Many countries implement sub-minimum wages for young people, with the aim of encouraging youth employment. However, these laws often create disparities based on age, which can be perceived as discriminatory. Furthermore, young workers earning the youth minimum wage can have difficulty earning sufficient income levels despite their active participation in the workforce. To combat age discrimination and following the lobbying and advocacy actions of trade unions, Belgium gradually abolished the sub-minimum wage for 18-20 year-olds at the national level between 2013 and 2015.
Removing sub-minimum wage for young people – Belgium
Abstract
Belgium operates with a nuanced minimum wage system where sectoral regulations take precedence, and national standards set the minimum threshold. Consequently, there are multiple minimum wage levels depending on the sector, with sectoral rates often surpassing the national baseline. Both labour unions and their youth branches actively campaigned for years to eliminate youth sub-minimum rates at the national level, using for instance lobbying and media campaigns. Between April 2013 and January 2015, the Belgian Government phased out youth sub-minimum rates for workers aged 18 to 20, resulting in wage increases of 6% for 20‑year‑olds, 12% for 19‑year‑olds, and 18% for 18‑year‑olds.
Nevertheless, the sub-minimum youth rates were reintroduced in 2019, as the government wanted to promote the hiring rate of (unexperienced) young people. However, to offset wage loss, employers who reduce young employees’ wages are obliged by law to provide them with an additional monetary compensation equal to the difference between the general minimum wage and the youth minimum wage. However, employers do not have to pay social security contributions over this compensation, unlike what would be needed for a higher wage.
The reform targeted the national sub-minimum wage, but its impact differed per sector. According to Ministry of Work data, approximately 43% of all sectors previously maintained degressive minimum wages for young workers. However, 64% of these sectors had already eliminated youth sub-minimum rates before the reform, with several sectors initiating this change as early as 2007. During the reform period between 2013 and 2015, 12% of sectors removed the sub-minimum youth wages.
A difference‑in-difference study of the affected sectors showed that the abolishment of the sub-minimum rates positively impacted wages and the likelihood of continued employment but negatively influenced the rate at which young people were able to enter into the workforce within these sectors. In practice, the decline in hiring induced by the higher minimum wage was almost offset by the decrease in young people leaving their jobs. Overall, the measure proved effective in achieving wage increases without significantly impacting unemployment rates, although its impact was somewhat mitigated by sectoral agreements.
The reforms of the sub-minimum wages for young people also served as a noteworthy example of the value of collective bargaining for young workers. Trade unions effectively advocated for young workers by initially pressing for the removal of youth rates and subsequently for the implementation of wage compensation upon reinstatement.
Further reading
[1] Berntsen, L. (2019), Vakbonden en jongeren - Belgische inspiratie voor de Nederlandse vakbeweging, https://www.researchgate.net/publication/339827124_Vakbonden_en_jongeren_Belgische_inspiratie_voor_de_Nederlandse_vakbeweging.
[2] Federale Overheidsdienst (2019), Starterslonen voor jongeren, https://werk.belgie.be/nl/themas/werkgelegenheid-en-arbeidsmarkt/werkgelegenheidsmaatregelen/starterslonen-voor-jongeren (accessed on February 2024).
[3] López Novella, M. (2018), Removing youth sub-minimum wage rates in Belgium: did it affect youth employment, https://www.plan.be/uploaded/documents/201803160911160.WP_1804_11675.pdf.
[4] Pulignano, V. and N. Doerflinger (2014), Belgian Trade Unions and the Youth: Initiatives and Challenges, Centre for Sociological Research (CeSO), Leuven, https://soc.kuleuven.be/ceso/ceso-reports-1/141001belgium-trade-unions-and-the-youth-final.pdf.
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