The unemployment reform proposed by the Arizona coalition could cost local Walloon authorities nearly €190 million annually, according to Belfius’s annual study on local finances published Thursday.
The Federal Government’s introduction of time-limited unemployment benefits means that anyone excluded from the system will be supported by their local Public Centre for Social Welfare (CPAS) and entitled to social integration income, according to Belfius.
Additionally, the CPAS will face an increased need for staff to handle the influx of new beneficiaries.
Communes are legally obliged to financially support the CPAS, and this reform will significantly affect them. However, their ability to adjust funding to CPAS is extremely limited, explains Arnaud Dessoy, head of Public Finance and Social Profit Studies at Belfius.
The CPAS have long faced high demand for social aid, exacerbated by recent crises such as the pandemic, floods, rising energy costs, and the arrival of Ukrainian refugees.
The administrative burden as well as the range of conditions and obligations for social aid have also intensified.
Municipal allocations to CPAS now account for about 11% of total ordinary expenditures. They have consistently increased since 2010, the study highlights.
Starting in 2026, when the unemployment reform will gradually be implemented, the €190 million annual cost identified by Belfius will further strain the financial situation of Walloon communes, which are already battling major budgetary challenges.
Flemish municipalities could face up to €203 million in extra costs in 2026 due to the Federal Government’s decision to limit unemployment benefits to a maximum of two years.
According to the study, if 30% of those who lose access to benefits turn to CPAS, local authorities would need to support around 16,000 new living wage recipients. If 46% do so, that number rises to 24,000 people, with corresponding costs jumping to over 200 million euros.
