## sipea2025021

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---

### A. Evolution of public expenditure on education and demographics
- General government spending on education: 6.3 percent of GDP in 2022.
  - This ratio is:
    - 34 percent larger than EU average (1.6 percentage point of GDP higher).
    - 40 percent larger than in Germany (1.8 percentage point higher).
    - 34 percent larger than in France (1.0 percentage point higher).
    - 13 percent larger than in The Netherlands (0.7 percentage point higher).
- Education as a share of total general government expenditure: 11.8 percent in 2022.
  - This share is 30 percent larger than in France or Germany, 25 percent larger than EU average, and 2 percent larger than in The Netherlands.
- Spending per student:
  - Spending per student remains larger in Belgium than in most peers whether measured in nominal terms or as a share of GDP per capita (2021).
  - Basic education focus: spending per student higher than any comparator at primary and lower secondary levels; at upper secondary Belgium’s spending per student is lower than comparators; at tertiary level Belgium is intermediate.
- Private financing: private financing of education is smaller than in other European countries; most private schools receive public financing (except a small number not recognized by the government).
- Demographics and projected fiscal impact:
  - Student population expected to decline by 8½ percent between 2022 and 2070 (2024 Aging Report).
  - Decline much less than for EU as a whole, France, and The Netherlands (which will experience declines of 14½–16½ percent).
  - Demographic developments expected to reduce spending on education by 0.8 percent of GDP between 2022 and 2070.
  - Education spending projected to decline by barely 0.2 percent of GDP by the end of the decade.
  - Federal Planning Bureau projects a smaller decline of 1.3 percent between 2022 and 2070 (implying even smaller fiscal savings than the Aging Report).

### B. Educational outcomes and trends
- Fourth graders:
  - Reading scores of fourth graders in the Flemish and French communities are among the lowest in the EU PIRLS assessment.
  - TIMSS assessments show Belgian scores among the lowest in the EU for science and mathematics.
- Fifteen-year-old students (PISA):
  - Belgium’s mean overall PISA score is broadly similar to peers in reading, mathematics, and science despite higher spending.
  - Significant regional disparities across Flemish, French, and German-speaking communities.
- Trends over time:
  - Belgian average scores have declined in the last decade.
  - Fourth graders’ low achievers in 2021: 38 percent in the French Community and 29 percent in the Flemish community.
  - The share of low performers is higher in 2022 than in 2012 in both French and Flemish Communities.
  - Despite deterioration, the share of low performers in Belgium remains one of the lowest in the EU; the share of low performers in all three domains tested is the fifth lowest in the EU.

### C. Evidence of low spending efficiency and estimated potential gains
- Higher spending not yielding better test scores indicates lower spending efficiency than in most peers.
- Potential fiscal savings and performance gains if Belgium achieved the efficiency of best EU performers:
  - Potential fiscal saving estimates range from 0.75 to 1.4 percent of GDP.
  - Potential increases in PISA scores range from 20 to 45 percent.
- Table 1 (potential efficiency gains, 2022) — fiscal saving (ppt of GDP) and increase in overall PISA score (percent) if Belgium were as efficient as comparator:
  - France: 0.74; 20
  - Germany: 1.38; 45
  - Netherlands: 0.85; 24
- Methodology notes:
  - Pre-primary to secondary spending is used to estimate potential efficiency gains because education is a cumulative process.
  - Estimated efficiency gains and fiscal savings are “potential” and presented as ranges rather than point estimates; structural differences across countries imply interpretation as potential gains.
  - Alternative measures in Appendix II confirm large potential gains.

### D. Main drivers of high education wage bill
- Compensation of employees in the education system accounts for over 5 percent of GDP.
- In 2022 compensation of employees in education was 1.4 to 2.6 percent of GDP higher than European peers and more than explains the difference in total public spending on education (1.0 to 1.8 percent higher).
- Compensation of employees in education was the same share of GDP in 2022 as in 2012, but represents a growing share of total government wage bill — an increase much larger than in peer countries over the past two decades.
- The wage bill accounts for 81 percent of education spending in Belgium (compared with 56 percent in Germany and 71 percent in France).
- Compensation of employees in education accounts for 41.5 percent of general government total wage bill — 10 percentage points or more than in France, Germany, or the EU and 6 points more than in The Netherlands.
- Salary levels:
  - Teachers’ actual salaries are in an intermediate position among comparators.
  - Since 2015, actual and statutory salaries of teachers declined in real terms in both communities.
  - Teacher salaries are relatively more attractive than in EU peers when compared to wages of the population with a similar level of education.

### E. Employment levels, staffing, and time use (principal driver of high wage bill)
- Principal reason for higher wage bill: employment level of teachers rather than salary levels.
- From primary to secondary levels, number of students per teacher is much lower than in any comparator.
- Between 2016 and 2022:
  - Number of students from early childhood to tertiary declined by 4 percent.
  - Number of teachers increased by 7 percent.
  - The gap (students down 4 percent vs teachers up 7 percent) is larger than in any comparator.
- Increase in teachers driven mostly by early childhood, primary and (upper) secondary levels.
- Student-to-teacher ratio declined recently at all levels except tertiary.
- Statutory teaching time is significantly lower in both French and Flemish communities than in any comparator.
  - French Community statutory working time is only 54 to 60 percent the statutory working time of teachers in comparators.
  - For statutory teaching time the gap is 72 to 98 percent.
- Part-time work:
  - Share of teachers working part-time is higher than in France or for the EU27 at all levels but lower than in the Netherlands.
  - Higher than in Germany at secondary level but lower at primary level.

### F. Work-reducing schemes for older employees
- Certain schemes allow permanent education employees aged 55 and over to reduce working time; at 58 they can stop working while receiving a reduced salary.
- French community:
  - 23.4 percent of employees over 55 benefited from the scheme (Départ Préalable à la Pension de Retraite) — up from 18.7 percent in 2019.
  - The reduction accounted for 13.2 percent of full-time equivalent of employees 55 and over — up from 9.5 percent in 2019.
- Review of such schemes could lower the wage bill without affecting outcomes.

### G. Class size, grade repetition, teacher time allocation, and outcomes
- Belgium has the highest rate of grade repetition in the EU, a cause of excessive spending in primary and secondary education.
- Grade repetition affects more socio-economically-disadvantaged students, students with a migrant background, and boys than in other EU countries.
- Both French and Flemish communities are taking measures to reduce grade repetition.
  - Example: Flemish community reform from 2023/24 requires all first graders of primary education to either change study programme or repeat a year if they fail the end-of-year exam (process previously started from second year onward).
- Empirical findings:
  - Smaller class-size is not associated with higher PISA score.
  - Lower statutory teaching time is not associated with higher PISA results.
  - Hattie (2005) meta-analysis: reducing class-size has only a “tiny” positive effect.
- Policy implication: increasing teaching time (possibly by reducing administrative/non-teaching tasks), combined with proper incentives, could allow more time dedicated to students in difficulty, reduce grade repetition, and improve outcomes for socio-economically-disadvantaged students.

### H. Staffing shortages, turnover, and measures to increase attractiveness
- Belgium experiences:
  - Comparatively high shares of teachers leaving the profession prematurely.
  - High absenteeism rates.
  - Declining share of students enrolling in initial teacher education.
  - Severe and rapidly increasing teacher shortages affecting more students than anywhere else in Europe.
- Consequences:
  - Reliance on replacement teachers, some lacking adequate qualifications and low job security.
  - New teachers often wait several years for permanent appointment, reducing attractiveness and increasing turnover.
- Measures adopted:
  - All communities introduced changes to provide job security for new teachers and increase the number of permanent contracts.
  - Flemish Community reduced length of time before a teacher is made permanent and eased recruitment rules for teachers from the private sector, including allowing them to retain part of their seniority.
- Examples and statistics:
  - French Community: 33.7 percent of teachers that started teaching in academic year 2017–18 had stopped doing so within five years.
  - Dutch-speaking schools of Brussels: over 84 percent of teachers under 30 in academic 2014–15 were employed on a temporary basis; five years later, 17.3 percent of these teachers had left the profession; share reached 19.5 percent for those employed on a temporary basis and 5.0 percent for those employed on a fixed basis.
  - Flemish secondary school vacancies in 2022–23 most common for teachers of mathematics, languages and technical subjects.

### I. Reallocation, fragmentation, and organizational reforms
- Potential scope to reallocate resources from secondary to primary education to support policy shifts.
- May require greater nimbleness in teacher assignments, including flexibility to increase teacher mobility.
- Tackle fragmentation of the educational system (between various educational networks in each community) that leads, in some locations, to duplication of small size schools.

### J. Skills mismatch, STEM enrollment, and firm impacts
- Skills mismatch:
  - Belgium’s skills mismatch remains the highest in the EU.
  - Country suffers more than peers from a shortage of people with high skills.
  - High-skilled occupations account for a relatively high share of job vacancies.
  - Share of working-age population with low skills exceeds low-skill employment more than in peers.
  - Employment rate: 75½ percent in 2023, lower than in any of the three comparators.
  - Employment rate of population aged 25 to 64 with tertiary education was 88.2 percent in 2023, 12.7 percentage points higher than the overall employment rate.
- STEM enrollment:
  - Share of younger working age population (20-29) with a tertiary degree in STEM was 16.4 percent in 2022, compared with EU level 23.0 percent, Germany 24.3 percent, France 35.3 percent.
  - Share of graduates that study STEM is lower than in comparators, notably for information and communication technologies despite growing demand.
- Firm-level impacts:
  - Skill mismatch limits employment rate and weighs on firms’ costs, productivity, and competitiveness.
  - Firms resort more to training than in most other EU countries to offset skill inadequacy.
  - Less than half of recent graduates participated in work-based learning during vocational education and training compared to over 60 percent in the EU.
- Figure 17 (Employment Rate, 2023, percent, population aged 25 to 64) — reported values:
  - 79.8; 75.5; 69.1; 70.9; 90.8; 88.2; 84.9; 83.7.

### K. Inequalities, early childhood, and immigrant gaps
- Students’ background determines educational achievement more in Belgium than in peers.
- Early childhood education:
  - Enrollment disparities: 33 percent of children from the poorest income tertile are enrolled compared to 72 percent of children of the richer income tertile.
  - This 39-points difference is more than twice the OECD average of 19 percentage points.
- Socio-economic status explains more variance in PISA performance in Belgium than in any peers; effect increasingly marked in the French community.
- Students with immigrant background:
  - Belgium has a higher share of students with immigrant background than most EU countries.
  - The 57-point gap in both mathematics and reading between students with immigrant background and non-immigrant students is among the largest in the EU.
  - Gap wider in the Flemish community than in other communities.
  - Most of the lower performance is explained by a larger share of disadvantaged students among students with immigrant background.

### L. Selected policy implications and reform levers
- Cost-reducing and efficiency-increasing measures:
  - Review schemes allowing education employees to reduce working time (notably for ages 55+) to lower the wage bill without affecting outcomes.
  - Reorganize the education system to better leverage teachers’ time (address smaller student-to-teacher ratios and less teaching time).
  - Consider increasing statutory teaching time and reducing administrative/non-teaching tasks; combine time-use changes with proper incentives to focus on students in difficulty.
  - Reduce grade repetition to curb excessive spending and improve outcomes for disadvantaged students.
  - Address staffing issues and increase attractiveness of the teaching profession: improve job security and reduce waiting time to permanent appointment; ease recruitment rules and increase mobility and career prospects.
  - Reallocate fiscal resources across education levels where appropriate (secondary to primary) and reduce fragmentation/duplication of small schools.
  - Promote STEM enrollment, notably among female students, to help reduce skills shortages in high-demand occupations.
  - Reform and promote vocational education and training and work-based learning; increase firm involvement in VET and dual learning.
  - Promote enrollment of disadvantaged students in early childhood through lower cost, increased availability, or simplified enrollment procedures.

### M. Expected economic and social impacts of reforms
- Reducing the impact of disadvantaged socio-economic and migrant backgrounds would:
  - increase the skills of disadvantaged students and help raise their employment rate and potential growth;
  - increase their income prospects and foster social mobility;
  - reduce the need for fiscal redistribution as equal access to education lifts pre-redistribution incomes for those at the bottom;
  - increase the pool of individuals able to innovate or to absorb technological innovation.
- Trade-offs highlighted:
  - Lower student-teacher ratios allow more individual attention but require higher spending and must be weighed against alternative priorities.
  - Empirical evidence suggests reallocating teacher time and reducing repetition may yield better outcomes than further reducing class size.

*Source: IMF staff paper “Public Education in Belgium: Improving Outcome While Reducing Cost,” SIPEA2025021.*

### 1. Evolution of Public Expenditure on Education ___________________________________________ 4

### 1. Evolution of Public Expenditure on Education

### A. Belgium spends more on education than peers
- General government spending on education: 6.3 percent of GDP in 2022.
- This ratio is:
  - 34 percent larger than EU average (1.6 percentage point of GDP higher).
  - 40 percent larger than in Germany (1.8 percentage point higher).
  - 34 percent larger than in France (1.0 percentage point higher).
  - 13 percent larger than in The Netherlands (0.7 percentage point higher).
- Education as a share of total general government expenditure: 11.8 percent in 2022.
  - This share is 30 percent larger than in France or Germany, 25 percent larger than EU average, and 2 percent larger than in The Netherlands.
- Spending per student:
  - Spending per student remains larger in Belgium than in most peers whether measured in nominal terms or as a share of GDP per capita (2021).
  - Strong focus on basic education: spending per student is higher than any comparator at primary and lower secondary levels; at upper secondary level Belgium’s spending per student is lower than comparators; at tertiary level Belgium is intermediate.
- Private financing of education is smaller than in other European countries; most private schools receive public financing (except a small number not recognized by the government).
- Demographics and future savings:
  - Student population is expected to decline by 8½ percent between 2022 and 2070 (2024 Aging Report).
  - This decline is much less than for the EU as a whole, France, and The Netherlands (which will experience declines of 14½–16½ percent).
  - Demographic developments are expected to reduce spending on education by 0.8 percent of GDP between 2022 and 2070.
  - Education spending is projected to decline by barely 0.2 percent of GDP by the end of the decade (while pension and healthcare pressures rise).
  - The Federal Planning Bureau projects a smaller decline of 1.3 percent between 2022 and 2070 (implying even smaller fiscal savings than the Aging Report).

### B. Education outcomes are comparable to peers and deteriorating
- Fourth graders:
  - Reading scores of fourth graders in the Flemish and French communities are among the lowest in the EU PIRLS assessment.
  - TIMSS assessments show Belgian scores among the lowest in the EU for science and mathematics.
- Fifteen-year-old students (PISA):
  - Belgium’s mean overall PISA score is broadly similar to peers in reading, mathematics, and science, despite higher spending.
  - Regional disparities: scores differ significantly across Flemish, French, and German-speaking communities.
- Trends over time:
  - Belgian average scores have declined in the last decade.
  - For fourth graders’ reading, shares of low achievers in 2021 were 38 percent in the French Community and 29 percent in the Flemish community.
  - The share of low performers is higher in 2022 than in 2012 in both the French and the Flemish Communities.
  - Despite deterioration, the share of low performers in Belgium remains one of the lowest in the EU; the share of low performers in all three domains tested is the fifth lowest in the EU.

### C. Potential efficiency gains are large
- Higher spending not yielding better test scores indicates lower spending efficiency than in most peers.
- Potential fiscal savings and performance gains if Belgium achieved the efficiency of best EU performers:
  - Potential fiscal saving estimates range from 0.75 to 1.4 percent of GDP.
  - Potential increases in PISA scores range from 20 to 45 percent.
- Table 1 (potential efficiency gains, 2022) — fiscal saving (ppt of GDP) and increase in overall PISA score (percent) if Belgium were as efficient as comparator:
  - France: 0.74; 20
  - Germany: 1.38; 45
  - Netherlands: 0.85; 24
- Methodological note:
  - Pre-primary to secondary spending is used to estimate potential efficiency gains because education is a cumulative process.
  - Estimated efficiency gains and fiscal savings are “potential” and presented as ranges rather than point estimates; structural differences across countries imply interpretation as potential gains. Alternative measures in Appendix II confirm large potential gains.

### D. Efficiency-increasing reforms (directions identified)
- Objective: increase spending efficiency to support fiscal consolidation and/or improved educational achievements; better align skills with labor market demands; reduce gaps from students’ economic or migrant backgrounds; lower skills mismatch; and raise employment, productivity, and innovation diffusion/creation.
- Cost-reducing reforms focused on the wage bill:
  - Compensation of employees in the education system accounts for over 5 percent of GDP.
  - In 2022 compensation of employees in education was 1.4 to 2.6 percent of GDP higher than European peers and more than explains the difference in total public spending on education (1.0 to 1.8 percent higher).
  - Although compensation of employees in education was the same share of GDP in 2022 as in 2012, it represents a growing share of total government wage bill — an increase much larger than in peer countries over the past two decades.
  - The wage bill accounts for 81 percent of education spending in Belgium (compared with 56 percent in Germany and 71 percent in France).
  - Compensation of employees in education accounts for 41.5 percent of general government total wage bill — 10 percentage points or more than in France, Germany, or the EU and 6 points more than in The Netherlands.
- Reform themes suggested by the analysis:
  - Reorganize the education system to better leverage teachers’ time (address comparatively smaller student-to-teacher ratios and less teaching time).
  - Strengthen support to students who face difficulties (address high share of grade repetition).
  - Better align curriculum with firm needs to reduce skills mismatch and the need for firms to provide continuing vocational training.

*Source: IMF staff paper “Public Education in Belgium: Improving Outcome While Reducing Cost,” SIPEA2025021.*

### 13.      Salary levels do not explain the comparatively high wage bill. For both the French and

### 13.      Salary levels do not explain the comparatively high wage bill. For both the French and the Flemish communities, teachers’ actual salaries are in an intermediate position among comparators

### Teacher salary levels and trends
- Teachers’ actual salaries are in an intermediate position among comparators (Figure 8).
- Since 2015, the actual and statutory salaries of teachers declined in real terms in both communities.
- The decline in real teacher salaries preceded the post-COVID high inflation period (OECD, 2022, 2024c and d).
- Teacher salaries are relatively more attractive than in EU peers when compared to wages of the population with a similar level of education (Table 4).
- Footnotes from source:
  - “Actual salaries of comparators are also comparatively high when compared to EU level but are also, with the exception of France, well above OECD average (OECD, 2023a).”
  - “The subnational variation in actual salaries was less than 11 percent for all levels of education for both teachers and school heads, and greater for school heads than for teachers.” Moreover, “the variation in statutory salaries between subnational entities remains relatively consistent across all levels of education and stages of teachers’ careers (a range of 3–7 percent)” (OECD, 2024c; emphasis added).

### Main driver of the high wage bill: employment levels
- The principal reason for Belgium’s higher wage bill is the employment level of teachers rather than salary levels.
- From primary to secondary levels, the number of students per teacher is much lower than in any comparator.
- Between 2016 and 2022:
  - Number of students from early childhood to tertiary declined by 4 percent.
  - Number of teachers increased by 7 percent.
  - The gap (students down 4 percent vs teachers up 7 percent) is larger than in any comparator.
- The increase in teachers was driven mostly by early childhood, primary and (upper) secondary levels (Figure 10).
- These developments contribute to a significantly higher spending per student on basic education.

### Students-to-teacher ratios and recent trends
- The student-to-teacher ratio has declined in the recent past at all levels of education, except tertiary (Figure 9).
- In most OECD countries, class-size declines were driven by teacher numbers rising faster than student population; in Belgium the ratio shrank because the number of teachers increased notwithstanding a drop in the number of students and attempts to limit teacher increases (Hallaert, 2016; OECD, 2024c).
- Data notes:
  - Growth in the number of students is for 2016–21 for "Early childhood to Tertiary" and "Tertiary" due to data availability.
  - Excludes post-secondary non-tertiary education due to data issues.

### Statutory teaching time and working time
- Statutory teaching time is significantly lower in both the French and the Flemish communities than in any comparator (Figure 11).
- Statutory teaching time is higher in the French community than in the Flemish community at all levels.
- Data availability:
  - Statutory working time data (rather than teaching time) is only available for primary education in the French Community.
  - French Community statutory working time is only 54 to 60 percent the statutory working time of teachers in comparators.
  - For statutory teaching time the gap is 72 to 98 percent.
- Footnote: See OECD (2024c, Chapter D4) for a description of the working/teaching time requirements.
- Part-time work:
  - The share of teachers working part-time is higher than in France or for the EU27 at all levels of education but lower than in the Netherlands.
  - It is higher than in Germany at secondary level but lower at primary level.

### Schemes reducing working time for older employees
- Certain schemes allow permanent education employees aged 55 and over to reduce working time; at 58 they can stop working while receiving a reduced salary.
- In the French community:
  - 23.4 percent of employees over 55 benefited from the scheme (Départ Préalable à la Pension de Retraite) — up from 18.7 percent in 2019.
  - The reduction accounted for 13.2 percent of full-time equivalent of employees 55 and over — up from 9.5 percent in 2019 (Fédération Wallonie-Bruxelles, 2024).
- The review of such schemes could lower the wage bill without affecting outcomes.

### Allocation of teachers’ time, class size, and educational outcomes
- OECD note: “While lower student-teacher ratios allow teachers to focus more on the needs of the individual, they require higher overall spending on teacher salaries and have to be weighed against alternative spending priorities” (OECD, 2024c).
- Evidence and observations:
  - Belgium has the highest rate of grade repetition in the EU, a cause of excessive spending in primary and secondary education (Figures 12).
  - Grade repetition in Belgium affects more socio-economically-disadvantaged students, students with a migrant background, and boys than in other EU countries (Appendix III).
  - Both the French and the Flemish communities are taking measures to reduce grade repetition (EC, 2023; Kemoe, 2020; OECD, 2024c and d; Pacte pour un Enseignement d'excellence).
  - Example reform in the Flemish community: starting from the 2023/24 school year, all first graders of primary education will be required to either change their study programme (B-certificate) or repeat a year (C-certificate) if they fail the end-of-year exam. Normally, this process only started from the second year onward (OECD, 2024c).
- Empirical findings on class size and teaching time:
  - Smaller class-size is not associated with higher PISA score (Figure 13).
  - Lower statutory teaching time is also not associated with higher PISA results.
  - Hattie (2005) meta-analysis: reducing class-size has only a “tiny” positive effect; teachers of smaller classes often adopt the same teaching methods as in larger classes and do not optimize opportunities presented by fewer students.
- Policy implication: increasing teaching time (possibly by reducing time spent on administrative and non-teaching tasks), combined with proper incentives, could allow more time dedicated to students in difficulty, reduce grade repetition, and improve outcomes for socio-economically-disadvantaged students.

### Staffing issues, attractiveness of the profession, and shortages
- Belgium experiences:
  - Comparatively high shares of teachers leaving the profession prematurely (both communities).
  - High absenteeism rates.
  - Declining share of students enrolling in initial teacher education.
  - Severe and rapidly increasing teacher shortages affecting more students than in anywhere else in Europe (Figure 14).
- Consequences and responses:
  - With teacher shortages and cumbersome hiring rules, schools rely on replacement teachers, some of whom may lack adequate qualifications and have low job security.
  - New teachers often wait several years to be permanently appointed, reducing attractiveness and increasing turnover.
  - Measures adopted:
    - All communities have introduced changes to provide job security for new teachers and increase the number of permanent contracts (EC, 2023; OECD, 2024c and d).
    - Flemish Community reduced the length of time before a teacher is made permanent and eased recruitment rules for teachers from the private sector, including allowing them to retain part of their seniority.
- Source statistics and examples:
  - In the French Community: 33.7 percent of teachers that started teaching in academic year 2017–18 had stopped doing so within five years (Fédération Wallonie-Bruxelles, 2024).
  - In Dutch-speaking schools of Brussels: over 84 percent of teachers under 30 in academic 2014–15 were employed on a temporary basis. Five years later, 17.3 percent of these teachers had left the profession. The share reached 19.5 percent for those employed on a temporary basis and 5.0 percent for those employed on a fixed basis.
  - Teacher shortages in Flemish secondary schools were not present in 2014/15; vacancies in 2022–23 were most common for teachers of mathematics, languages and technical subjects. In the French Community bilingual ‘immersion’ schools are particularly impacted by lack of qualified language instructors and only around half of VET teachers have received pedagogical training (EC, 2023).

### Reallocating resources and system fragmentation
- There may be scope to reallocate some resources from secondary to primary education to support policy shifts in both communities.
- This may require:
  - Greater nimbleness in teacher assignments, including flexibility to increase teacher mobility.
  - Tackling fragmentation of the educational system (between various educational networks in each community) that leads, in some locations, to duplication of small size schools.

### Outcome-increasing reforms: objectives and labor market links
- Objectives of reforms:
  - Reverse the decline in test scores.
  - Increase equality of opportunities.
  - Better align skills acquired at school with firms’ needs.
- Potential economic impact:
  - Boost human capital and productivity.
  - Improve labor market functioning.
  - Increase competitiveness and potential growth.
- European Commission note: addressing challenges related to labor shortages and skills mismatches, integration of disadvantaged groups, performance and equity of the education system, the teaching profession, business environment, regulatory burden and restrictions in the service sector could help bring employment closer to the national 2030 target of 80 percent (European Commission, 2024b).

### Skills mismatch and STEM enrollment
- Skills mismatch:
  - Belgium’s skills mismatch remains the highest in the EU (Figure 15).
  - Measured as the squared difference in proportions between population aged 15 to 64 and employed by level of education: low, medium, high skill groups.
- Consequences and characteristics:
  - Belgium suffers more than peers from a shortage of people with high skills (Table 5).
  - High-skilled occupations account for a relatively high share of job vacancies in Belgium (OECD, 2024e).
  - The share of the working-age population with low skills exceeds low-skill employment more than in peers.
  - People with less than secondary education are overrepresented among jobseekers; low levels of education and low work-related skills are the two main barriers among people experiencing employment difficulties (OECD, 2024e).
  - Employment rate notes:
    - At 75½ percent in 2023, the employment rate in Belgium was lower than in any of the three comparators.
    - Employment rate of population aged 25 to 64 with tertiary education was 88.2 percent in 2023, 12.7 percentage points higher than the overall employment rate.
    - Among EU27, only Italy, Romania, and Croatia have a larger gap between tertiary-educated employment rate and overall rate.
- STEM enrollment:
  - Enrollment in STEM is low despite favorable employment prospects; few students (notably female students) pursue tertiary education in STEM.
  - The share of younger working age population (20-29) with a tertiary degree in STEM was 16.4 percent in 2022, compared with EU level 23.0 percent, Germany 24.3 percent, France 35.3 percent.
  - The share of graduates that study STEM is lower than in comparators, notably for information and communication technologies despite growing demand in digital skills.
- Firm-level impacts:
  - Skills mismatch limits the employment rate and weighs on firms’ costs, productivity, and competitiveness.
  - “Skill mismatch plays a major role in firms’ recruitment difficulties” and “skills shortages create competition between firms to attract talent and reinforces incentives to upskill their pool of employees. However, smaller firms are often penalized in this race because of challenges in competing on salary and benefits. Small firms also face more difficulties than larger firms in investing into training” (OECD, 2024e).
  - Belgian firms resort more to training than in most other EU countries to offset skill inadequacy (Figure 18).

### Selected policy implications and reform levers (from the source)
- Review schemes allowing education employees to reduce working time (notably for ages 55+) to lower the wage bill without affecting outcomes.
- Improve allocation of teachers and better leverage teachers’ time:
  - Consider increasing statutory teaching time and reducing administrative/non-teaching tasks.
  - Combine time-use changes with proper incentives to focus on students in difficulty.
- Reduce grade repetition to curb excessive spending and improve outcomes for disadvantaged students; note existing measures in both communities to reduce repetition.
- Address staffing issues and increase attractiveness of the teaching profession:
  - Improve job security and reduce waiting time to permanent appointment.
  - Ease recruitment rules and increase mobility and career prospects.
- Reallocate fiscal resources across education levels where appropriate (secondary to primary) and reduce fragmentation/duplication of small schools to increase efficiency.
- Promote STEM enrollment, notably among female students, to help reduce skills shortages in high-demand occupations.

*Italic: Source — sipea2025021 (IMF PDF chapter excerpt).*

### 24.      Various policies would help better aligning skills with firms’ needs. Policy makers

### 24.      Various policies would help better aligning skills with firms’ needs. Policy makers

### Aligning skills with firms’ needs
- Strengthen incentives and guidance to ensure that the curriculum provides graduates from the secondary education with skills that would increase their low employment rate.
- Reform and promote vocational training (to address stigma associated with it among the two largest communities).
- Address shortage in high-skilled individuals by promoting STEM studies, notably among women.
- Ensure curriculum better aligns education with firms’ needs to reduce firms’ need to provide training to offset inadequate skills, which increases labor cost and weighs on firms’ competitiveness.

### Vocational education, work-based learning, and firm involvement
- Less than half of the recent graduates participated in work-based learning during their vocational education and training compared to over 60 percent in the EU.
- Need to:
  - promote vocational education and training to firms; dual learning is little known resulting in insufficient available place;
  - address stigma attached to vocational education which contributes to high drop-out rate (EC, 2023).
- Figure 17 (Employment Rate, 2023, percent, population aged 25 to 64) — reported values in source:
  - 79.8
  - 75.5
  - 69.1
  - 70.9
  - 90.8
  - 88.2
  - 84.9
  - 83.7
- Figure 18 (Enterprises Providing Continuing Vocational Training Courses, 2020, percent of all firms) — charted comparisons across Flanders, Netherlands, Germany, Belgium, EU27, EU14, France, Wallonia, Brussels (percent axis shown from 60 to 95 in figure).

### Reducing inequalities in education and early childhood interventions
- Students’ background determines more their educational achievement in Belgium than in peers.
- Childhood education is crucial to child development and has a long-lasting impact on education achievements, including helping reduce grade repetition.
- Enrollment disparities in early childhood education:
  - 33 percent of children from the poorest income tertile are enrolled compared to 72 percent of children of the richer income tertile.
  - This 39-points difference is more than twice the OECD average of 19 percentage points (OECD, 2024d).
- Socio-economic status explains more variance in PISA performance in Belgium than in any peers; this is increasingly so and markedly more the case in the French community than in the Flemish one (and even more than in the German-speaking community).
- Students with immigrant background:
  - Belgium has a higher share of students with immigrant background than most EU countries.
  - The 57-point gap in both mathematics and reading (between students with immigrant background and non-immigrant students) is among the largest in the EU.
  - The gap is wider in the Flemish community than in other communities.
  - Most of the lower performance is explained by a larger share of disadvantaged students among students with immigrant background.

### Organizational reforms, teacher time, and spending efficiency
- A higher spending on education than in peers does not result in better educational outcomes, suggesting large scope for increasing spending efficiency.
- The paper estimates Belgium could achieve the same educational outcome at a fiscal cost lower by up to 1.4 percent of GDP.
- Alternatively, Belgium could achieve better educational outcomes at unchanged current spending, reversing the recent decline in test scores and providing students with skills more aligned with labor market demands.
- Main drivers of larger spending in Belgium than in European peers:
  - High wage bill due to higher level of employment combined with relatively shorter teaching time and lower students-to-teacher ratio.
  - Belgium experiences teacher shortages and the highest share of grade repetition in the EU (a source of inefficiency and fiscal cost).
- Recommended reforms:
  - Reorganize the educational system to better allocate teachers and better leverage their time.
  - Streamline schemes allowing for reduced working time or early retirement with reduced salary.
  - Allow and incentivize teachers to provide support to students who face difficulties to foster skills acquisition and reduce grade repetition.
  - Promote enrollment of disadvantaged students in early childhood through lower cost, increased availability, or simplified enrollment procedures — associated with higher labor force participation of their mothers.

### Economic and social implications
- Reducing the impact of disadvantaged socio-economic and migrant backgrounds would:
  - increase the skills of disadvantaged students and help raise their employment rate and potential growth;
  - increase their income prospects and foster social mobility;
  - reduce the need for fiscal redistribution as equal access to education lifts pre-redistribution incomes for those at the bottom of the income distribution;
  - increase the pool of individuals able to innovate or to absorb technological innovation.

### Key statistics and figures cited
- Less than half of recent graduates participated in work-based learning; over 60 percent in the EU (comparative statement).
- Early childhood enrollment: 33 percent (poorest tertile) vs. 72 percent (richer tertile).
- Enrollment gap: 39-points difference versus OECD average of 19 percentage points.
- Immigrant background PISA gap: 57-point gap in both mathematics and reading.
- Potential fiscal savings: up to 1.4 percent of GDP through increased spending efficiency.
- Figures presented in the source include:
  - Figure 17 (Employment Rate, 2023): 79.8; 75.5; 69.1; 70.9; 90.8; 88.2; 84.9; 83.7.
  - Figures on vocational training participation, continuing vocational training by firms, variance in PISA explained by ESCS, and grade repetition differences (charts and country comparisons referenced in text).

*Source: IMF Selected Issues Paper — Belgium (excerpts from section 24 and related sections).*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025021.pdf_