Unleashing Talent in Brussels, Belgium

Report

OECD Reviews on Local Job Creation

12 October 2023

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2. The Brussels-Capital Region’s labour market in national and international comparison

Abstract

This chapter provides an overview of the Brussels-Capital Region’s labour market in comparison with labour markets of the other Belgian regions, and with those of selected OECD metropolitan areas. Labour market trends are highlighted through an analysis of unemployment, long-term unemployment, and labour force participation, split by different socio-economic groups. The chapter then turns to the demand for labour by local employers and identifies sectors that drove the recent tightening of the regional labour market. The chapter then analyses the labour market participation of different migrant groups in more detail and identifies migrant-specific employment obstacles. Finally, the chapter analyses the wider urban functional area of the Brussels-Capital Region, with a focus on employment opportunities for the region’s less-educated jobseekers in the surrounding Flemish region.

In Brief

The labour market of the Brussels-Capital Region has shown strong improvement over the past decade, but joblessness remains above that of most other OECD metropolitan areas. Between 2010 and 2021, the unemployment and long-term unemployment rate dropped by 4.6 percentage points and 2.9 percentage points respectively. As of 2021, both the unemployment rate (12.5%) and the long-term unemployment rate (6.9%) remained well above that of most comparable OECD metropolitan areas. Supported by government liquidity and income support measures, the labour market remained resilient to the COVID-19 health crisis.
A range of statistical indicators support the notion that the Brussels-Capital Region’s labour market is in a high-skill equilibrium. A highly educated, highly productive workforce constitutes a major part of the population in the Brussels-Capital Region. In 2020, 58% worked in high-skill occupations, a sharp increase from 49% in 2011. On the other hand, the labour force participation among low-skilled persons remains low. The large share of workers formally undereducated for their job further points to skills imbalances in the labour market.
A large number of less-educated persons faces a lack of employment opportunities, resulting in low employment rates. The share of 25- to 64-year-olds in the Brussels-Capital Region’s population with a maximum of lower secondary education stood at 27% in 2020, a share of persons with low educational attainment well above most comparable OECD metropolitan areas. The low employment rate of 41% among the less educated can partly be explained by a lack of demand for unskilled labour in the local labour market. Centrally negotiated sector-specific minimum wages, the high coverage of workers by collective bargaining and inflation-indexed wages may contribute to a decoupling of wages from productivity in some instances, deterring employers from hiring less-skilled workers.
Labour demand in the Brussels-Capital Region has risen significantly over recent years, but opportunities for less-educated workers nevertheless remain limited. The job vacancy rate, the share of total jobs in the local labour market that is vacant, increased significantly over the past decade, from 2.8% in 2012 to 3.2% in 2019 and 4.0% in 2022. However, the increase in labour demand is mostly driven by middle-skill and high-skill professions, with the logistics sector and administrative professions experiencing the largest rise in vacancies. Between 2009 and 2019, there were on average ten less educated jobseekers for each job vacancy that required only a low level of education. By comparison, the ratio of vacancies to jobseekers for highly educated individuals almost reached parity before the start of the COVID-19 pandemic.
A very low labour force participation rate is a structural feature of the Brussels-Capital Region’s labour market. The labour force participation rate, defined as the share of the population aged 15 to 64 years that is either employed or unemployed, remained low in the region over the past decade. In 2021, the labour force participation rate, stood at 65.5% in 2021, compared to 66.3% in 2010. Most recent data points to an upwards tick in labour force participation in the Brussels-Capital Region. Labour force survey data from the second quarter of 2022 shows that the activity rate in the working-age population rose to 67.2%, an increase of 3.3 percentage point points compared to the second quarter of 2021. This positive trend may be a result of the exceptionally tight labour market in the Brussels-Capital Region.
Women with a non-EU migration background constitute the group with the highest economic inactivity rate in the Brussels-Capital Region. The labour force participation rate of women born outside non-EU countries was 11 percentage points lower than that of Belgium-born women in 2019. The participation gap is even larger in the Flemish Region (14 percentage points) and the Walloon Region (19 percentage points) but has larger macroeconomic implications in the Brussels-Capital Region where the share of non-EU-born migrants constitutes 31% of the local working-age population (Flemish Region: 9%; Walloon Region: 10%).
Obstacles to employment participation persist for individuals with a migration background. Obstacles for migrants include the need to learn the local languages (French and Dutch) difficulties to get foreign diplomas acknowledged and hiring discrimination. In Belgium, hiring discrimination has been shown to be a particularly persistent barrier to employment for non-EU-27 migrants. The high concentration of non-EU-27 migrants in municipalities of the Brussels Capital-Region that are characterised by low employment rates is likely to reflect the importance of co-ethnic networks as a pull factor of migration. For instance, among non-EU-27 migrants residing in the region, 56% migrated for family reasons, among which 63% are female and 43% are low educated. Non-EU-27 migrants who came for family reasons show a significantly lower labour market attachment than other migrants who primarily came for work. Facilitating access to education and high-quality jobs for this group is likely to require strong policy support.
Significant inbound and outbound commuting flows characterise the Brussels-Capital Region’s labour market but less educated Bruxellois commute in low numbers. The region’s functional urban area – or commuting zone – extends well into parts of the Flemish and the Walloon Region. It is home to a population of over 3.3 million and covers over 4 800 square kilometres. In 2021, among 796 000 employed workers in the Brussels-Capital Region, 393 000 resided in the region, while 403 000 commuted from the Flemish and the Walloon Region. Reversely, 53 000 Bruxellois commuted to the Flemish Region and 23 000 commuted to the Walloon Region. Commuting among less educated segments of the Brussels-Capital Region’s population remained low despite relatively higher demand for less educated workers in the Flemish Region. Incentivising mobility among jobseekers while carefully considering language barriers, transport and childcare infrastructure could be part of a long-term strategy to increase employment rates of less educated workers.

Introduction

The Brussels-Capital Region is one of Belgium’s three regions and the largest metropolitan area in Belgium. The population of the Brussels-Capital Region stood at 1 226 000 inhabitants in 2021, compared to 6 665 000 and 3 665 000 in the Flemish Region and the Walloon Region, the two other regions of Belgium. 824 100 inhabitants of the Brussels-Capital Region are aged between 15 and 64 years and therefore classified as being of working age. This corresponds to 67% of its total population, compared to 63% in the Flemish Region and 64% in the Walloon Region, reflecting the relatively younger urban population of the Brussels-Capital Region. The surface area of the Brussels-Capital Region only covers 162 square kilometres (Figure 2.1, panel B). However, its functional urban area, or commuting zone, extends well into parts of the Flemish Region and the Walloon Region and is home to a population of 3 322 000.1

The economy and labour market of the Brussels-Capital Region reflect its highly diverse and dynamic population. Between 2001 and 2021, the population of the region grew by 27%, compared to a 12% population growth in the whole of Belgium over the same period. In 2019, 54% of the Brussels population was foreign-born, reflecting its attractiveness to both EU and non-EU migrants. The labour market of the region reflects this dynamism, posing distinct opportunities and challenges to the provision of labour market policies.2

The government of the Brussels-Capital Region has extensive responsibilities in the domain of employment policies. Belgium assigns extensive governance responsibilities to the three Belgian regions as well as to the language communities. The Brussels-Capital Region, the Flemish Region and the Walloon Region are responsible for territorial matters such as employment policies, infrastructure, and industrial policy, as well as and tax matters. The language communities, composed of the Flemish, French, and German speaking communities are responsible for people-related matters. These cover domains such as culture, education, welfare, health and care of the elderly (see Chapter 3 for details on the governance of labour market policies). In addition to the three regions and the language communities, a total of ten provinces in the Flemish Region and the Walloon Region have responsibilities in the fields of education, social and cultural infrastructure, environment, roads and waterways, preventive health, transport, public works and housing. These responsibilities overlap with those of the 589 municipalities. For administrative purposes, provinces are further divided into 43 arrondissements (Figure 2.1, panel C). The Brussels-Capital Region is not part of any province and does not constitute its own province. It combines regional and provincial function under the “Capital Region” administration (OECD, 2016[1]) and forms a single arrondissement. This arrondissement comprises 19 municipalities (Figure 2.1, panel D). One of its municipalities, the City of Brussels, is the capital of Belgium.

This chapter characterises the labour market of the Brussels-Capital Region in detail. The remainder of the chapter provides a high-level overview of recent trends in the labour market and describes the socio-economic profile of the population in more detail. For the purposes of statistical analysis, this report combines labour market data at various levels of regional analysis. Selected OECD metropolitan areas are chosen to put labour market trends in the Brussels-Capital Region into international perspective. A technical explanation of the OECD regional terminology applied in this report is provided in Annex Box 2.A.1.

Figure 2.1. The geography of Belgium and the Brussels-Capital Region

Comparative labour market overview of the Brussels-Capital Region

A steady decline in the Brussels-Capital Region’s unemployment rate has slowed down only slightly during the COVID-19 pandemic. Between 2010 and 2019, unemployment in the region decreased from 17.1% to 12.8% among those of working age who are part of the labour force (Panel A, Figure 2.2). Between 2019 and 2021, the unemployment rate levelled out at 12.5%, on a par with cities such as Madrid (11.7%) and Vienna (12.2%). The resilience of the Brusels-Capital Region’s labour market during the COVID-19 pandemic was partly supported by the federal government’s income and liquidity support measures which mitigated the pandemic’s effect on labour markets across Belgium (OECD, 2022[3]). However, unemployment in the Brussels-Capital Region nevertheless remains well above that of most other OECD metropolitan regions. Both the Flemish Region (4.0% in 2021) and the Walloon Region (8.9% in 2021) also show significantly lower unemployment rates than the region.

Similarly, the long-term unemployment rate in the Brussels-Capital Region dropped significantly before the COVID-19 pandemic and has since bottomed out at a high level. The long-term unemployment rate, defined as those unemployed aged 15 to 64 years who are out of work for more than 12 months as a share of the local labour force, stood at 6.9% in 2021. This is significantly above the level of Wallonia (4.3%) and the Flemish Region (1.0%), as well as that of comparable OECD metropolitan areas. Among those, even cities with comparable levels of unemployment such as Vienna and Madrid had significantly lower levels of long-term unemployment. While the share of jobseekers who have been without work for more than a year thus remains high, the long-term unemployment rate has trended downwards since 2015, when it peaked at 11.1% (Panel B, Figure 2.2).

A high long-term unemployment rate is often a sign of skills mismatch, which is indeed high in the region. Research has shown that of all possible factors, a mismatch between skills demanded by employers and those of jobseekers is one of the main predictors of the long-term unemployment rate (Suphaphiphat and Miyamoto, 2020[4]). In the Brussels-Capital Region, there is indeed a gap between the relatively high share of less-educated in the local population and little demand by employers for low-skill labour.

Figure 2.2. Unemployment and long-term unemployment in the Brussels-Capital Region have dropped over the past decade but remain high in national and international comparison

A very low labour force participation rate is a structural feature of the Brussels-Capital Region’s labour market. In many OECD countries, declining unemployment and long-term unemployment rates eventually also lead to a drop in the economic inactivity rate (OECD, 2021[5]). The reason is that all three labour market metrics co-move to some degree. For instance, a booming economy characterised by high labour demand not only allows jobseekers to find employment but also lowers barriers to entry into the labour market for those who have not previously been part of the labour force. However, the economic inactivity rate did not decline in the Brussels-Capital Region over the past decade, a period during which both unemployment and long-term unemployment dropped significantly. Figure 2.3 (Panel A) shows that the labour force participation rate, defined as those either employed or unemployed among the population aged 15 to 64 years. It stood at 66.3% in 2010 and remained at that level until 2021 (65.5%).

Most recent data point to an upwards tick in labour force participation in the Brussels-Capital Region. Labour force survey data from the second quarter of 2022 shows that the activity rate in the working-age population rose to 67.2%, an increase of 3.3 percentage points compared to the second quarter of 2021. This positive trend may be a result of the exceptionally tight labour market in the Brussels‑Capital Region (Figure 2.9).

Both gender and the level of education are strong predictors of labour force participation. Figure 2.3 (Panel B) shows the labour force participation rate in the population aged 15 to 64 years in 2021, disaggregated by sex and education. Three observations are striking. First, the labour force participation rate in the region is lowest among the less educated. For less educated men, it was 51.2%, while it stood at 31.2% for less educated females. It then increases sharply for medium-educated and high-educated men and women. Second, the labour force participation rate is lower in the Brussels-Capital Region than the EU-27 average across all levels of education, for both males and females. The participation gaps are largest among medium-educated men (-13.9 percentage points) and women (-20.3 percentage points) but are also large for less educated men (-8.7 percentage points) and women (-10.1 percentage points). Finally, the participation gap between the Brussels-Capital Region and the EU-27 is larger for women than men across all levels of education.

Figure 2.3. Labour force participation continues to remain low in the Brussels-Capital Region

The relatively large share of people with a low level of education in the Brussels-Capital Region provides a partial explanation for the low labour force participation rate. Figure 2.4 (Panel A) shows that the share of 25- to 64-year-olds in the region with a maximum educational attainment of lower secondary education stood at 26.9%, well above comparable OECD metropolitan areas and the other Belgian regions. In Stockholm, Sweden and Munich, Germany, the share of less educated individuals was as low as 11.4% and 11.3% respectively in the same age group. Panel B of Figure 2.4 shows that employment rates for the population aged 25-64 years increase with educational attainment. In 2021, a highly educated-inhabitant of the Brussels-Capital Region was almost 40 percentage points more likely to be employed than a less educated individual. Panel C of Figure 2.4 shows that the relatively low labour force participation rate among less educated individuals is also caused by a lack of demand for workers with a low level of education. Between 2009 and 2019, there were on average ten less educated jobseekers for each job vacancy that required only a low level of education. By comparison, the ratio of vacancies to jobseekers for highly educated individuals almost reached parity in 2018, even before the significant tightening of labour markets began in the aftermath of the COVID-19 pandemic. Such a lack of demand is likely to discourage labour force participation among those less educated who are economically inactive.

The lack of labour demand for less educated workers is partly driven by their high labour costs. In simple terms, the maximum an employer can afford to pay a worker in salary is the worker’s marginal productivity, minus taxes and social security contribution. If total wage cost exceed productivity, employers will decide against hiring new workers. Labour cost for less educated workers in Belgium is among the highest in the OECD. For a single worker without children earning 67% of the average wage, employer social security contributions in Belgium represented 26% of gross earnings in 2019, compared to 20% in Germany (OECD, 2020[6]). In addition, collective bargaining in Belgium is centralised and sector-specific and does not consider the large regional differences in productivity. As a result, the nationally set minimum wage is superseded by the sector-specific minimum wage for almost all less educated workers by an average of 20% (OECD, 2020[6]). Wages in Belgium are also automatically indexed to inflation, which may add to an additional decoupling of productivity from wages.

Figure 2.4. The level of education is a strong predictor of success in the Brussels labour market

The lack of demand for some workers is also reflected in the high additional slack in the labour market of the Brussels-Capital Region. Additional labour market slack is defined as 15- to 64-year-olds available but not seeking for work, persons seeking for work but not available and underemployed part-time workers as percentage of the extended labour force. Thus, it does not include unemployment but focusses on those economically inactive and underemployed that could be activated or integrated more tightly into the labour market if the right conditions were put in place. Figure 2.5 shows the additional labour market slack as a percentage of the extended work force. Additional labour market slack in the Brussels-Capital Region increased from 5.2% in 2010 to 10.7% in 2013 and has since remained broadly at this level. As of 2021, when the measure stood at 9.9%, additional labour market slack was still among the highest across OECD metropolitan areas. A mix of active and passive labour market policies discussed in Chapters 4 and 5 of this report can facilitate and strengthen the attachment of the economically inactive and the underemployed to the labour market.

The high incidence of involuntary part-time work in the Capital Region is likely due to the limited job opportunities for less educated workers. Involuntary part-time work as a share of total employment stood at 9.4% in 2018 in the Brussels-Capital Region, a share significantly higher than in the Flemish (3.9%) and the Walloon (5.9%) Region (OECD, 2020[6]). Valletta, Bengali and Van der List (2020[7]) show that in general, the incidence of involuntary part-time work is determined by a business cycle and a structural component. The business cycle component refers to employers that reduce staff hours during a recession. The structural component refers to the size of sectors such as hospitality and retail in which employers are likely to adjust staff time to peak-load demand, as well as labour cost. Across the three Belgian Regions, business cycles are largely synchronised (see Figure 2.2) and the hospitality and retail sector are approximately equal in size.3 However, the relatively high number of less educated workers in the region face more limited employment opportunities, which may lead them to accept part-time positions out of necessity rather than choice.

Figure 2.5. Additional labour market slack in the Brussels-Capital Region is high in national and international comparison

Pursuing education or training is the most common reason for economic inactivity among those economically inactive who are willing to work, while caregiving and other family responsibilities present an obstacle for women. Figure 2.6 shows the reason for not searching for work among the economically inactive population aged 15 to 89 years who are not currently searching for employment but want to work. In the Brussels-Capital Region, this group consisted of 24 000 men and 32 000 women in 2021. Across Belgian regions, more than 40% of men and women who state that they are economically inactive, wanting to work but not seeking for work are enrolled in education or training. Among economically inactive women in the region who would want to work, 20% state that they are unable to look for work due to caregiving responsibilities towards children or other dependents or have other family-related reasons not to work, compared to 15% of women in the Flemish Region and 17% in the Walloon Region. Lower shares of inactive women who are willing to work state illness or disability (13%), personal reasons (8%) and other reasons (10%) as their primary reason not to work. Among inactive men in the region who are willing to work, most state the less clearly defined other reasons (19%) as the reason for their inactivity. Twelve percent state that their illness or disability does not allow them to work, compared to 16% in the Flemish Region and the 15% in the Walloon Region, likely reflecting differences in average age across the regions’ populations. Compared to women, the share of inactive men who are willing to work and who state caregiving responsibilities as the primary reason for their inactivity is low in the Brussels-Capital Region (4%). No suitable job opportunities are mentioned by 9% of inactive men who are willing to work and 7% of inactive women who are willing to work as their main reason for economic inactivity.

Figure 2.6. Women are more likely to be involuntarily economically inactive to look after children and other dependents in all Belgian regions

Youth are particularly vulnerable to experiencing adverse long-term consequences from being excluded from the labour market. Academic research has long established that being without work for an extended period can have a so-called “scarring effect” on youth. For instance, Mroz and Savage (2006[8]) show that unemployment can affect earnings of workers ten years after having experienced unemployment if the unemployment spell was experienced at a young age. Burgess et al. (2003[9]) further show that such scarring is particularly strong among low-skilled young workers. For these reasons, ensuring that youth do not leave school before the completion of their education and ensuring a smooth transition from school to work is likely to decrease unemployment and increase earnings in the long term. Two indicators that capture the labour market potential of current youth cohorts are the share of early leavers from education and training among young people aged 18 to 24 years, and the rate of youth neither in employment nor in education and training (NEET) within the same age group.

International comparisons highlight that while the Brussels-Capital Region has seen improvements in the labour market situation of youth, there is still progress to be made. In 2021, the region had a 9.1% rate of early school leavers, a significant decline from 20.1% in 2012. This positive development continued throughout the COVID-19 pandemic, a period during which the risk of labour market scarring among youth rose in many OECD countries (OECD, 2021[10]). However, the Brussels-Capital Region still had higher rates of early school leavers compared to other OECD metropolitan areas such as Amsterdam (5.1%), Oslo (8%), and Stockholm (7.5%). Similarly, the NEET rate stood at 13% in 2021, showing a significant decline from previous years but remaining high compared to OECD metropolitan areas such as Amsterdam (4.4%), Oslo (7.2%), and Stockholm (6.8%).

Figure 2.7. The share of early school leavers and the NEET rate have dropped significantly in the Brussels-Capital Regions over the past decade

Total employment increased in the Brussels-Capital Region over the past decade, driven mostly by job creation in education, health, and technical and administrative activities. Looking at sectoral employment growth and decline is not only informative of the main type of local economic activity but also gives an indication of where labour demand may be highest in the future. The annual average rate in employment growth between 2010 and 2020 was approximately 0.5% in the Brussels-Capital Region, compared to 0.9% in Belgium as a whole (Panel A, Figure 2.8). In the Brussels-Capital Region, the total number of jobs increased by 33 286 between 2010 and 2020 (Panel B). The fastest growing sector in absolute terms was the education sector (+15 375 jobs), followed by specialised professional, scientific, and technical activities (+14 736), human health and social work activities (+11 912), and administrative and support services (+9 497). The absolute employment growth was partly offset by employment decline in the trade and repair of motor vehicles and motorcycles (-12 948 jobs), financial and insurance activities (-10 965) and the manufacturing industry (-7 002).4

Job creation in the Brussels-Capital Region was largely driven by high-skill jobs. To gain an understanding of changes in educational requirements in the local labour market, the OECD divides ISCO‑08 occupation groups by their different average skill level requirements. High-skill jobs include managers, professionals and technicians; middle-skill jobs compose clerks, craft and related trades workers, machine operators and assemblers; and low-skill jobs include elementary occupations, service workers, and shop and market sales workers. In 2020, 58% of employed residents in the region worked in high-skill occupations, a sharp increase from 49% in 2011 (Panel C, Figure 2.8). Over the same period, the share of middle-skill jobs declined from 25% in 2011 to 18% in 2020. Similarly, the share of low-skill jobs decreased from 26% to 23% between 2011 and 2020. Belgium as a whole experienced a similar, albeit less extreme shift towards high-skill employment. In 2020, 48%, 29% and 23% of employment fell into the high-skill, middle-skill and low-skill categories respectively, compared to 44%, 33% and 23% in 2011.

Such job polarisation is widespread across the OECD and a rapid erosion of middle-skill and, to some extent low-skill occupations, poses a social challenge. It raises public concern about growing inequality in OECD countries. Middle-skill jobs were historically associated with a middle-class lifestyle and socio-economic mobility for future generations. However, middle-skill workers are now more likely to be in lower-income classes than middle-income classes (OECD, 2019[11]). The wage structure in many OECD countries is now also showing a growing divide between top earners and others, with income growth mostly observed at the top end of the income distribution. Skills-biased technological change is one important factor behind the labour market polarisation across the OECD. This is particularly noticeable in large cities, which tend to be at the forefront of labour market transformations. In cities like the Brussels-Capital Region, where a strong labour market polarisation already exists, there is a large risk that a further hollowing out of middle-skill jobs may pose a threat to social cohesion.

Figure 2.8. Employment growth in the Brussels-Capital Region was driven by high-skill jobs over the past decade

All labour demand measures point to a labour market tightening in the Brussels-Capital Region. The number of vacancies in the region as assessed by the Belgian Job Vacancy Survey (JVS) increased steadily from 10 100 in 2012 to 26 500 in 2022 (Figure 2.9, Panel A, left axis).5 Similarly, the job vacancy rate defined as the share of total jobs in the local labour market that are vacant, increased over time, from 2.8% in 2012 to 3.2% in 2019 and 4.0% in 2022 (Panel A, right axis). The total number of job vacancies reported by employers in the Brussels-Capital Region to Actiris rose even faster, from 18 000 in 2009 to 67 000 in 2022. OECD calculations show that a higher propensity among local employers to share their job vacancies with Actiris may explain the slightly larger rise in vacancies reported to Actiris compared to vacancies captured by the JVS during the COVID-19 pandemic.6 In 2022, the ratio of the total number of vacancies received by Actiris to the quarterly average in the JVS reached its decade high. Finally, OECD calculations further show that online job vacancies posted by employers in the Brussels-Capital Region increased from 66 000 to 245 000 between 2018 and 2022.

The rise in labour demand has been uneven across occupational groups. In absolute term, jobs in general administration and logistics experienced the highest increase in job vacancies reported to Actiris through 2022 (Figure 2.9, Panel B). Other occupational groups that recorded large increases in vacancies submitted to Actiris include security and cleaning, medical and paramedical professions, management and commerce and sales support. Figure 2.9, Panel C, shows the ratio of vacancies reported to Actiris to jobseekers registered with Actiris by occupational groups. Industrial occupations, which includes occupations such as machinery mechanics, electromechanics and welders, show the highest level of tightness, followed by economy, law and finance professionals and occupations in the logistics sector.

Figure 2.9. The tightening of the Brussels-Capital Region’s labour market is uneven across occupations

The tightening of the labour market and the high demand for highly educated workers may have contributed to the relatively high incidence of formal undereducation among employees. Education mismatch captures the overeducation and undereducation of workers within a given occupation. It can occur for a number of reasons. For instance, overeducation often occurs when migrants do not get their foreign degrees acknowledged and work in occupations they are overqualified for based on the education they obtained in their country of origin (Ludolph, 2023[12]). Formal undereducation, on the other hand, may occur naturally in labour markets where informal and non-formal education is acknowledged by employers as substitutes for formal degrees. However, it may also occur in tight labour markets when employers struggle to find the right workers. In the Brussels-Capital Region, 32% of workers were mismatched by their education in 2020, a low share in international comparison and similar to other Belgian provinces (Figure 2.10). Disaggregating the mismatch measure into the share of formally undereducated and formally overeducated reveals a high incidence of workers who are formally undereducated for their job. Twenty-four percent of workers in the region do not hold a degree that corresponds to at least the modal educational attainment in their occupation, a share well above all other OECD metropolitan areas (Panel A of Figure 2.10) and other Belgian provinces (Panel B).

Figure 2.10. Education mismatch in the Brussels-Capital Region is mostly driven by a large share of workers formally undereducated for their job

Migrants in the Brussels labour market

More than half of the Brussels-Capital Region’s working-age population was born abroad. Figure 2.11 shows the share of the foreign-born population aged between 15 and 64 years old in the total population. In 2018, 54% of the region’s working-age population was foreign-born, reflecting its attractiveness to both EU and non-EU migrants. Both of these groups made up 23% and 31% of the local population respectively. No other comparable European metropolitan area is home to such a diverse population. Even populations of global cities such as London, Vienna or Berlin have lower shares of migrants. In these cities, the share of the foreign born stood at 44%, 41%, and 26% respectively in 2018.

The profile of working-age migrants from EU-27 countries differs significantly from that of migrants born outside the EU-27. In 2021, 60% of migrants aged 25 to 64 years who were born in EU-27 countries were highly educated, many working for the European institutions and the organisations surrounding them. Among non-EU-27 migrants in the same age category, only 35% were highly educated, while 39% were low educated. EU-27 migrants are also significantly more likely to migrate to the Brussels-Capital Region for work than non-EU-27 migrants (59% versus 22%). Most non-EU-27 migrants (56%) came to reunify with their families, an effect of co-ethnic networks discussed further below.7 Both groups, EU-27 and non-EU-27 migrants share the characteristic of being relatively young compared to the Belgian-born population in the region. In 2019, 73.1% of migrants born in EU-27 countries and 74.9% of migrants born outside EU-27 countries were of prime working age, defined as age 25 to 54.

Figure 2.11. More than half of the working-age population in the Brussels-Capital Region was born abroad

The density of migrants differs across municipalities in the Brussels-Capital Region. Panel A of Figure 2.12 shows that migrants born in EU-27 tend to live in the municipalities near the European institutions, namely Saint-Gilles/Sint-Gillis, Ixelles/Elsene and Etterbeek. On the other hand, Panel B shows that migrants born outside the EU-27 mostly live in the Northern municipalities of the Brussels-Capital Region, namely Molenbeek-Saint-Jean/Sint-Jans-Molenbeek, Saint Josse-ten-Noode/Sint-Joost-ten-Node and the Northern parts of the Bruxelles-Ville/Brussel-stad. Such geographical concentration of migrants who often share the same country of origin is a phenomenon observed across the globe.

It is common for migrants from the same country of origin to settle in the same place, but co-ethnic networks also lead to new policy challenges. Co-ethnic networks constitute one of the main pull factors of migration and provide a partial explanation for migrants’ destination choices within OECD countries. (Pedersen, Pytlikova and Smith, 2008[13]). One of the policy challenges that arises through co-ethnic network induced migration is the labour market integration of those who arrive as a result of their network of family and friends, since these migrants tend to be less educated than those who first migrated (Beine, Docquier and Özden, 2011[14]). Indeed, in the Brussels-Capital Region, non-EU-27 migrants who came for family reasons are often low educated (43%), and mostly female (63%).8 Recent evidence by Battisti, Peri and Romiti (2022[15]) further shows that for less-educated migrants, co-ethnic networks facilitate faster access to low-income employment but may have adverse effects on human capital investment in the destination country. Growing up in ethnic enclaves has also been causally linked to lower language skills in the destination country among young migrants (Danzer et al., 2022[16]). Taken together and considering the limited opportunities for less-educated workers in the region’s labour market, there is an elevated risk of an exclusion from the labour market for non-EU-27 migrants.

Figure 2.12. The distribution of the migrant population is highly uneven across municipalities in the Brussels-Capital Region

The municipalities with the highest density of non-EU-27 migrants are indeed those where employment rates are lowest. Figure 2.13 shows that the large spatial differences in employment rates across municipalities of the Brussels-Capital Region indeed correlate closely with the presence of non-EU-27 migrants. The municipalities with the highest shares of non-EU-27 migrants, are also those with the lowest employment rates. In 2021, the employment rate among residents of Molenbeek-Saint-Jean/Sint-Jans-Molenbeek, Saint Josse-ten-Noode/Sint-Joost-ten-Node and Bruxelles-Ville/Brussel-stad was 44%, 47% and 49% respectively, compared to 58% in Auderghem/Oudergem and Ganshoren and 59% in Jette.

Figure 2.13. Employment rates differ by 15 percentage points across municipalities in the Brussels-Capital Region

Non-EU-27-born migrants who came for family reasons are the group with the lowest labour market participation. Table 2.1 shows that in 2021, non-EU-27 born migrants aged between 25 and 64 years who came for family reasons were 34.8 percentage points less likely to be economically active than non-EU-27-born migrants who came for employment and had found a job before migrating. Even when differences in education, sex and age are accounted for, the gap remains large at 18.0 percentage points. Non-EU-27 Migrants who came for employment without a job offer before migration, who came for education reasons or who came to apply for asylum also show lower labour force participation rates than non-EU-27 migrants with a job offer before migrating. However, both the unconditional and the conditional participation gaps are smaller compared to family migrants. The analysis thus confirms that family migrants in the Brussels-Capital Region have the lowest labour market attachment.

	(1) Employment (no job before migrating)	(2) Family reasons	(3) Education	(4) Asylum	(5) Other
Unconditional difference: Probability of labour force participation	-11.3 percentage points	- 34.8*** percentage points	-11.4 percentage points	-25.4*** percentage points	-18.1* percentage points
Conditional difference: Probability of labour force participation	-0.0 percentage points	-18.0*** percentage points	-12.8* percentage points	-10.2 percentage points	-10.6 percentage points

Note: The sample consists of 1008 non-EU-27 born migrants who live in the Brussels-Capital Region. All coefficients estimated by a linear probability model. Language skills are self-assessed. The base category is “mother tongue”, which constitutes 17.5% of the unweighted sample. Conditional difference refers to estimates conditional on sex, education (low/medium/high) and age. The asterisks next to the reported estimates indicate whether estimates are significantly different from zero at conventional confidence levels, where *p<0.1; **p<0.05; ***p<0.01.

Source: OECD estimations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

Female migrants born outside the European Union show the lowest labour market attachment. In 2019, only 49.4% of women aged between 15 and 64 years who were born outside the EU-27 were economically active, a very low share compared to other population groups in the Brussels-Capital Region. In the same year, 60.3% of Belgian-born women and 72.2% of men born outside the EU-27 who are in the same age group were part of the labour force. On average, 61.1% of women born outside the EU-27 were economically active in the OECD in 2019. The participation rate of non-EU-27 born females in other OECD metropolitan areas is significantly higher. In other cities with a diverse population like Berlin (59.2%), Vienna (59.6%) or London (65.1%), the labour force participation rate of working-age women born outside the EU-27 was more than 10 percentage points above that of the Brussels-Capital Region in 2019 (Figure 2.14).

Figure 2.14. Female migrants born outside the EU-27 show the lowest labour market attachment in the Brussels-Capital Region

Migrant-specific structural barriers to employment provide another partial explanation for the relatively lower labour market attachment of non-EU-27 migrants. While the relatively lower level of education among non-EU-27 migrants provides a partial explanation for their lower labour market attachment, migrants face other distinct barriers to employment. In general, these include the non-recognition of foreign degrees, lacking language skills, not holding the citizenship of the destination country and discrimination in the labour market. Box 2.1 discusses these barriers in more detail.

Box 2.1. Why are employment rates among foreign-born migrants often lower compared to those of native-borns?

Foreign-born migrants show a lower labour market attachment across many OECD countries, measured by their labour force participation and employment rates. A number of structural reasons exist that explain this phenomenon. For each of these, policy measures can help the integration of migrants into the labour market.

A first reason for the relatively low employment among foreign-born migrants is that formal education may not be transferable across country borders. Due to country-specific job skills requirements and differences in the quality of education, degrees obtained abroad are sometimes not acknowledged in the destination country. As a result, income disparities can persist even for immigrants with the same level of education who do not receive support in getting their foreign degrees recognized (Ludolph, 2023[12]). Employers may also undervalue foreign degrees if they are less familiar with them. Acknowledging foreign degrees and offering retraining programs can improve migrants' chances of finding employment in their host country.

A second reason is that foreign-born migrants may lack language skills needed in the destination country. Studies have shown that migrants who speak the host country's official language have higher labour force participation rates, employment rates, and wages. Language courses can be helpful in improving migrants’ ability to interact in the host country's language and can increase their chances of finding work. Recent research conducted in the United States found that language training programmes generated a 6% annual return on investment and increased tax revenues over time (Heller and Slungaard Mumma, 2022[17]).

A third reason is that not having citizenship can negatively impact migrants’ employment opportunities. Due to limited public sector job options, weaker signalling value of foreign nationality, discrimination, and uncertainty regarding the duration of stay, not holding the citizenship of the destination country may affect employment rates negatively. Naturalisation can therefore benefit migrants' employment prospects. A quasi-experimental study conducted in France found that naturalisation had a positive effect on immigrants' income and hours worked (Govind, 2021[18]).

Finally, even if migrants fulfil all formal job requirements, discrimination in the labour market may occur during the hiring process. A recent meta-analysis of discrimination during the hiring process by Lippens, Vermeiren and Baert (2023[19]) reveals that ethnic minority candidates on average receive nearly one-third fewer positive responses to their applications than their majority counterparts in Europe and the United States. Candidates of Arab, Maghrebi, or Middle Eastern origin face the most severe discrimination. Targeted outreach to support discriminated groups and engaging employers in awareness campaigns and diversity plans can help overcoming hiring discrimination.

Sources: Govind (2021[18]), Is naturalization a passport for better labor market integration? Evidence from a quasi-experimental setting; Heller and Slungaard Mumma (2022[17]), Immigrant Integration in the United States: The Role of Adult English Language Training; Lippens, Vermeiren and Baert (2023[19]), The state of hiring discrimination: A meta-analysis of (almost) all recent correspondence experiment; Ludolph (2023[12]), The Value of Formal Host-Country Education for the Labour Market Position of Refugees: Evidence from Austria.

Non-EU-27 born migrants are underrepresented in the public sector of the Brussels-Capital Region. In 2019, 35 208 workers of Belgian origin aged 18 to 64 years worked in the public sector, corresponding to 21.5% of the underlying Belgian-born population. By comparison, only 11.4% of both migrants originating from Sub-Sahara Africa and the Maghreb region, the largest groups of immigrants from outside the European Union in the Brussels-Capital Region, were employed in the public sector in the same year. For migrants originating from Sub-Sahara Africa and the Maghreb region, these numbers are likely to overestimate the share of statutory civil servants since workers of foreign origin are mainly manual or clerical workers when employed in the public sector (Federal Public Service Employment, 2022[20]). Importantly, these statistics have two limitations: First, they do not consider that non-EU-27 born migrants also have a lower employment rate outside the public sector. Second, they do not consider the time since migration and do not include second-generation migrants.

Employed migrants with a non-EU-27 migration background are equally likely to work in the public sector as other groups once their lower likelihood to be employed in general is accounted for. OECD analysis, explained in more detail in Annexe 2.B, estimates the likelihood of public sector employment among migrants with non-EU-27 migration background in the region. For the purposes of the analysis, having a non-EU-27 migration background is defined as (i) a person being born in a non-EU-27 country or (ii) at least one parent being born in a non-EU-27 country. The results show that the reason for the underrepresentation of migrants with a non-EU-27 background in the Brussels-Capital Region’s public sector is the lower employment rate of migrants with a non-EU-27 background in general. In other words, migrants with a non-EU-27 background are likely to face the same challenges to work in the public sector as they do in the private sector.

City administrations can take steps to ensure proportionate representation of migrants and other minority groups. Across the OECD, cities have expanded their diversity strategies. Generally, women and people with disabilities represent the target groups of these strategies, while the focus on people with a migration background or on sexual orientation remain less widespread (OECD, 2021[21]). More diversity in the public sector cannot only provide new employment opportunities for minority groups. Increasing diversity and inclusion in the public sector increases trust in the government by minorities and decreases discrimination at the workplace against minority groups (Nolan-Flecha, 2019[22]).

The Brussels-Capital Region’s commitment to diversity could draw inspiration from city administrations that have made their recruitment processes more inclusive towards migrants. As part of its strategy to combat labour market discrimination and promote diversity, the government of the Brussels-Capital Region committed to make its public sector a positive example of a diverse workforce (Gouvernement de la Région bruxelloise, 2023[23]). The strategy rests on three pillars: (i) monitoring and evaluating the diversity of its work force along a wide range of dimensions, (ii) focussing on competences rather than formal degree requirements in hiring and (iii) increasing binding quotas for people with a disability. In its planning to implement its diversity strategy and tailor it to its migrant population, the region could draw on good practices from other OECD cities. For instance, to counter labour market discrimination, the Municipality of Amsterdam has adopted an inclusive hiring strategy. This strategy includes setting non-binding targets and quotas for the number people with a migration background. In London, United Kingdom, the Camden City Council has launched the “Race Equality Action Plan” in which it commits to making recruitment processes fair and unbiased and to increase the representation of people with a migration background at all hierarchical levels. The Council introduced a series of changes in its recruitment, including: i) anonymised recruitment, ii) inclusive recruitment training and best practice sharing for hiring managers, iii) the use of inclusive and gender-neutral language in job descriptions; iv) the advertisement of jobs in organisations that provide services for people from ethnic minorities; and v) the revision of all-white shortlists for roles at high grades. In Berlin, Germany, the city administration went even further and implemented a public sector diversity plan. Box 2.2 describes the city of Berlin’s approach to increasing diversity in its public sector in more detail.

Box 2.2. A diversity plan for the public sector in Berlin, Germany

In 2021, the government of Berlin, one of Germany’s 16 federal states, passed the “Participation and Integration Act” (Partizipations- und Integrationsgesetz).

The main objective of the new act is to give people with a migration background special consideration when filling vacancies in the public sector. For its purposes, the administration defines migration background as a person who was born outside of Germany (and did not hold German citizenship at birth) or who has at least one parent who was born outside of Germany (and did not hold German citizenship at birth).

While quotas are not binding and declaring migration background relies on self-reporting, the Act introduces a set of new rules that will help to move the city administration towards a more diverse workforce. Importantly:

It aims to ensure that, at all occupational levels, people with a migration background are represented at least in accordance with their share of the population of Berlin;
Plans to increase diversity and non-binding targets for people with a migration background are being introduced at all public offices in the federal state of Berlin;
The city targets workers with a migration history through binding regulations for job advertisements;
Public sector employees receive additional sensitivity training on working for a diverse employer;
An advisory board for participation and integration is formed in each of Berlin’s boroughs.

Source: Beauftragte des Berliner Senats für Integration und Migration (2021[24]), Gesetz der offenen Tür - Das Partizipationsgesetz und die wichtigsten Fragen und Antworten, available online at: https://www.berlin.de/lb/intmig/_assets/themen/partintg/211207_broschuere_partmig_web_barrierefrei.pdf (accessed on 14.06.2023).

Evidence further suggests that obtaining Belgian citizenship significantly increases employment rates among non-EU-27 migrants in Belgium. Bignandi and Piton (2022[25]) show that naturalised migrants from non-EU-27 countries are 7 percentage points more likely to be employed than those without Belgian citizenship. Migrants originating from the Maghreb (+8 percentage points), as well as less educated migrants (+8 percentage points) benefit the most from obtaining Belgian citizenship. Their analysis also suggests that obtaining citizenship has a positive effect on migrants’ entrepreneurship and public sector employment in the long term.

A large share of non-EU-27 born migrants residing in the Brussels-Capital Region only have intermediate, basic or no French or Dutch language skills. A share of 59% of non-EU-27 born migrants state that they speak at least one of the two languages proficiently, defined as either native or advanced knowledge of the language. A share of 23% report intermediate proficiency in at least one of the local languages, while 17% only report beginner-level or no language proficiency.9 A lack of knowledge of the two official languages is particularly problematic against the background of high language requirements by employers in the Brussels-Capital Region. In 2019, approximately 40% of job vacancies reported to Actiris required the knowledge of both French and Dutch (Actiris/View, 2020[26]). The issue of high language skills requirements is further analysed in Chapter 5 of this report.

Language skills are indeed a very strong predictor of labour force participation among non-EU-27 born migrants in the Brussels-Capital Region. Speaking either French or Dutch at least at an intermediate level is strongly associated with labour force participation among non-EU-27 migrants. Table 2.2 shows that in 2021, non-EU-27 born migrants aged between 25 and 64 years who spoke French or Dutch as their mother tongue were 7.2 percentage points, 10.1 percentage points, 30.0 percentage points more likely to be economically active than advanced, intermediate and beginner-level speakers respectively. Non-EU-27 born migrants with hardly any or no language skills in French or Dutch were 38.9 percentage points less likely to be part of the labour force. Differences in education, sex and age between migrant groups with different knowledge of at least one of the local languages can only explain a small part of the labour force participation gap. Non-EU-27 born migrants who only speak beginner-level or no Dutch or French remain 22.1 percentage points and 28.8 percentage points less likely to be part of the labour force, even when differences in education, sex and age are accounted for.

	(1) Advanced (proficient user)	(2) Intermediate (independent user)	(3) Beginner (basic user)	(4) Hardly any or no language skills
Unconditional difference: Probability of labour force participation	-7.2* percentage points	- 10.1** percentage points	-30.0*** percentage points	-38.9*** percentage points
Conditional difference: Probability of labour force participation	-4.0 percentage points	-3.1 percentage points	-22.1*** percentage points	-28.8*** percentage points

Note: The sample consists of 1011 non-EU-27 born migrants who live in the Brussels-Capital Region. All coefficients estimated by a linear probability model. Language skills are self-assessed. The base category is “mother tongue”, which constitutes 17.5% of the unweighted sample. Conditional difference refers to estimates conditional on sex, education (low/medium/high) and age. The asterisk next to the reported estimates indicate whether estimates are significantly different from zero at conventional confidence levels, where *p<0.1; **p<0.05; ***p<0.01.

Source: OECD estimations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

The Brussels-Capital Region offers a mandatory language and a broader civic integration training to newly arrived migrants from non-EU-27 countries. In the Brussels-Capital Region, newly arrived migrants from non-EU-27 countries who register with a municipality are required to take a mandatory integration course. These integration courses are offered by the Dutch-speaking and the francophone communities. They consist of an assessment of education and qualifications, a civic integration course, a language course (either Dutch or French) and basic labour market counselling.

The Brussels-Capital Region could ensure that these mandatory civic integration courses target women more specifically. Since a large share of female migrants arriving in the region from non-EU countries come as family migrants, they often have a low attachment to the labour market. The Brussels-Capital Region could ensure that mandatory integration courses include voluntary discussions on gender equality, women’s rights, and health care, following good practices from OECD countries such as Germany’s “Migrant Women Simply Strong in Daily Life” (OECD, 2023[27]). In these courses, Germany prepares migrant women for their lives in Germany. Courses are taught by women for women and include exchanges about life in Germany as a foreign woman, additional opportunities to learn the German language and information about education offers, opportunities on the local labour market and childcare services (Bundesamt für Migration und Flüchtlinge, 2022[28]).

Evidence from the Flemish Region shows that hiring discrimination against migrants is a pertinent issue in the labour market of Belgium. While Actiris/View (2019[29]) conducted a detailed analysis of pathways into employment among migrants in the Brussels-Capital Region, experimental studies on hiring discrimination have so far only been carried out in other parts of Belgium. For instance, Baert et al. (2017[30]) show that in the city of Ghent, job applicants with a foreign sounding name receive 30% fewer call-backs compared to applicants with Belgian names and otherwise equal CVs. Like in other OECD countries, discrimination affects non-EU applicants rather than applicants from EU member states (Lippens, Vermeiren and Baert, 2023[19]). Baert et al. (2017[30]) further show that hiring discrimination is lower for candidates with extensive work experience in Belgium but the effect only becomes visible for migrants with more than ten years of work experience.

It is not clear if the tightening of the labour market in the Brussels-Capital Region will lower hiring discrimination. Baert et al. (2015[31]) show that in occupations where recruitment is difficult, employers in Belgium discriminate less against foreign-sounding names when hiring. However, evidence from Sweden shows that this negative cross-sectional relation between occupational tightness and hiring discrimination is reversed when changes in call-back rates between native and foreign applicants are compared at various degrees of labour market tightness (Carlsson, Fumarco and Rooth, 2018[32]). In conclusion, while a tight labour market may facilitate the job search of minority groups, hiring discrimination still requires the attention of policymakers.

Discrimination at the workplace due to foreign origin or religious beliefs may further contribute to shorter employment spells among some groups of migrants. While most academic studies focus on discrimination during the hiring process, discrimination can also occur at the place of work. For example, this can occur if promotion decisions are biased against employees with a migration background or through acts of micro-aggression such as the use of inappropriate language to refer to co-workers’ ethnicity or their religious beliefs. The “Interfederal Center for Equal Opportunities” (Centre pour l'égalité des chances et la lutte contre le racism, Unia) an independent public institution in Belgium that supports individuals who experience discrimination, reports that after race, disability, health and age, religious or philosophical beliefs was the fifth most common type of discrimination experienced in the Belgian labour market in 2022 (Unia, 2022[33]). Figure 2.15 (Panel A) shows that discrimination at the workplace indeed occurs slightly less often in the Brussels-Capital Region than in the Flemish Region and the Walloon Region. In 2021, 4.6% of all foreign-born employed workers aged between 15 and 74 years stated they experienced any kind of discrimination, compared to 5.1% in the Flemish Region and 6.8% in the Walloon Region. Among all foreign-born employed, 2.8% stated that this was due to their foreign origin, a share significantly below that in the Flemish Region (4.4%) and the Walloon Region (4.4%). Among non-EU-27-born migrants in the Brussels-Capital Region, this share rises to 4.5%, compared to 1.4% among EU-27-born migrants.10 Panel B shows that only a small fraction of 1.5% among foreign-born migrants report that discrimination due to foreign origin is a major obstacle to finding employment in the Brussels-Capital Region. However, these self-reported statistics should be treated with care as applicants who experience hiring discrimination may not know that they experience discrimination if, for instance, they do not get invited for a job interview.

Figure 2.15. Discrimination against foreign-born workers in the Brussels-Capital Region provides a partial explanation for the high economic inactivity rate among non-EU migrants

Low participation in childcare is another reason for the low labour force participation rate among non-EU-27-born migrant women in the Brussels-Capital Region. Childcare uptake among migrants, and in particular migrants from non-EU-27 countries is currently low (Biegel, Wood and Neels, 2021[34]). While close to 70% of 0-2 year-old children from high-income households participate in childcare in Belgium, this share is only 36.4% of children from low-income households (OECD, 2022[3]). Improving access to childcare among low-income households would disproportionally benefit non-EU-born migrant women for two main reasons. First, households with a non-EU-27 migrant background are more likely to fall into the low-income bracket across Belgian regions (OECD, 2022[3]). Second, the number of very young children is higher in households with a migrant background. In the Brussels-Capital Region, women holding Belgian citizenship have 1.46 children on average, compared to 1.88 children among women with foreign citizenship.11

The Brussels-Capital Region’s Maison d’Enfants provide temporary childcare for parents who are registered with Actiris as jobseekers or who have recently found employment. Actiris provides financial and practical support to parents with young children during their job search. Its Maison d’Enfants are childcare centres for short-term childcare of children below the age of three. These allow parents to leave their children while participating in training, taking exams or during job interviews. Support includes covering travel expenses if the exam centre is outside of the region. For parents who take up new employment, the Maison d’Enfants offer temporary childcare for up to three months. The Maison d’Enfants are therefore an important tool to facilitate the labour market integration of parents in vulnerable households. Its use could be expanded to cover children of individuals registered with the Centre Public d'Action Sociale (CPAS) during the attendance of training courses. To increase the number of available childcare spots, Actiris, the CPAS and childcare providers can work together to predict childcare facility usage and allocate temporary spots when, for instance, spots become available due to children on sick leave.

The geography of work in Brussels and its functional urban area

The Brussels-Capital Region is the largest commuting zone in Belgium. The population of the Brussels-Capital Region was around 1.2 million inhabitants in 2021, compared to around 6.7 million in Flanders and 3.7 million in Wallonia, the two other regions of Belgium. There are over 824 000 working-age inhabitants (defined as 15-64 years of age) in the Brussels-Capital Region. This corresponds to 67% of its total population, compared to 63% in the Flemish Region and 64% in the Walloon Region, reflecting its relatively younger urban population. The surface area of the Brussels-Capital Region covers only 162 square kilometres. However, its functional urban area – or commuting zone – extends well into parts of Flanders and Wallonia, is home to a population of over 3.3 million and covers over 4 800 square kilometres. Box 2.3 discusses the concept of functional urban areas in more detail.

Box 2.3. Functional urban areas – the concept of commuting zones

In addition to its definition of TL2 and TL3 regions, the OECD also uses the concept of functional urban areas. These correspond to commuting zones. The commuting zone is composed of local administrative units for which at least 15% of their workforce commute to the city. Commuting zones of the functional areas are identified based on commuting data (travel from home-to-work). Figure 2.16 shows the commuting zone of Brussels and puts it into perspective to other functional urban areas in Belgium.

More than half of those working in the Brussels-Capital Region live in the Flemish Region or the Walloon Region. In 2021, among 796 000 employed workers in the Brussels-Capital Region, 393 000 resided in the Brussels-Capital Region, while 259 000 and 144 000 commuted into the Brussels-Capital Region from the Flemish Region and the Walloon Region respectively. Figure 2.17 shows that this corresponds to 49% of workers employed in the region who also live within its administrative boundaries, 33% of workers who commute into the region from the Flemish Region, and 18% who commute from the Walloon Region.

Figure 2.17. Only half of the jobs in the Brussels-Capital are filled by workers living in the Brussels-Capital Region

The number of outbound commuters from the Brussels-Capital Region is smaller but still sizeable. In 2021, 479 000 people of working-age living in the Brussels-Capital Region were employed. Among these, 393 000 (82%) worked within the administrative boundaries of the region and 87 000 (18%) worked outside the region.12 Figure 2.18 shows the share of outbound commuters by region of work. In absolute terms, these shares correspond to 53 000 commuters to the Flemish Region, 23 000 commuters to the Walloon Region and 10 000 commuters who are registered as residents of the region but who work abroad.

Figure 2.18. Most commuters from the Brussels-Capital Region work in the Flemish Region

Only a small number of outbound commuters are less educated workers. In 2020, around 13 900 (3 800) less educated workers, 14 500 (4 800) medium-educated workers and 24 400 (15 100) highly-educated workers who live in the Brussels-Capital Region worked in the Flemish (Walloon) Region. These shares approximately correspond to the respective shares in each education category among the working-age population that lives in the region (see Figure 2.4, Panel A). However, given the few job opportunities less educated jobseekers have in the region, a wider search radius could potentially benefit their employment prospects.

The Flemish part of the Brussels urban functional area may indeed offer some job opportunities for less educated jobseekers registered with Actiris. An analysis of job vacancies in the Flemish Brabant Region, the Flemish region that approximately corresponds to the Flemish part of Brussels’ urban functional area, shows that the demand for low-skilled workers is relatively high. Figure 2.19 shows that between 2011 and 2022, the annual number of job vacancies received by the Flemish PES, VDAB (Vlaamse Dienst voor Arbeidsbemiddeling en Beroepsopleiding), in Flemish Brabant stayed constant at around 30 000 between 2011 and 2020. It then rose to 44 000 by 2022. Among these vacancies, a stable share of around 40% listed only low education requirements. The total number of vacancies listing only low education as a requirement reached a decade-high of 17 700 in 2022.

Figure 2.19. Around 2 in 5 job vacancies in Flemish Brabant have low education requirements

Labour shortages in some sectors of nearby Flemish districts offer opportunities for less educated jobseekers, including non-EU-27 born migrants with unrecognised foreign qualifications. An analysis of existing commuter flows, jobseeker profiles from the Brussels-Capital Region and job vacancies in the Flemish Region by Carpentier et al. (2023[36]) confirms the potential to promote greater jobseeker mobility in the region. The study explores the potential to match jobseekers from the region with job vacancies posted by employers in Halle-Vilvoorde/Hal-Vilvoorde, one of the two districts that constitute the region of Flemish Brabant and thus a large part of the Brussels functional urban area. The authors show that service professions, transport and logistics, and industrial occupations are sectors in which labour demand is high in Halle-Vilvoorde/Hal-Vilvoorde. Many vacancies in these sectors have low education requirements. An online survey conducted by Carpentier et al. (2023[36]) further shows that these sectors are also often named in the job aspirations of jobseekers who live in the Region, including by migrants born in non-EU-27 countries with unrecognised foreign qualifications. The same survey further reveals that non-EU-27-born migrants have a higher willingness to commute than Belgium-born jobseekers. Other sectors that meet the criteria of high demand in the Flemish Region, low education requirements and a high willingness of jobseekers from the region to work in these sectors also include hospitality, trade and sales, and wider administration professions. However, job vacancies posted by employers in the hospitality sector often require flexibility in working hours, while trade and sales and administrative professions often require advanced Dutch language skills.

Less educated and individuals may require additional mobility incentives. Academic studies from across the OECD show that the willingness to commute increases with educational attainment. For instance, Lee and McDonald (2003[37]) show that male workers, full-time salaried workers, workers with higher levels of education are willing to travel longer distances in Seoul, Korea. Similarly, Cassel et al. (2013[38]) show that next to gender and the presence of children in the household, the level of education is the main predictor of commuting distance in Dalarna, Sweden. Less educated individuals may therefore require additional mobility incentives.

Legislation in Belgium would permit the matching of jobseekers registered with Actiris with vacancies from the surrounding Flemish Region. In general, the unemployed may refuse a job offer if the total daily commuting time is more than four hours or if the daily absence from home is more than 12 hours within the means of available transport. The job offer cannot be refused if the distance between home and work is less than 60 kilometers. For unemployed over 50 years of age, the total daily commuting time should not exceed two hours and the daily absence from home should not exceed 10 hours. In exceptional circumstances, the unemployed may refuse a job with a shorter commute, if commuting is considered too high given the age and health of the person. In OECD comparison, these geographic mobility requirements for jobseekers fall close to the average. On a scale from 1 to 5, where 5 are the strictest mobility requirements, Belgium scores a 3.0, compared to the OECD average of 2.83 (OECD, 2022[39]).

Determining the mobility of jobseekers requires a detailed assessment of available infrastructure and close cooperation with VDAB. While the unemployment benefit legislation gives considerable leeway, facilitating the mobility of workers who live in the Brussels-Capital Region requires an assessment of available infrastructure on a case-by-case basis by PES staff. Such assessments could include the commuting time. Commuting time is primarily determined by the availability of public transport from the place of residence to the place of work. Furthermore, childcare responsibilities among jobseekers may not allow these to travel large distance. Finally, job vacancies in Flanders need to be screened for those that meet the language skills of jobseekers from the Brussels-Capital Region, notably with regards to Dutch language requirements.

Some OECD countries go further and support the relocation of jobseekers for employment. In Korea, Iceland and Norway unemployment benefit recipients must be willing to move for employment (OECD, 2022[39]). A larger group of OECD countries, including the Czech Republic, Finland, France, Germany, Iceland, Japan, Korea, Latvia, Luxembourg, New Zealand, Norway, Poland and the Slovak Republic, support the relocation of unemployment benefit recipients if no job can be found within commuting distance.

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Annexe 2.A. Regional terminology

The OECD classifies regions within its 38 member states on two territorial levels (TL). This OECD classification reflects the administrative organisation of the country. Within the OECD, there are 433 large (TL2) regions and 2 414 OECD small (TL3) regions. Annex Box 2.A.1 discusses this regional terminology for the Brussels-Capital Region and Belgium.

Annex Box 2.A.1. OECD regional terminology applied within this report

The TL2 level: The Brussels-Capital Region as one of the three regions in Belgium

In Belgium, the OECD TL2 level corresponds to the Brussels-Capital Region, the Flemish Region and the Walloon Region. Due to its administrative importance for labour market policies, the TL2 level represents the main level of statistical analysis in this report. Not all statistics are available on the TL2 level. Where necessary, the report, therefore, makes use of statistics from the Eurostat Regional database. Unlike the OECD’s TL classification, Eurostat makes use of the “Nomenclature of Territorial Units for Statistics” (NUTS) classification. For Belgium, the TL2 level only corresponds to the NUTS-2 level for the Brussels-Capital Region. For the Flemish Region and the Walloon Region, the NUTS-2 level is made up of ten provinces: Liege, Antwerp, Luxembourg (BE), West the Flemish Region, Hainaut, Limburg, Namur, East the Flemish Region, Flemish Brabant, Walloon Brabant.

The TL3 level: The Brussels-Capital Region as an arrondissement in Belgium

The TL3 level is a more granular geographical level. In Belgium, it corresponds to the administrative unit of arrondissements. The Brussels-Capital Region is also one of the 43 Belgian arrondissements. Thus, the TL2 and TL3 levels cover the same geographic area for the Brussels-Capital Region. The TL3 level also corresponds to the NUTS-3 level classification used by Eurostat.

The 19 municipalities of the Brussels-Capital Region

The 19 municipalities of the Brussels-Capital Region are a separate geographical unit not covered by OECD data. Statistics presented at the municipality level are based on statistics provided by the Brussels Institute for Statistical Analysis (Institut Bruxellois de Statistique et d’Analyse; IBSA).

Source: “OECD Territorial Grid”, OECD Centre for Entrepreneurship, SMEs, Regions and Cities, https://www.oecd.org/cfe/regionaldevelopment/territorial-grid.pdf.

Annexe 2.B. The likelihood of public sector employment among migrants with a non-EU-27 background in the Brussels-Capital Region

To estimate the likelihood of public sector employment among migrants with a non-EU-27 background in the Brussels-Capital Region, this analysis makes use of data from the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”. It estimates the likelihood of public sector employment using the following specification for all employed individuals aged 20 to 64 years who live in the Brussels-Capital Region:

$P u b l i {c_S e c t o r}_{i} = β_{0} + β_{1} {N o n_E U_27}_{i} + β_{2} {E U_27}_{i} + β_{3} X_{i} + \hat{⅄_{i}} + μ_{i}$ , (1)

where $P u b l i {c_S e c t o r}_{i}$ is a binary variable indicating if individual i works in the public sector. For the analysis, the public sector is defined as Nomenclature of Economic Activities (NACE) category “O”, which refers to “Public Administration and Defence; Compulsory Social Security”. ${N o n_E U_27}_{i}$ is a binary variable that captures a non-EU-27 background. It indicates if individual i was born in a non-EU-27 country, or if the individual has at least one parent who was born in a non-EU-27 country. ${E U_27}_{i}$ captures an EU-27 background (excluding Belgium) in a similar manner. $X_{i}$ is a vector that includes control variables for gender (categorical), age (continuous) and education (low/medium/high). $\hat{⅄_{i}}$ is the inverse Mills ratio which corrects for the different probability of individuals in the sample to be employed. It is estimated from the following Heckman selection specification:

$p r o b i t : P r {(E m p l o y e d = 1 | x_{i})}_{i} = ɸ (0 + 1 {N o n_E U_27}_{i} + 2 {E U_27}_{i} + 3 Z_{i} + i$ ), (2)

Where $Z_{i}$ includes the same control variables as $X_{i}$ of equation (1) and is identified through an additional binary variable that indicates whether the individual lives in a household with children.

The results are summarised in table Annex Table 2.B.1. All estimated coefficients only show a weak association with the outcome of public sector employment once the general likelihood of employment is accounted for. Having a non-EU-27 migration background increases the likelihood of public sector employment by 2.7 percentage points, compared to Belgian-born individuals with Belgian-born parents.

Variable	Public sector employment
Non-EU-27 migration background	+2.7** percentage points
EU-27 migration background	-2.0 percentage points
Female (base category: Male)	+0.1 percentage points
Age	+0.0 percentage points
Education (base category: low) - Medium - High	+0.3 percentage points +0.0 percentage points

Note: The sample consists of 5 517 individuals who live in the Brussels-Capital Region, of which 2 111 were employed (unweighted). The asterisk next to the reported estimates indicate whether estimates are significantly different from zero at conventional confidence levels, where *p<0.1; **p<0.05; ***p<0.01.

Notes

← 1. Statistics and calculations in the paragraph based on the OECD Regional Database, “Regional Demography: Population by 5-year age groups, large regions TL2”, “Regional Labour: Labour indicators, large regions TL2” and OECD City Statistics, “Demography”.

← 2. Statistics in this paragraph based in the OECD Regional Database, “Regional Demography: Demographic Composition and Evolution, large TL2 and small TL3 regions and “Database on Migrants in OECD Regions – Migrants – Demographic Characteristics”.

← 3. In 2022, employment shares in “Wholesale and retail trade, transport, accommodation and food service activities” (NACE Rev. 2 categories G and I) corresponded to 20% in the Brussels-Capital Region, 22% in the Flemish Region and 21% in the Walloon Region. See Eurostat table “Employment by sex, age, economic activity and NUTS 2 regions (NACE Rev. 2) (1 000) (lfst_r_lfe2en2)”.

← 4. The large average annual growth rates in the agriculture, forestry, and fishing sector, the extractive industry and electricity, gas, steam, air conditioning should be interpreted with care as the high growth rate mostly reflect very low baseline employment, with 74, 47 and 2 650 jobs respectively in 2010.

← 5. The Job Vacancy Survey is conducted quarterly. Annual numbers correspond to quarterly averages for a given year. These numbers are therefore not directly comparable to job vacancies reported to public employment services, which capture all vacancies received throughout the year.

← 6. To test whether the propensity of local employers to share vacancies with Actiris changed over time, time trends in the ratio of the total annual number of vacancies received by Actiris to the quarterly average number of vacancies reported by employers in the JVS were compared.

← 7. OECD calculations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

← 8. OECD calculations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

← 9. OECD calculations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

← 10. OECD calculations based on the 2021 EU-LFS ad-hoc module “Labour market situation of migrants and their immediate descendants”.

← 11. Statbel, “Indicateurs de fécondité, selon la nationalité de la mère (belges ou étrangères), par région, 2020“.

← 12. Statistics from Actiris/View, "B. Population active occupée et emploi intérieur - B.1. Caractéristiques de la population active occupée", see https://www.actiris.brussels/media/ngbjzb0u/population-active-occup%C3%A9e-et-emploi-int%C3%A9rieur-h-37ED3987.pdf (accessed 23/08/2023).

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