Should the minimum wage be increased? This is the question posed by a temp agency. She records more and more job refusals. The reason: the difference between the salary offered and the unemployment benefit is not attractive enough. The issue of labor taxation has been on the political table for years. This is a point of the government agreement. But the different parties of the majority fail to agree on a real reform.
In a temporary agency in Naninne (Namur), a certain frustration has set in. Interviews are more difficult at times, because salary negotiations have become tougher. Some people have turned down a job because they don’t think the financial incentive is high enough. Several concrete cases have arisen in recent weeks.
Head of recruitment for a temporary work agency, Adélaïde draws up her conclusions following 5 years of observation in this sector. She is worried regarding receiving refusals from people who choose to remain unemployed because thefinancial incentive to work is too minimal.
“People are constantly calculating whether the job offered will earn them more than unemployment. Concrete example: one of my temporary workers informed me that he did not want to go to his trial because following reflection, he earned more on unemployment…”she says.
Adelaide also shares other thoughts made during job interviews.
Basically, if we give them an hourly wage of 12 euros per hour, for a 38-hour week, they will calculate and can say no
“In terms of salary, they don’t ask the question right away. It’s later, when there’s something more concrete, that it’s going to happen. The person will say ‘hey, I went to school. interview is positive, but what is the salary? Basically, if we give them an hourly wage of 12 euros an hour, for a 38-hour week, they will calculate and can say to us ‘no, I have to pay for a crèche if I go to work whereas if I stay at unemployment, I keep my child’. For 100 euros more, with crèche and petrol, they prefer to remain unemployed.”
The employee of this interim box, however, wonders regarding this choice to remain unemployed.
“How can we accept to remain unemployed, stay at home, do nothing…?”
“I find it crazy. How can we accept to stay unemployed, at home, doing nothing…? When we offer them a job that can open other doors for them. We can’t always start with a salary of 2,000 euros net per month. That would be great, but sometimes you have to be able to start at the bottom of the ladder”, she believes.
For Adelaide, the current system in Belgium is “poorly done”. “How is it possible that in 2022 it will be more profitable to stay at home while unemployed than while working?”
And to add: “We notice that among people who have just left school, they expect a higher salary. If they are offered a salary of 1600 euros net, they can say that with this salary, they do not are not going to work. We want to tell them that they must first build their career, prove themselves, before having a higher salary. Maybe following 2-3 months, once they will have shown what they are worth, they will be able to ask for a salary increase. It would perhaps be more coherent. Now with current life, the increase in prices, etc… We can understand that too.
There is potentially no penalty
In some cases, the refusal of employment may be sanctioned but the offer must be deemed suitable. The amount of salary is decisive. “When the job is not suitable and this will be the case if the remuneration is going to be lower than the scale or if it is going to be lower than the net allowance, there will potentially be no sanction”explains Claire De Haan, Head of Unemployment Regulation and Litigation at Onem.
The job trap
But why these refusals? Is raising the minimum wage the solution? We put these questions to the economist Bruno Colmant.
“Refusing work? It’s a shame because work is structuring, it allows you to flourish, to create training, wealth. It’s a shame because we are in a situation of job shortage. There are a lot of jobs that don’t find takers.” he points out.
“Why do people prefer to remain unemployed? Because the non-taxable minimum is too low. There is what is called the employment trap. A situation in which one does not earn enough when starting to work in a low salary taking into account all the costs you have to bear to go to work (transport, crèche and others).Clearly, I believe that today people make a calculation and tell themselves that working will earn them 50 euros more given the costs they have to bear.
What impact on our economy?
Bruno Colmant indicates that “everyone who refuses to work, it is a productive potential for the whole community that is lost. When a person decides not to work, it can be assumed that he will start to leave the labor market and that behind it, there are perhaps 20 to 30 years of productive work that are taken away from the prosperity of future generations. Someone who decides not to work not only damages today’s economy but also the tomorrow’s economy. All the influence that he might have brought professionally is removed from the economy.”
The economist isabsolutely” for an increase in the non-taxable minimum. It is explained:
“Not only are we going to reduce the employment trap and we are going to allow the pocket wage of low salaries to be increased. This will allow people to reimburse their energy costs. I think that we should ideally have a non-taxable minimum around 12 to 13,000 euros (annual salary bracket that would be non-taxable). It will cost money. This is also something that is planned in the tax reform of the Minister of Finance, but in a more global package than just this measure.
He pursues : “For companies, it wouldn’t change anything a priori. Because we are simply talking regarding personal income tax, but companies pay a gross salary. They cannot take the pretext that the employee has more for less. is something that is settled between the employee and the tax authorities.
What regarding the current political debate? Is an increase in the minimum wage possible in the coming months? Political scientist Dave Sinardet takes stock.
“The job trap debate is a debate that we have known for many years. This does not mean that nothing has been done. Different governments have taken different measures which have reduced this job trap. This is clearly not enough”, he points out.
“It has always been small steps. Again this year, Minister Van Peteghem also took a measure to prevent an unemployed worker who combines his allowance with the salary of a part-time worker from being penalized fiscally. But fundamentally, the problem still remains there. The problem is that all parties would have to agree to do something. The question is what.”
It exists two solutions.
“Either we can reduce unemployment benefits or increase their degressivity. There, it is the left that does not like this solution”, says Dave Sinardet.
The other solution would be to lower labor tax. There, in principle, all the parties agree that it is a good idea. The question is where is the money going to come from for this tax cut? There, the differences between the left and the right will manifest themselves. The left will say “We want to pay this reduction in labor tax with a wealth tax. But here, it’s the right that will block. The right will say “We will reduce taxes and the State will have to spend less for its missions.” There, it is the left which will not agree.
In principle, everyone therefore agrees to say that the tax on labor must be reduced to reduce the employment trap, but the question is how to finance it.
In the government agreement, a major tax reform is planned. Various studies and expert proposals have also been made in this context. “Minister Van Peteghem is preparing a reform. It may not be possible to carry out a real major reform during this legislature, but we can take steps forward. I believe that we can find a consensus on a small tax reform where the charges on labor would be reduced a little. A major reform which would eliminate this employment trap, I do not think that is for now.
