Reports

Belgium has made progress in decoupling several environmental pressures from economic growth, in improving wastewater treatment and in expanding protected areas. Regions have achieved high levels of recovery and recycling, and have pioneered circular economy policies. However, further efforts are needed to progress towards carbon neutrality, reduce air and water pollution, reverse biodiversity loss and consolidate results of circular economy initiatives. Strengthening co‑ordination between the federal government and the regions, and among the regions, as well as enhancing policy coherence will be key factors of progress. As the COVID-19 emergency passes, recovery efforts should focus on putting the country back on track to meet the Sustainable Development Goals. Investing in low-carbon and natural infrastructure, promoting circular economy, strengthening carbon prices and phasing out environmentally harmful subsidies should be priorities. This is the third Environmental Performance Review of Belgium. It evaluates progress towards sustainable development and green growth, with special features on biodiversity and waste, materials management and the circular economy.

Social protection systems use a range of entitlement criteria. First-tier support typically requires contributions or past employment in many countries, while safety net benefits are granted on the basis of need. In a context of volatile and uncertain labour markets, careful and continuous monitoring of the effectiveness of income support is a key input into an evidence-based policy process. This paper proposes a novel empirical method for monitoring the accessibility and levels of safety net benefits. It focusses on minimum-income benefits (MIB) and other non-contributory transfers and relies on data on the amounts of cash support that individuals in need receive in practice. Results show that accessibility and benefit levels differ enormously across countries – for instance, in 2015/16, more than four out of five low-income workless one-person households received MIB in Australia, France and the United Kingdom, compared to only one in five in Greece, Italy and Korea, three countries that have since sought to strengthen aspects of safety-net provisions.

The OECD’s Development Assistance Committee (DAC) conducts reviews of the individual development co-operation efforts of DAC members once every five to six years. DAC peer reviews critically examine the overall performance of a given member, not just that of its development co-operation agency, covering its policy, programmes and systems. They take an integrated, system-wide perspective on the development co-operation activities of the member under review and its approach to fragility, crisis and humanitarian assistance. Belgium is a powerful voice for the cause of the least developed countries and fragile contexts, and a strong humanitarian partner. Committed to the principles of partnership, it empowers multilateral, civil society and private sector organisations to achieve their mandates. As Belgium emerges from a period of institutional reforms, this peer review provides recommendations to strengthen the management of its development co-operation policy. It also advises on how to take advantage of recent changes to reinforce the humanitarian-development-peace nexus, and improve the management of human resources.

The COVID-19 crisis has had a profound impact on SME access to finance. In particular, the sudden drop in revenues created acute liquidity shortages, threatening the survival of many viable businesses. The report documents an increase in demand for bank lending in the first half of 2020, and a steady supply of credit thanks to government interventions. On the other hand, other sources of finance declined, in particular early-stage equity. This paper, a special edition of Financing SMEs and Entrepreneurs, focuses on the impacts of COVID-19 on SME access to finance, along with government policy responses. It reveals that the pre-crisis financing environment was broadly favourable for SMEs and entrepreneurs, who benefited from low interest rates, loose credit standards and an increasingly diverse offer of financing instruments. It documents the unprecedented scope and scale of the policy responses undertaken by governments world-wide, and details their key characteristics, and outlines the principal issues and policy challenges for the next phases of the pandemic, such as the over-indebtedness of SMEs and the need to continue to foster a diverse range of financing instruments for SMEs.

Global demographic, climate and digitalisation megatrends are transforming the policy environment in Flanders, Belgium. With strong economic performance, low unemployment and a well-educated population, Flanders is using the SDGs to respond to these megatrends in pursuit of the seven transition priorities outlined in its Vision 2050 policy framework, namely circular economy, smart living, industry, lifelong learning, caring and living together, transport and mobility, and energy. The SDGs provide a common language and framework to mobilise Flemish cities and municipalities, private sector, civil society and youth in such a transition. This is why, Flanders has also developed Focus 2030 with more concrete and mid-term objectives to adapt and implement the SDGs at regional level. The report argues that a territorial approach to the SDGs can accelerate the transition to more sustainable pathways in Flanders if federal, regional, provincial and local sustainable development strategies are strategically aligned, and sufficient funding from both public and private sectors is ensured for innovative sustainability solutions.

The world of work is changing as a result of technological progress, globalisation and population ageing. The future of work holds many opportunities, but also presents distinct risks which tend to be greater for some population sub-groups, including low-educated workers. This report documents how the labour market for low-educated workers in Belgium has evolved in recent years and what the future might hold for them in terms of both job quality and quantity. Based on comparisons with neighbouring countries, the report seeks to provide policy advice to ensure that low-educated workers are not left behind by the changes that lie ahead.

This paper documents joblessness in OECD countries, provides a detailed diagnosis of structural employment barriers in Belgium, Korea and Norway by applying the OECD Faces of Joblessness methodology to the situation just before the COVID-19 crisis and discusses the policy implications. It shows that individuals experiencing major employment difficulties often face a combination of barriers related to work availability, readiness and incentives. It suggests a number of avenues for enhancing the effectiveness of public support: i) make greater use of statistical profiling tools to adapt programmes to the needs of the jobless and target resources to those at the highest risk of long-term joblessness; ii) better coordinate support provided by employment, health and education services; iii) place a greater emphasis on preventive policies (equal opportunities, life-long learning).

The design of intergovernmental fiscal relations can help to ensure that tax and spending powers are assigned in a way to promote sustainable and inclusive economic growth. Decentralisation can enable sub-central governments to provide better public services for households and firms, while it can also make intergovernmental frameworks more complex, harming equity. The challenges of fiscal federalism are multi-faceted and involve difficult trade-offs. This synthesis paper consolidates much of the OECD’s work on fiscal federalism over the past 15 years, with a particular focus on OECD Economic Surveys. The paper identifies a range of good practices on the design of country policies and institutions related strengthening fiscal capacity delineating responsibilities across evels of government and improving intergovernmental co-ordination.

Job creation has lowered unemployment, but the Belgian labour market still faces many challenges. Employment rates remain low, reflecting barriers to finding a job such as low levels of skills and weak work incentives. In addition, the changing nature of work will require faster adaptation of workers. In order to address these challenges, this chapter presents a detailed analysis of policy priorities, drawing notably on insights from the OECD Jobs Strategy. One priority should be that each worker has access to lifelong training, with additional allowances targeted to disadvantaged workers. To improve transitions into work, the use of tools for the profiling of individualised risks should be extended. A better combination of income support and incentives could be achieved through reforming both unemployment and in-work benefits. Reforming some aspects of employment protection legislation, such as those related to collective dismissals, and the wage formation system, would boost flexibility. This Working Paper relates to the 2020 OECD Economic Survey of Belgium http://www.oecd.org/economy/belgium-economic-snapshot/.