Belgium's Federal Parliament has approved a controversial package of budget measures, including the new so-called "centenindex" system that will limit automatic wage indexation and benefit increases for some workers and pensioners.
The measures were passed late on Thursday night after months of political debate and delays.
For many expats and newcomers to Belgium, the most important change touches the country's automatic wage indexation system, which links wages, pensions and benefits to inflation.
Under the new rules, future index-linked pay rises will be fully applied only to the first €4,000 of a gross monthly salary. For pensions and benefits, the limit is €2,000 gross per month.
The measure will apply twice during the current Federal Government term: once from June 2026 and again from 2028.
In practice, higher earners will still receive an index increase, but a smaller one on the part of their salary above the threshold.
For example, a worker earning €5,000 gross per month would lose around €20 gross per month compared with a full indexation, according to HR specialist SD Worx.
The government hopes the reform will slow the growth of labour costs. Critics, however, describe it as a hidden "index jump" that weakens Belgium's long-standing wage protection system.
The centenindex could already take effect from Monday, 1 June, if the law is signed by the King and published in Belgium's official state journal in time.
The reforms triggered mixed reactions from employers and trade unions.
Business groups, including VBO and Unizo, supported the pension changes, calling them necessary to keep Belgium's pension system financially sustainable. However, both organisations criticised the centenindex, describing it as a hidden tax increase and accusing the government of ignoring alternative proposals from employers and unions.
Trade unions strongly opposed the pension reform and said they plan to challenge the new law before Belgium's Constitutional Court, arguing that it unfairly affects women, part-time workers and people with less stable careers.
The door is still open
The opposition resisted the measure, but there has also been increasing protest within the majority in recent weeks. Francophone liberals MR and Flemish Christian Democrats CD&V are putting the index back on the table in the ongoing budget negotiations.
They favour the alternative developed by the social partners, which involves giving less weight to energy prices in the index.
The measure is also unpopular with the social partners.
In a rare unanimous opinion, a group comprising the chief negotiators of Belgium’s federal social partners – the so-called Group of 10 – had recommended an alternative system, which consists of reducing the weight of energy costs in the index. However, the government rejected it, notably because, in its view, this would not guarantee the expected budgetary yield.
While Social Affairs Minister Frank Vandenbroucke (Vooruit) opposes reintroducing this proposal during the next budget discussions, the MR and CD&V parties are considering it.
Francophone centrists Les Engagés also "leave the door open" for an adjustment, said group leader Aurore Tourneur on Friday in De Ochtend. She called the social partners' proposal "interesting," although the cost and the fact that it is only applicable to the private sector are problematic for her party.
"We are the legislative branch; our job is to write laws and submit amendments. So if we still need to find new solutions, we are ready for it," she said. "If at some point you see that better solutions exist, then you must leave the door open."
The Parliament also approved a major pension reform. Workers who retire early without a long enough career record will receive a lower pension, while people who continue working beyond retirement age may receive a bonus. The reform will come into force in 2027.
