Is Social Security heading for bankruptcy?  - Economic policy

Is Social Security heading for bankruptcy? – Economic policy

The FEB warns against the explosion of social security expenditure. Only a clear improvement in the employment rate, and therefore the proportion of contributors, could save it, says the employers’ organization.

Question mark or exclamation point? The FEB left the two options open for the seminar it was organizing this Thursday on the theme of “the bankruptcy of social security?/!”. The financial situation of the institution is in any case more than worrying. To complete its 2022 financial year, it needs an allocation from the State of four billion euros. And the needs will increase since, by 2027, expenses will grow faster than revenues (26% against 20) and will propel the hole to fill beyond ten billion euros.

It’s called living beyond your means. Except that some consider that the balance allocation is part of the “normal” means of social security and that it makes it possible to meet new needs without increasing social security contributions. With alternative financing (share of VAT receipts), this now makes a third of social security receipts which is not deducted directly from work.

“The balancing grant is a blank cheque, it does not encourage responsible thinking”, objects Alice Defauw, employment and social security adviser at the FEB. The employers’ federation insists a lot on this aspect of “responsibility”, which would, according to her, be diluted in the internal organization of social security. Revenues being globalized, the different departments fight to get the biggest share, not to save money in their own budget. “At the end, no one feels responsible for the finances anymore,” denounces the managing director of the FEB Pieter Timmermans. Such mechanisms end up destroying social security.”

The chairman of the social security management committee, Ferre Wyckmans, obviously does not share these criticisms. In particular, he highlights the “particularly low management costs” of social security.

The speakers at this seminar were unanimous : the sustainability of social security will require an increase in the number of contributors, by raising the employment rate (currently a little above 71%) up to 80%. The federal government set itself this objective inhorizon 2030. “But II don’t see much in the pipeline to achieve this goal, notes Jan Denys, labor market expert at Randstad. The government agreements in the regions do not seem to be coupled with this objective, it is a bit strange.” From training to interregional mobility through the prevention of long-term illnesses (500,000 people concerned in the country) , many of the measures likely to boost the employment rate in Belgium depend at least partially on the federated entities.

More Belgians will have to work and they will have to work longer. The average length of professional careers is 34 years in our country, two years less than the European average. But, above all, a third of these careers are made up of assimilated periods (unemployment, illness, disability, etc.), during which the person does not contribute. “We need a really activating social security, argues Marie-Noëlle Vanderhoven, Social Security and Pensions Advisor at the FEB. We must revalue work. Not only because it is the best instrument for financing social security but especially because work is a factor of integration and fulfilment.”

This requires as much education as greater equity in social benefits. At the FEB, for example, we wonder about the legitimacy to maintain all differences between pension schemes and on the fact that the years of actual work are not better valued in the calculation of the pension.

“The foundations of Belgian social security are shaken, and we are watching without moving”, conclude Pieter Timmermans and Monica De Jonge, Executive manager of the FEB’s Employment and Social Security Competence Center. “We are spending more and more without thinking about who will pay in the end, while the cost of aging continues to rise and the goal of an employment rate of 80% is further away than ever. We urgently need to renovate our social security, make it more accountable and extract the anomaliesotherwise it risks bankruptcy, with all the ccatastrophic consequences that would entail.”

Question mark or exclamation point? The FEB left the two options open for the seminar it was organizing this Thursday on the theme of “the bankruptcy of social security?/!”. The financial situation of the institution is in any case more than worrying. To complete its 2022 financial year, it needs a state grant of four billion euros. And the needs will increase since, by 2027, expenditure will increase faster than income (26% against 20) and will propel the hole to be filled beyond ten billion euros. This is called living beyond above his means. Except that some consider that the balance allocation is part of the “normal” means of social security and that it makes it possible to meet new needs without increasing social security contributions. With alternative financing (share of VAT receipts), this now makes a third of social security receipts which is not deducted directly from work. “The balancing grant is a blank check, it does not does not encourage people to think responsibly”, objects Alice Defauw, employment and social security adviser at the FEB. The employers’ federation insists a lot on this aspect of “responsibility”, which would, according to it, be diluted in the internal organization of social security. Revenues being globalized, the different departments fight to get the biggest share, not to save money in their own budget. “At the end, no one feels responsible for the finances anymore, denounces the managing director of the FEB Pieter Timmermans. Such mechanisms end up destroying social security.” The chairman of the social security management committee, Ferre Wyckmans, obviously does not share these criticisms. In particular, he highlights the “particularly low management costs” of social security. The speakers at this seminar were unanimous: the sustainability of social security will go through an increase in the number of contributors, by raising the employment rate (currently a little above 71%) up to 80%. The federal government has set this objective for 2030. “But I don’t see much in the pipeline to achieve this objective, notes Jan Denys, labor market expert at Randstad. The government agreements in the regions don’t seem to be coupled to this lens otherwise, it’s a bit strange.” From training to interregional mobility, including the prevention of long-term illnesses (500,000 people affected in the country), a good part of the measures likely to boost the employment rate in Belgium depend at least partially on the federated entities. . More Belgians will have to work and they will have to work longer. The average length of professional careers is 34 years in our country, two years less than the European average. But, above all, a third of these careers are made up of assimilated periods (unemployment, illness, disability, etc.), during which the person does not contribute. “We need a really activating social security, argues Marie-Noëlle Vanderhoven, Social Security and Pensions Advisor at the FEB. We must revalue work. Not only because it is the best instrument for financing social security but especially because work is a factor of integration and fulfilment.” This requires as much education as greater equity in social benefits. At the FEB, for example, we wonder about the legitimacy of maintaining all the differences between the pension schemes and the fact that the years of actual work are not better valued in the calculation of the pension. Belgian social security are shaken, and we watch without moving”, conclude Pieter Timmermans and Monica De Jonge, Executive manager of the Employment and Social Security Competence Center of the FEB. “We are spending more and more without thinking about who will pay in the end, while the cost of aging continues to rise and the goal of an employment rate of 80% is further away than ever. We must urgently renovate our social security, make it more accountable and extract the anomalies, otherwise it risks bankruptcy, with all the catastrophic consequences that would entail.

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