Energy and wage costs moderate expansion of Belgian economy

Energy and wage costs moderate expansion of Belgian economy | Economy

Our country is performing well in terms of innovation and the employment rate is increasing, although we continue to lag behind the three major neighboring countries in that area. On the other hand, energy and wage costs, among other things, moderate the expansion of the Belgian economy. This is learned from the 11th edition of the scoreboard of the Federal Public Service Economy, which measures the competitiveness of the Belgian economy.

The Belgian economy has shown resilience after the health and energy crisis, the FPS says. Innovation and a rising employment rate are highlighted. Belgium is among the European top five in terms of innovation, after Denmark, Sweden, Finland and the Netherlands.

For the labor market, an increase of 1.2 percentage points in the employment rate to 73.1 percent in 2022 is indicated (20-64 year olds). “Nevertheless, this participation rate is still lower than in Germany, France and the Netherlands.” Labor participation among 55-64 year olds also remains low compared to Germany and the Netherlands.

Furthermore, in 2022, there were significant labor shortages in four sectors: administrative and support services, information and communications, specialized, scientific and technical activities and finally the provision of accommodation and meals.

Exports are weakening

In foreign trade, chemical, pharmaceutical and high-tech products are “top exports”. Belgium ranks sixteen globally in terms of exports, behind its large neighboring countries. This means that foreign demand is weakening. In 2022, the trade balance was negatively affected by a larger increase in imports of contracting services, maintenance and repairs, transport and travel.

According to the table, energy costs, wage costs per unit produced and a “lack of entrepreneurial dynamism” also moderate the expansion of the Belgian economy. For example, wage costs per unit produced increased in 2022 due to the combination of decreased productivity per hour and rising wage costs. The wage cost is higher than in neighboring countries, but the difference has become smaller in recent years.

Entrepreneurial dynamics

Entrepreneurial dynamism, “which encourages employment, innovation and productivity”, remains weak in Belgium. For example, in 2023 the number of company registrations fell sharply, while more bankruptcies were declared than in 2022. Fast-growing companies have also become rarer in Belgium.

“In conclusion, it is essential to focus on increasing productivity and ensuring a strong, resilient and inclusive ecological and digital transition,” the table concludes. Elements such as accumulation of knowledge, development of competences, investments, higher energy efficiency and improvement of the business environment need to be strengthened.