The Belgian service voucher scheme, which allows users to buy household services subsidised by the state, is a major actor in creating jobs for low-qualified workers. Following the great success of this scheme, the Federal Minister of Employment Monica De Coninck has proposed a work voucher scheme. Its aim is to help jobseekers enter the labour market, particularly the young unemployed. However, political parties and social partners’ opinions are strongly divided.
Service voucher scheme
Belgium’s service voucher scheme, introduced in 2001, has many different objectives. It is designed to help reduce undeclared work, create new jobs and give vulnerable workers access to employment. The scheme is defined in Article 2 of the law of 20 July 2001 in favour of ‘proximity services and employment’. It consists of a payment coupon issued by the company Sodexho which allows the users, with the help of a state subsidy, to pay for housework services. The real cost of a voucher is €22.04 for each hour of work.
Users in need of domestic help buy vouchers and choose an accredited service provider company which assigns them a worker. The price of the service voucher to the user was initially €7.50. It rose to €8.50 in 2013, and €9 in 2014. The first 400 vouchers can be bought at this price, and a further 100 cost €10 each (the maximum per person is 500). The amount that was deductible from tax (by 30%) has also decreased from €2720 to €1380 per person.Companies that redeem the vouchers receive a subsidy from the Federal Government, which contributes up to €11.04 to cover charges such as wages, supervision and training of workers.
Although the growth of the service voucher sector has slowed, it is still increasing. It has approximately 834,959 users, involves more than 2,700 service-providing enterprises and gives work to149,827 persons.
Its huge success has been the inspiration behind a new proposal: the work voucher.
Work voucher proposal
The Federal Secretary of Employment Monica De Coninck recently put forward the idea of a work voucher. This will essentially be a wage subsidy for labour-intensive, low-skilled activities. Each voucher would cost the user €10, representing one hour of work, and the cost of the voucher would be partially tax deductible.
Its current equivalent is the ACTIVA plan, a measure designed to reintegrate jobseekers into the regular labour market. The National Office of Employment (RVA) pays a proportion of a worker’s net pay through the institution that would normally pay unemployment benefit. In most cases, this is the employee’s trade union, but for some it may be the Auxiliary Unemployment Benefits Fund (CAPAC/HVW).
The newly proposed work voucher is aimed at self-employed people and small and medium enterprises for whom the ACTIVA plan is very complicated and bureaucratic. Monica De Coninck expects the new scheme to create 15,000 jobs.
However, under the ACTIVA plan, an employee must fulfil three conditions to be eligible. They must be under 30, have no secondary school degree, and have been registered as a jobseeker for at least six months.
Social partners’ positions
Given the great success of the service vouchers scheme, a warm welcome might have been expected from politicians and social partners for the new work vouchers. However, the political and institutional context has instead strongly divided opinions.
Following the federal agreement of 2011, it was decided to transfer several competencies and means from the federal to the regional level, and measures to integrate the unemployed back into the job market was one of them. The transfer of competencies will not be completed until July 2014. Until then, the RVA is in charge of paying unemployment benefits and initiating certain employment activation measures.
Vocational education and training have already been made regional competencies in earlier state reforms and are now provided by the Walloon Public Service for Employment and Training (FOREM), the Flemish Public Service for Employment and Training (VDAB) the Brussels Regional Office of Employment (ACTIRIS).
The regions are therefore worried about an initiative from the federal level which could be implemented in a few months at the regional level. Since regional, federal and European elections take place in May, every unusual proposition could be perceived as a political move.
Political parties’ reactions
Only some political parties have reacted to the proposal. Among them, the Dutch-speaking Christian Party (CD&V) and the New Flemish Alliance (N-VA) are very upset that they were not consulted on the work vouchers proposal. They also argue that since the responsibility for this area will shortly belong to the regions, this cannot be discussed at the federal level.
Other political parties, such as the French-speaking green party (Ecolo), the Flemish Greens (Groen) and the French-speaking Christian Party (CDH), have also deplored the lack of consistency, the source of funding and the lack of proof that such schemes are effective.
In favour of the scheme is the Dutch-speaking Liberal Party (Open VLD) which considers it a good opportunity for providing flexible working that could help small- and medium-sized enterprises.
The regional Secretaries of Labour for Wallonia and Brussels and the President-Secretary of Flanders demanded an urgent dialogue committee meeting to discuss the work vouchers scheme with the Federal Secretary of State. The negative outcome of this meeting was due to the reluctance of the regions to provide the funding for this new scheme.
Social partners’ views
On the social partners’ side, opinions are clearly divided. For instance, the youth branch of the Belgian Federation of Labour (FGTB/ABVV) has protested against this proposal. They describe it as a very expensive and damaging measure which introduces competitiveness between young people by creating a new work status. The Flemish Federation of employers (VOKA) is also against the proposal.
However, the Federation of Liberal Trade Unions of Belgium (ACLVB) and the Neutral Union of the Self-Employed (NSZ/SNI) are in favour of it, considering it a good opportunity to tackle youth unemployment issues and increase the competitiveness of small- and medium-sized enterprises.
Finally, the opinion of the Belgian Federation of Enterprises (FEB/VBO) is more balanced. While it approves of the intention to reduce labour costs for companies and tackle youth unemployment, it would prefer a more comprehensive programme that doesn’t focus only on the low-skilled young.
After the elections, and after competencies have been transferred to the regions, each region will have the opportunity to discuss this measure again. Political parties and the social partners will first have to discuss how to administer the service voucher scheme at regional level.
Key challenges
What tends to be ignored is that the housework services sector subsidised in this way is now facing many different challenges. Among these are quality of work, employers’ profitability and whether the scheme effectively targets the unemployed and helps them back into work. These challenges affect all three actors in the triangular employment relationship of workers, users and employers.
Quality of work
Non-standard and precarious work contracts and higher flexibility of working time, such as weekend work and when holidays are taken, are of great concern in this field. A study on atypical forms of work in Belgium revealed that non-standard forms of employment attract ‘less favourable working conditions (for example in terms of wages)’. The same study, however, suggests that ‘these workers do not, by definition, score lower on subjective feelings of well-being at work’.
However, since the launch of the service voucher scheme, little attention has been paid to working conditions or wages. The President of the Confederation of Christian Trade Unions Food and Services (CSC), Pia Stalpaert, considers that workers employed under the scheme and the quality of their job as a major concern. For example, such workers get no help with transport costs and have to dedicate a part of their modest wage to getting to their place of work. The FGTB/ABVV has also said this situation cannot continue because households living on service voucher income cannot make ends meet. Recently, the CSC said it would put in place a programme to calculate transport fees.
Employers concerned about profitability
The sector also presents challenges for employers. The state subsidy of the scheme has not risen in recent years. The Union of Private Service Voucher Enterprises (UNITIS) says that this, added to the compulsory rises dictated by wage indexation, has made the profit margin very low for organisations in this sector. Some companies, such as the Public Social Assistance Centres (CPAS/OCMW), may have to end their involvement in the service voucher scheme. Such centres are in distress because wages are higher in the public sector and workers with many years of service cannot be fired just because they are a costly labour force. However, this alarming situation is also echoed in the private sector. The President of UNITIS, Nathalie Garcia-Hamtiaux, says the situation has become unbearable and that approximately 130,000 jobs are threatened.
Helping the unemployed
The objective of the service voucher scheme is to help precarious people to get back into the labour market. The FGTB/ABVV has said that although since July 2012, 60% of new jobs paid for through the service voucher scheme must be assigned to social beneficiaries or unemployed people, many service-voucher companies do not reach this quota.
The Minister of Employment Monica De Coninck insists, however, that the numbers are increasing and companies are getting closer to the target.
Stéphanie Coster and Michel Ajzen, CIRTES and Institut des Sciences du Travail- UCL