Expats in Belgium: Their impact on the local economy

Belgium has about 220,000 expatriates. Although they only stay in the country temporarily, they do affect the local economy, especially in Brussels. A recent study by the Free University of Brussels (VUB) illustrates the economic impact of the presence of European and international institutions in the capital of Europe.

The international environment in Brussels generates up to 20% of the economy of the Brussels-Capital Region and up to 23.2% of regional employment, or more than 162,000 jobs. More than one in three Brussels residents has a foreign nationality and more than one in five has the nationality of an EU member state. ​ The total impact of international and European institutions and lobbies is estimated at between 8.7 and 13.9 billion euros. This socio-economic impact is equivalent to about one fifth of the regional economy of the Brussels-Capital Region.

Multiplier effect

These are among the findings of the study "Estimations of the Economic Impacts of International and European Institutions on the Brussels-Capital Region using a local Multiplier Approach" (VUB, 2020, under review). This research assumes that the expenditures of international organisations and lobbyists generate a multiplier effect through activating their supply chains, while their workers contribute to a further economic impact through their patterns of consumption.

The specificity of this approach is that all types of taxes, social security expenditures and savings are taken into account to estimate the net effects, thus providing more realistic estimates and avoiding the risk of overestimating the results.

Of the approximately 162,000 jobs created by the international sector in Brussels, 48,909 are direct jobs of staff employed by international institutions, with the main European institutions, agencies and bodies creating 90% of these jobs. ​

For example, some 21,000 people work for the European Commission, over 6,700 for the European Parliament, some 3,000 for the Council of the EU. ​ The European External Action Service (EEAS) has over 1,600 employees and the European Research Executive Agency over 700. Just over 35,000 of these employees live in the Brussels-Capital Region, 8,732 in the Flemish Region and 3,963 in the Walloon Region. Just over 500 employees are posted abroad.

'Cost of Living' index

According to the 'Cost of Living' index from HR firm Mercer, the Belgian capital has become a significantly more expensive city for foreign workers to live in. At the beginning of the year, the Belgian capital rose 16 places on the annual list and now ranks 39th. The remarkable rise is said to be due to high inflation and the weakening of the euro against the dollar.

"Living expenses have become significantly more expensive for expatriates and without adjustment of the indexation of their salaries, this will be at the expense of their purchasing power," Mercer told the Bulletin earlier this month.

The changed way of working as a result of the corona pandemic, with more people working from home and working flexibly, is also having an impact on the Brussels housing market.

"Many employees have reconsidered their priorities, work-life balance and choice of residence. Expats are more likely to reassess whether it is still attractive to work in Brussels under these circumstances," Mercer added.

The fact that Brussels has become more expensive may also have an impact on its attractiveness.

"In the long run, this rise in costs could prompt a company to withdraw its international employees from Brussels and relocate them to less expensive cities,’ Mercer concluded.

The 'Cost of Living' index compares prices and services in cities, including housing, transport, food, clothing, household items and entertainment.

This article is part of the five-part series Expats in Belgium.

(AHU)

© Easy Fotostock - Brussels, Belgium, June, 2019, Modern building of European Parliament and Office buildings in the European district in Belgium, Europe.