Walloon government launches plan for economic recovery

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In August 2005, the government of Belgium's Wallonia region launched an action plan aimed at reinvigorating the regional economy. All of the social partners approve of this initiative, but the trade unions call for a 'social dimension' to be implemented in parallel to the plan.

On 30 August 2005, the Wallonia regional government, composed of French-speaking Socialist Party (Parti Socialiste, PS) and the Humanist Democratic Centre (Centre Démocrate Humaniste, CDH) - presented a document entitled 'Priority actions for the future of Wallonia', which was dubbed a new 'Marshall plan'. This initiative is particularly the consequence of the worrying economic situation in Wallonia, which has had a high unemployment rate for a number years (currently 18%) and relatively weak GDP (the GDP per capita in Wallonia is around 72% of that for the whole of Belgium and is below the European average).

Contents

This action plan is composed of practical measures with a substantial budget (EUR 1 billion to be financed from the regional budget over four years). This sum is divided into following five priority areas, identified by the Walloon government as necessary to boost the region’s economy.

• Creation of economic activity (EUR 317.5 million). The economic development agencies will be rationalised in order to improve efficiency and speed of response. To this effect, six local offices (and one regional coordination agency) are being set up to replace the 70 different bodies that exist at present. These offices will provide, in one location, all the services offered to companies in the context of economic stimuli (relating to investment grants, research, consulting, employment etc). Moreover, resources will be allocated to reducing the delay in dealing with investment grants. The cleaning up of disused sites will be speeded up (where the buildings of old industries are in ruins). Finally, in the service sector, 2,000 jobs will be created in order to respond to the requirements of child-minding and looking after old people.
• 'Competitiveness poles' (EUR 280 million). The objective is to concentrate development efforts in the economic sectors that are specific to Wallonia and which are growing (pharmacy/health, agro-food, mechanical engineering, transport/logistics and aeronautics/aerospace). The Walloon government will develop its economic policies for employment, research and for training facilities around these 'poles'. Each pole will bring together, at the level of the Walloon region, companies of every size and training centres and research units, both public and private. In practical terms, this will mean investment grants, strengthening of the Walloon Export Agency (Awex) to support exports, and the encouragement of incoming investment. A significant sum will also be paid to the universities, enterprises and research centres in support of projects with an industrial application.
• Training/skills (EUR 160 million). Those sectors that lack trained labour will benefit from 8,000 specific training places per year. Language tuition will also receive particular attention - 8,000 new 'immersion scholarships' for pupils in the last stage of compulsory education, job seekers, language teachers in order to maintain their knowledge, and specialised workers in very small enterprises and SMEs. Furthermore, 500,000 training vouchers will be available. Some 12,000 supplementary training courses, intended exclusively for job seekers, will also be financed.
• Research and innovation (EUR 150 million). Here too the intention is to concentrate on research with industrial applications. Programmes of excellence will be set up in order to strengthen the competitive poles. Spin-offs and 'spin-outs' will receive increased support in order, above all, to lead to increased employment. Some 120 additional places for PhD students will be provided. The aim is that the guiding principles of the economy and of research are to merge.
• Reduced taxation (EUR 92.5 million). Despite the fact that much of the decision making on tax matters takes place at federal level, the regions do have some 'action levers'. In this respect, the property tax on plant and equipment is abolished for all new investments. At provincial level, at the start of 2009, the 'industrial compensatory tax' and the tax on power units will be totally abolished. The 'surface tax' will no longer apply as from January 2006. At the level of the communes, in the new 'local free zones' (see below), the tax on power units will be abolished for all approved investments as from January 2006. The Walloon government wishes to create 70 such free zones in several localities in Wallonia.

Reactions of opposition parties

The opposition Reform Party (Mouvement réformateur, MR) has welcomed the regional government's plan, which it qualifies as being of liberal inspiration. However, it has voiced a series of criticisms, claiming that the EUR 1 billion dedicated to the plan does not constitute a very significant stimulation effort. Furthermore, part of this funding comes from slippage within Walloon budget or from the available margin for future years. Only half of the amounts announced are really 'new' money. There are, according to MR, too many proposed 'free zones' (70, whereas in the whole of France there are only 80). Furthermore, the implementation of these free zones will have to be negotiated at federal level, which runs the risk of provoking further similar demands from Flanders.

The French-speaking environmentalists (Ecolo) emphasise the positive effects of this stimulation of energy around a project, but they draw attention to several points. No mention is made of the importance of developing paths to employment in the'eco-industrial' sectors. Moreover, Ecolo expresses its regret at the absence of a 'social dimension' to the proposed policies.

Reactions of social partners

The response to this plan from the two largest trade union organisations - the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) and the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) - is by and large positive. However, they believe that the plan ignores social problems and are thus demanding that a social inclusion plan be set up rapidly with a defined budget. CSC/ACV and FGTB/ABVV will also be very attentive to the practical results of this plan, above all in terms of employment. In a broader context, the unions would like to see the setting up of genuine concertation during the implementation phase of the plan (in terms of the main choices, the monitoring and the assessment of results).

On the employers' side, for the Walloon Union of Enterprises (Union Wallonne des Entreprises, UWE) the plan is very good news. Two positive points are emphasised. On the one hand, in terms of selection criteria, clear priorities have been defined. On the other hand, in terms of the budget, significant extra funds have been allocated. These are two requests put forward on numerous occasions by UWE. From this perspective, UWE believes that these are good bases from which to relaunch the economy of the region. In addition, UWE is delighted by the abolition of certain constraints on the creation of new activities in Wallonia, particularly in terms of taxes.

Commentary

All observers are in agreement that the 'Walloon Marshall plan' constitutes, at last, a real project that goes beyond a catalogue of good intentions. A plan of this type is really necessary in view of the mediocre economic performance of Wallonia and the persistently high level of unemployment. The plan was also welcomed in Flanders, which is notable, given the poor image, in terms of bad governance and weak initiatives, that Wallonia has in the north of Belgium. It is precisely in this area of management and good governance the Walloon government will have to prove its worth. It is true that 'under-regionalisation' and the dispersion of Walloon policies have undermined regional recovery for too long. (Alexandre Chaidron, Institut des sciences du travail, UCL)