The Functional Urban Area of Leuven, located in the Vlaamse-Brabant province of the region of Flanders, in Belgium, includes the municipality of Leuven and a dozen smaller municipalities around it. In 2020, it had a population of nearly 260,000 people, of which almost 40% lived in the city of Leuven. Despite being a distinct FUA, Leuven is closely linked to the metropolitan area of Brussels, especially in terms of housing and commuting dynamics. However, Leuven is also a job basin on its own that has been steadily growing in the last decade, particularly in the fields of research, healthcare, innovative entrepreneurship, and creative industries.
Main challenges, trends and policies
In Belgium, and in Flanders in particular, cultural preference for homeownership is very pronounced, and owner occupation rates are extremely high, especially in suburban areas, while rental dwellings are more common in cities. The low proportion of social housing means that people with low socioeconomic status can have trouble finding a suitable dwelling, and often have to face affordability problems on the private rental market. In Leuven house prices and rents are higher than the Flemish average, making the affordability issue very relevant. Investments in social housing provision, together with innovative housing concepts are the proposed municipal strategies to address the problem.
Although unemployment rates in Flanders and Leuven are comparatively low, employment opportunities are unevenly distributed, and rates of inactivity are quite high, indicating a number of barriers to employment. Particularly young people, people with a low education and people with a migrant background face a relatively high unemployment or inactivity risk. Thanks to highly protective legislation and collective negotiation, precarious and non-standard employment is not yet prevalent, although it is on the rise. Labour market policies mainly focus on activation and training of the unemployed and inactive population, particularly the young.
The Flemish school system can be characterized as decentralized and segmented. Educational inequalities occur mostly along parental education, wealth and ethnic background lines and are reproduced across generations. These inequalities seem to be further enhanced by early tracking and school segregation. Current educational policies aim to increase the equality of opportunities, with mixed results.
In Belgium, in Flanders and in Leuven, socioeconomic inequalities are very evident both in terms of the health of residents and in terms of their access to the healthcare system. People with a low socioeconomic status show worse physical and mental health conditions overall, an increased risk of premature mortality, and most importantly a worse access to healthcare services, mostly due to unaffordability, despite Flemish policy efforts in the last decade.
Discussion and main conclusions
- Belgium stands out in Europe as a country with particularly low levels of socioeconomic inequality. Its Gini coefficient has remained stable at around 0.26 for the last decade, and redistribution through taxation and social benefits is among the most efficient in Europe. Indeed, the Belgian welfare system still guarantees very high levels of support.
- However, when looking more in-depth, more complex dynamics of economic inequality emerge. Wage inequality is low thanks to collective bargaining, but income inequality is rising, mostly due to high levels of inactivity for vulnerable groups and young people with low education levels. However, it is wealth inequality that has the strongest impact, as the Gini coefficient for wealth distribution is approximately equal to 0.6. The deepest cleavage exists between those who have housing wealth and those who do not. Thus, renters, who are often also young, have one of the weakest economic positions.
- Important differences between the different regions in terms of economic growth, employment levels, education and health performance highlight territorial dynamics of inequality, which are rarely addressed.
- Leuven’s economy has been growing at a relatively high pace for the last decade, and the city is now very prosperous. This makes it an up-and-coming European player in innovative and highly technological sectors, as well as in the knowledge and creative sectors. This economic strength provides advantages, but also fuels inequalities. The highly specialized and dynamic labour market is very attractive for international professionals, but has no room for low-skilled youth, who faces high level of unemployment and inactivity.
- House prices are becoming prohibitive for a larger segment of the population, which increases the centrifugal movement of middle-income families towards other municipalities in the FUA, only partially addressed by housing policies. On the other hand, the high levels of liveability and the proximity to Brussels make Leuven attractive for wealthier households looking to move out of the capital, thus generating a vicious cycle that reinforces house prices growth. Moreover, the large presence of university students fuels the demand for rental dwellings, and rents are soaring as well, effectively pushing the more vulnerable groups towards the outskirts of the core city.
- Leuven has only recently taken stock of the inequalities that its economic growth has generated, and policy response is still insufficient. Indeed, the interaction of the different policy and governance levels is complex, and it leaves very little room for manouvre to municipalities. The Flemish Region is definitely a more important player than the Municipality of Leuven in many policy domains, and its guidelines highly influence what initiatives and programmes are implemented in the FUA.
- Overall, it can be said that, albeit much “softer” than in many other European countries, socioeconomic inequalities do exist in Belgium, in Flanders and in Leuven, and they play out along ethnic and educational lines. The advice would be to pay more attention to the groups that are left behind in the growth of the city and of the region, with a particular effort in involving youth – particularly vulnerable youth, and not only those who volunteer for political participation – in a more structural way on relevant policy domains such as education and employment.
- Although the hardest phase seems to be over, the structural impact of the Covid-19 pandemic is still difficult to assess. The general consensus is that it will exacerbate existing inequalities in the long term, as it has heavily impacted education of younger generation, highlighted the deep imbalances of the healthcare system, and in general put a spotlight on all the warped mechanisms that perpetuate socioeconomic inequalities in Belgian society.