[Belgium] Employers call automatic wage indexation ‘untenable’

With Europe withstanding a cost of living crisis that has seen both individuals and companies bear the brunt of rising prices, nine in ten employers have expressed deep concerns about Belgium’s automatic wage indexation, The Brussels Times reports.

A survey of 200 employers by the association of Flemish businesses Unizo revealed that one-third have had to delay company investments and recruitment because of the additional budgetary constraints of automatic wage indexation, according to Belga News Agency reporting.

In contrast to claims of wage stagnation, Unizo director Danny Van Assche said, “Workers’ syndicates continually claim that salaries will only rise by 0.4 per cent this year. This is absolutely false.”

Mr Van Assche explained that salaries are, by Belgian law, indexed automatically. This in fact means that “salaries in our country go up automatically and much more quickly than in neighbouring countries.” Citing the Belgian National Bank, Mr Van Assche put this figure at a “13 per cent rise between 2022 and 2024”.

That figure is reportedly corroborated by the European Commission, which forecasts a far greater rise in real-term salary costs for Belgium than in nearby countries. Unizo warns that rising salaries could stifle innovation and become a handicap for SMEs that struggle to remain competitive in a global market.

Speaking in a televised debate, Liberal Reformist Movement leader Georges-Louis Bouchez strongly put the case that Belgium’s automatic indexation does far more to protect employees from wage stagnation than in neighbouring countries.

Clients bear the costs

In addition, the survey showed that 96 per cent of SMEs were bracing themselves for wage increases. In 35 per cent of cases, this included by delaying or scrapping investment projects completely. Half of SMEs were looking to other parts of their business to cut costs.

Three-quarters of businesses reportedly feel that they have no choice but to pass along rising costs to clients; 47 per cent have already begun to do so. However, this squeezes profit margins and becomes unsustainable in the long term.

The employers’ organisation is calling for the automatic salary indexation to be adjusted, “Exceptional times call for exceptional measures,” Unizo said. It offers a couple of solutions to help companies with the difficulties.

One option could be for companies to pay lower social security costs for its employees. The second option would be to temporarily allow companies to not adhere to the automatic indexation laws, according to their financial means.

Source: The Brussels Times

(Link and quotes via original reporting)

With Europe withstanding a cost of living crisis that has seen both individuals and companies bear the brunt of rising prices, nine in ten employers have expressed deep concerns about Belgium’s automatic wage indexation, The Brussels Times reports.

A survey of 200 employers by the association of Flemish businesses Unizo revealed that one-third have had to delay company investments and recruitment because of the additional budgetary constraints of automatic wage indexation, according to Belga News Agency reporting.

In contrast to claims of wage stagnation, Unizo director Danny Van Assche said, “Workers’ syndicates continually claim that salaries will only rise by 0.4 per cent this year. This is absolutely false.”

Mr Van Assche explained that salaries are, by Belgian law, indexed automatically. This in fact means that “salaries in our country go up automatically and much more quickly than in neighbouring countries.” Citing the Belgian National Bank, Mr Van Assche put this figure at a “13 per cent rise between 2022 and 2024”.

That figure is reportedly corroborated by the European Commission, which forecasts a far greater rise in real-term salary costs for Belgium than in nearby countries. Unizo warns that rising salaries could stifle innovation and become a handicap for SMEs that struggle to remain competitive in a global market.

Speaking in a televised debate, Liberal Reformist Movement leader Georges-Louis Bouchez strongly put the case that Belgium’s automatic indexation does far more to protect employees from wage stagnation than in neighbouring countries.

Clients bear the costs

In addition, the survey showed that 96 per cent of SMEs were bracing themselves for wage increases. In 35 per cent of cases, this included by delaying or scrapping investment projects completely. Half of SMEs were looking to other parts of their business to cut costs.

Three-quarters of businesses reportedly feel that they have no choice but to pass along rising costs to clients; 47 per cent have already begun to do so. However, this squeezes profit margins and becomes unsustainable in the long term.

The employers’ organisation is calling for the automatic salary indexation to be adjusted, “Exceptional times call for exceptional measures,” Unizo said. It offers a couple of solutions to help companies with the difficulties.

One option could be for companies to pay lower social security costs for its employees. The second option would be to temporarily allow companies to not adhere to the automatic indexation laws, according to their financial means.

Source: The Brussels Times

(Link and quotes via original reporting)