Executive Search in Belgium – 2019 Outlook
UK, US Form Trade Threats to Belgium
According to the OECD, Belgian GDP growth is projected to remain at around 1½% in 2019 and 2020. Private consumption will be an important driver of growth, supported by past and announced additional reductions in labour taxation. Private investment will remain robust over the projection period, supported by favourable financing conditions and high levels of profitability.
Government investment will contribute to economic activity in 2020 with the launch of some major public investment projects. Employment growth is projected to continue, leading to further declines in the unemployment rate to 5.9% in 2020.
Economic growth could be weaker if private consumption growth is lower than expected. On the upside, business investment could be stronger than expected, if the tight labour market leads to more labour-saving investment than projected.
The National Bank of Belgium predicts that over the period 2018 – 2020 more than 150,000 extra jobs are likely to be created (in cumulative terms). Inflation is estimated at 2.4% in 2018, largely related to energy prices, and is subsequently expected to drop to an average of 1.8% in 2021. The government deficit is estimated at 0.8 % of GDP in 2018, but is likely to rise to 2.0 % of GDP towards the end of 2020.
On the downside, a recent report by Deloitte confirms that the impact of Brexit on Belgium can be significant. The UK is one of country’s top 5 most important export partners. The total of Belgian exports to the UK represents almost nine percent of total exports from Belgium (an amount of EUR 31.99 billion), whereas the UK accounts for nearly five percent of total Belgian imports (a total amount of EUR 16.06 billion).
Belgium’s most important exports to the UK are in the vehicles, chemicals, food and beverages, textiles, synthetic materials and the machine industries.
These economic links with the UK mean that Belgium ranks fourth among the 27 EU countries in terms of the economic risk created by Brexit. The impact will mainly be felt in Flanders, which produces 80% of Belgian exports to the UK (and accounts for 87% of UK imports).
In the wood, stone, glass, medical devices and arms industries, the impact will be felt mostly in Wallonia. And the automotive and leather industries will be most impacted in the Brussels region.
Major disruptions possible
If the Brexit negotiations result in a disruptive situation (which could range from no deal at all to partial restriction of some or all of the EU Internal Market’s four freedoms – free movement of goods, capital, services, and labour), business will face changes in trading with and doing business in the UK. These could include:
- tariffs on trade in goods, changed customs procedures and delays at border crossings – with the consequent disruption to the supply chain;
- restrictions on companies’ ability to deploy UK staff in Belgium or non-UK nationals in business operations in the United Kingdom;
- restrictions on the sharing of data between Belgium and the UK;
- changes in tax treatment (both direct tax and VAT); and
- a requirement to observe differing technical standards if the UK and EU’s regulatory regimes diverge after Brexit.
The National Bank of Belgium also observes that the trade war between the United States and China is a concern for Belgium as a supplier of those countries. Belgium’s contribution to Chinese exports to the United States, particularly in electrical, computer and optical equipment, amounts to 0.14 % of its GDP. On the other hand, the share of the Belgian economy involved in American exports to China is no more than 0.03 %.
Belgium’s exposure to Chinese sales on the American market is thus almost five times greater than the other way round, whereas Belgian exports to China are significantly lower than its exports to the United States.
China continues to invest
The good news is that Belgium also continues to attract China’s investment interest and continues to have pioneering initiatives in logistics, education and life sciences with an excellent university and spin-off incubator infrastructure.
As an example, Alibaba Group Holding late last year signed an agreement with the Belgium government to launch an e-commerce trade hub, which will include investments in logistics infrastructure.
The project is part of Alibaba’s Electronic World Trade Platform (eWTP), and Belgium is the first European country to join the project following similar agreements in Malaysia and Rwanda.
Alibaba’s logistics arm, Cainiao, will lease a 220,000 square meter logistics port at Belgium’s Liege airport as part of the deal and invest an initial €75 million ($85 million) in the project set to begin operations in 2021. The eWTP project should open up the huge potential for European businesses to reap the benefits of global cross-border trade, especially into the China market.
Executive Search Outlook 2019
In 2018, the interim management market especially grew rapidly, stimulated by project-based resourcing of finance, operations (production and supply chain) and project management.
Despite this, employers had to contend with candidate shortages across the board and hiring difficulties especially with Millennials in the financial sector as more candidates chose to take sabbatical leave, travel or continue further education after obtaining their qualifications. Nevertheless, there was also an increase in hiring levels for senior candidates as companies sought to fill roles with qualified and experienced professionals.
As 2019 looks set to be another strong year for the economy, companies may invest increasingly in business support roles from administrative and HR to customer service and logistics.
The trend for hiring interim managers is expected to continue in 2019. Candidates with experience in optimization projects and those who possess strong project management skills will be of high value.
Competition for top talent will continue to be the challenge in what looks to be another candidate short market. Added incentives’ such as flexible working time and workplace environment can make a difference in candidates’ motivation to join.