Discussion Paper From Host Country Government: Belgium

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1 Discussion Paper from Belgium on The "Rosetta Plan" - A Springboard for Young People into Employment (The First Job Agreement) by Federal Ministry of Employment and Labour First job agreements are part of the co-operation agreement concluded between the Federal Government and the federate entities, which stands for a preventive approach of youth unemployment. Young people have thus the opportunity to acquire some vocational experience via a first job agreement. Goals The aim of the first job agreement is to offer, as soon as possible, to young people a job or a training and a job or an apprenticeship. This should: avoid that young people would get stuck in unemployment; improve their vocational education skills necessary for a long-term integration in the labour market. This aim meets the guideline as well as the specific needs of the Belgian labour market. In order to encounter the specific difficulties experienced by certain young people, the youth employment plan is subject of a co-operation agreement between the Regions. This agreement focuses on regional and community initiatives in the field of placement and training for young people who don't hold a certificate of higher secondary education (integration path replacing the monitoring of the unemployed) as well as the role of the sub-regional Employment Committees. The obligation for the employers in both the private and public sectors to hire a certain number of youngsters within the framework of a first job agreement is a basic principle of this plan. If the youngsters are poorly skilled, the employer is entitled to a specific social contributions cut. The first job agreement came into force on April 1st, Young people eligible for a first job agreement All youngsters, skilled (those holding a diploma of higher secondary education or higher or university education) or not (those not holding a certificate or diploma of higher secondary education) are eligible for a first job agreement provided they belong to one of the following categories: A. Young people under 25 years of age, within 6 months after leaving school or after ending an integration path, providing they are no longer schoolagers (18 years old); B. Young job seekers under 25 years of age; C. Young job seekers under 30 years of age A first job agreement is intended preferably for young people under category A. Nevertheless the employer can hire young people coming under category B or C whenever there is a shortage of young people of category A (and subsequently B) in the concerned sub-region. The sub-regional Employment Committees (in which social partners are represented) play an important role in the decision whether to pass on to category B or C. June 2001 Peer Review " Rosetta Plan" - A Springboard For Young People Into Employment, Belgium 1

2 Obligation for the employers to create additional employment for young people Within the framework of a first job agreement, a private-sector employer putting to work at least 50 workers (physical units) is obliged to hire a number of young unemployed corresponding to 3% of his workforce (full-time equivalents on June 30th of the previous year, excluding new workers). The occupation of new workers must constitute an additional recruitment and can thus not be compensated by firing company personnel. Enterprises that do not put to work 3 % of young people, risk financial sanctions under the law, i.e. risk having to pay a compensatory indemnity of BEF per youth and per day during which the compulsory percentage has not been met. The individual obligation of the employer has not been extended to enterprises employing less than 50 persons. However the government hopes that these employers will recruit young people on a voluntary basis and that the larger enterprises will recruit youngsters above the required percentage of 3%. The contribution cut should help them doing so. Regulation also stipulates that all the private-sector employers ought to recruit collectively a number of young people representing 4% of the workforce of all the enterprises together, putting to work over 50 workers. The SME intervene jointly so as to help the enterprises putting to work over 50 workers to reach the recruitment threshold of 4%. The National Labour Council (CNT/NAR) and the Central Economic Council will make an evaluation, one year after the enforcement of the law. This evaluation will also concern the impact of the project as far as the balance men/women is concerned. Should the evaluation not be positive and on basis of the CNT/NAR recommendations, the percentages of cuts in the employer' social security contributions (cf. infra) are liable to be modified by royal decree. Private-sector employers in difficulty or in the process of a reorganisation can be exempted by the Federal Ministry of Labour and Employment from all or part of their obligations in the field of first job agreements. Enterprises willing to conclude an agreement with the Ministry of Employment and Labour on the creation of additional full-time employment for young people as well as enterprises belonging to a sector that, within the framework of a collective bargaining agreement, makes a reasonable effort in the field of employment of youngsters eligible for an integration path, are liable for an exemption. The education sector excepted, the public-sector employers (Regions, Communities, towns and municipalities, ) as well as the non-profit private sector employers are obliged to take on a number of new workers corresponding to 1,5% of their workforce. A first job agreement can consist in: 1. Either an open-ended or fixed-term full-time employment contract or part-time (at least half-time) employment contract, the first year of which is considered to be a first employment agreement. 2. Or a part-time (at least a half-time) employment contract, completed by a training. For a period of one to two years, three years when the initial training lasts for three years; 3. Or an apprenticeship contract for a salaried or a self-employed profession, a traineeship contract for a self-employed profession, or a integration agreement. Period: at least one to two years, three years when the initial training lasts for three years. Moreover, in collaboration with the Regions, vocational training or individual guidance (cf. recommendation 1.a) are proposed to young people under 25 years of age: having left school since at least three months; seeking a job not longer than three months; not holding a diploma of higher secondary education. June 2001 Peer Review " Rosetta Plan" - A Springboard For Young People Into Employment, Belgium 2

3 In the private sector, including the non-profit sector, new workers employed within the framework of an employment contract, are entitled to a salary equal to the salary of workers having the same function, in accordance to the pay scale applied in a given enterprise. In case of part-time work, the salary is in proportion to the worked hours. If a new worker is employed within the framework of a half-time employment contract for a length of time of at least 12 months, the employer is entitled to put out an amount corresponding to 10 % of the worker s wage for his or her training. If such is the case, the worker is entitled to 90% of his or her normal pay, which can however never be inferior to the guaranteed average minimum monthly income. The works council or, failing that within the enterprise, the trade union delegation or, failing that, the sub-regional employment committee are once a year fully informed on the actual spending of the 10% used for training purposes. The National Labour Council will evaluate this every year. In the public sector, a new worker employed within the framework of an employment contract is entitled to a salary that equals the initial salary of a personnel member with the same professional skills. In case of part-time work the salary is proportional to the worked hours. The employer can also decide to put out an amount corresponding to 10% of the worker s salary for his or her training. Financial incentives for employers For young people employed on a first job agreement, the employer pays the usual social security contributions. Such as for the other workers, he is granted a structural costs reduction of which the amount has increased on 1 April On the other hand, for low-skilled young people (who do not hold a diploma of higher secondary educational level) employed by virtue of a first job agreement which consists in a contract of employment, the employer has the right to deduct a quarterly fixed sum of BEF 20,000 over all social security contributions provided that he employs young people who would represent at least 3% of his workforce. For an employment of more than 3% of young people in comparison with his workforce, the employer is granted for the recruitment of each additional low-skilled young person a quarterly reduction of BEF 45,000. If the employer voluntarily employs 5% or more young people, he receives a quarterly reduction of BEF 45,000 for all of the low-skilled young people employed. These reductions are also applicable to the employers who are not forced to do so but who spontaneously employ young people from this target group. Financial incentives for the employer who keeps at his service the young worker at the end of the first job agreement The public or private employer who keeps at his service low-skilled young people under a written fixedterm contract of employment, may receive costs reductions like foreseen in the recruitment benefits plan. It means in concrete terms: after a first job agreement of at least 12 months, a 75% reduction of the costs during the first 4 quarters and a 50% reduction for the next 4 quarters; after a first job agreement of at least 24 months, a 100% reduction of the costs during the first 4 quarters and a 75% reduction for the next 4 quarters. June 2001 Peer Review " Rosetta Plan" - A Springboard For Young People Into Employment, Belgium 3

4 Moreover, employers who keep, under a written fixed-term open-ended employment contract, a skilled young people at the end of the first job agreement are granted for this worker a 10% reduction of the employers social security contributions. This due reduction is given the whole year that follows the first job agreement. In order to stimulate the recruiting of young people at the end of the first job agreement, their occupation within the framework of this agreement is considered as an unemployment period or a registration as job seekers for the application of the measures for the work which require a period of unemployment or a registration as job seekers. As a result, every young people can benefit from plans which require a period of unemployment, such as the plan for the professional transition (which is normally applicable after 1 year unemployment) or the Wep-plus in Flanders. How many young people will work on the first job agreement? For the public sector, the number of created works has been fixed. And so, the Federal state and its public institutions will recruit 2000 new workers within the framework of this youth employment plan. One third of these young people will be employed in the Federal institutions and more specifically for welcoming and giving information to the citizens. An other third will be first and foremost recruited for specific federal programs such as the embellishment of stations, the redevelopment and the upkeep of parks, the selective collection of rubbish in the Federal administrations and public buildings, and so on. One last third will be working on projects developed in the future by the Federal state in collaboration with the Regions, the Communities and the local authorities in their fight against violence at school, security on the way to school, the guidance of the elderly, young people and less valid, public cleanliness, Communities and Regions are also forced to recruit; the total number of jobs which have to be created by the federate institutions is estimated at 855. In Flanders, young people will be employed on one hand in the Flemish administration and on the other hand, for special projects in education and within the policy of big cities. The public jobs which have to be created in the Walloon region aim at improving the living conditions in insisting on the help to disadvantaged and on day-care centre for children. The Brussels-Capital Region employs young people for orientation and information jobs in the administration to the citizens. Moreover, they will be recruited within the framework of three specific plans: urban stewards, awareness of ecological issues and public cleanliness, such as social cohesion in big buildings. In German-speaking community, young people will be educated to exercise activities linked to the maintenance of infrastructures. In addition to the jobs created by the public authorities, the success of the first job agreement will depend on the possible dynamic of firms which are enthusiastic about the first job. In fact, it is really possible that a firm recruits beyond its obligations and that SME s, which do not have obligations voluntarily recruit people. If the collective and individual obligation is respected by the private firms, the creation of jobs is potentially estimated at 45,000 (in full-time equivalents). June 2001 Peer Review " Rosetta Plan" - A Springboard For Young People Into Employment, Belgium 4

5 The first job agreement one year later The first job agreement was launched in April 2000, for an annual budget of 99.2 million.. In fact, more than 50,000 contracts of employment have already been concluded, employing 42% of women and 40% of low-skilled young people. The federate entities have been going on with the efforts made since Thus, the Flemish government has on one hand released an additional budget of 15 million and has extended the measure to all jobseekers under 30 years of age. (the same in the German-speaking community with an emphasis on young people encountering difficulties to find a job and who are employed and trained by the Community itself as public employer). On the other hand, he searched for an active commitment of the employers through sector related protocols and young people by information sessions in secondary schools (Campus Campaign) and through measures for all jobseekers of less than 25 years. This aims at creating 4,500 additional jobs by 2002, via a charter of social partners (EUR 2.23 million in 2001). In order to help further less skilled young people (who do not hold a diploma of higher secondary educational level), the Federal government has recently considered that the employing period under the first job agreement corresponds to a period of unemployment. It creates this way a huge financial incentive to their employment at the end of the agreement thanks to reductions in employers social security contributions (EUR million in 2001). A global estimation of the effects of the measure and of the eventual corrective measures which have to be taken will be made in September 2001 by the social partners, including for the matter of equality between men and women. Evaluation of the first job agreement The Ministry of Employment and Labour has foreseen to realise a scientific research on the effective insertion of people who were recruited on the first job agreement. The research will be made in association with CIRIEC-IISA-ULG and will go on in June The research consists of 2 different parts: statistics and econometrics. The first part will consist in a descriptive analysis of statistics on the first job agreement which have been encoded by the Ministry of Employment and Labour. The second part about econometrics will analyse 2 samples of young people over different periods. The first sample is composed of young jobseekers who began their waiting period, before the application of this measure (witness group). The second sample is formed by young jobseekers who may be employed on the first job agreement. One of the principal missions of this research would be the elaboration of a protocol on the systematic registration of administrative information in order to create a longitudinal database which enables to continuously estimate the first job agreement June 2001 Peer Review " Rosetta Plan" - A Springboard For Young People Into Employment, Belgium 5

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