At 38% for the employer’s contribution, social security rates on employee wages in Belgium are amongst the highest in the world. This is known to be a major disincentive for companies, and in particular for small companies, to hire new personnel, which explains why the Belgian government has recently announced new measures specifically designed to address the problem.
Under the new measures, which will be effective as of 1 October 2012, small and medium sized companies will qualify for substantial social security reductions in respect of the first three employees that they hire. The reductions will apply on a reducing scale over a period of three years.
For the first employee the reduction will be 1500 € per quarter for the first four quarters, 1000 € per quarter for the second four quarters and 400 € per month last four quarters. Similar, but slightly less favourable, reductions are available for the second and third employee hired by the SME.
The measures are particularly interesting in that they are not limited to any salary range and will therefore apply both to lower salaries and to high salaries at executive level or beyond.
These new reductions are specific to SME’s. The existing reductions applicable to companies other than SME’s will continue to apply but the levels of reduction are significantly less than those applicable to SME’s under the new measures.