charity established in
1976 to work for justice, democracy and
respect for diversity, sent a special report
to the presidents of all political parties,
reinforcing the climate of disillusionment.
Its authors, Michel Roland, of
Université Libre de Bruxelles, and Jan De
Maeseneer, of Ghent University, highlight
the essentially inequitable nature of
the health care system. They conclude
that depending on a person’s ranking on
the income scale, on average, she or he
may die five years earlier than another of
higher rank. They add that on average,
those with a lower level of education may
experience 25 fewer years of good health
than well-educated citizens.
Belgians are not equal when it comes
to health. And the Fondation, which
claims that the Belgian government is
indifferent about this inequity, has submitted
concrete proposals to the
government coalition negotiators to create
a federal body to combat inequalities
in the health care system, enhance primary
care and step up preventive efforts.
Reforms require the financial means
to carry them out, and these means are
not lacking in Belgium. Since 2005, the
centrally managed pool of pensions,
health and disability insurance, unemployment
and family allowances has
posted surpluses. To date, this money
has been used to pay off debts and to bolster
the Fonds de Vieillissement (Aging
Fund), created in 2001 to cover the costs
generated by the growing number of
senior citizens. Other steps are expected.
Economics professor Deschamps
advocates broadening responsibilities
for the regions and increased co-operation
between the federal government
and the constituent units.
“Co-operation here is still piecemeal,
in contrast to countries like Germany,
where federalism is really entering a
phase of maturity.”
What is needed is a maturity that
requires imagination, Cantillon said. “In
Flanders, people see separation as the
cure-all. At the other end of the country,
people feel continually under threat. This
situation puts social security on the line.
It prevents us from coming up with more
constructive solutions.”
OCTOBER | NOVEMBER 2007 Federations
A mural in Caracas portrays Fidel Castro and Hugo Chávez. The legend reads “Cuba and
Venezuela: the two countries are brothers.”
REUTERS/Jorge Silva
and municipal i t ies through the
“Constitutional Transfer”.
• Granting authority to the central government
to establish limits on state and
municipal taxation powers (Article 156).
Essentially, with the inauguration of
Hugo Chávez as president in 1999, the
processes of decentralization and federalism
were reversed. Chávez could not
turn back the clock and prevent the
achievements of the previous decade
from influencing the Constitution
adopted in December 1999.
However, according to constitutional
expert Allan Brewer-Carias, the 1999 cons
t i tut ional text cont radict s the
Constitution’s initial intent, and “covers
with a democratic veil a highly centralized
and authoritarian system in which
powers can be concentrated, which has
in fact happened.” Defenders of the
Chávez government have a different
interpretation, such as that of Member of
Parliament and constitutional scholar
Carlos Escarrá. According to Mr. Escarrá
the Constitution of 1999 is in the process
of being reformed in order to, among
other objectives consolidate the “peoples’
power.” He added that the
government hopes to deepen the dispersed
decentralization proposed by
President Chávez.
The future of federalism
The presence of a federal structure
enabled the Venezuelan opposition to
rally around the only serious opposition
candidate for president, Manuel Rosales,
the governor of Zulia State, in 2006.
Governors and mayors have been elected
by coalitions opposing the president’s
program. They are against presidential
Legal Decree No. 5841, which creates a
mandatory system of centralized planning
for all government entities,
including states and municipalities.
As for finances, all the states depend
on intergovernmental transfers from the
national government. The national government
has used its administrative tools
to slow or deny payments, but the transfer
that accounts for most of the money,
called the Constitutional Transfer, is subject
to less discretionary action. This gives
the states some autonomy in spending,
and transfers have grown in real terms
with the increase in the national government’s
budget, although less so than the
central government’s finances. This condition,
combined with the fact that the
majority of Venezuelans approved of the
changes that took place after decentralization,
may have protected state
government finances so far. Also,
Venezuelans typically associate their cultural
values and individual rights with
their geographic location. Most people
did not believe that political decentralization
could be reversed.
The efforts on the part of President
Chávez to impede the states’ autonomous
actions demonstrate that, to date,
even a weakened federalism represents
an obstacle to his other goals that require
an increasing concentration of power in
the central government. The current situation
is one of uncertainty for those who
defend Venezuela’s federal model.