Belgium Unlocked

Will Belgium become uncompetitive? Worker wage increases challenged

Will Belgium become uncompetitive? Worker wage increases challenged
Demonstrators pictured at a national demonstration of the three main trade unions in Brussels. Credit: BELGA PHOTO DIRK WAEM

Workers beware. Until at least 2024, it may be necessary to impose a freeze on average wage increases in Belgium, according to a new report by the Central Economic Council (CEC). Trade bosses and unions are understandably concerned and will meet to discuss the new findings this evening.

The report concludes that in some sectors, Belgian wages are much higher than compared to those in neighbouring economies. To prevent companies currently operating in Belgium from moving abroad where the cost of labour is lower, the CEC argues that it will be necessary to close this gap.

Belgium’s maximum average wage margin, defined by Belgium’s unpopular Wage Margin Act of 1996, will therefore need to be significantly reduced, the CEC warns.

The margin increased by 0.4% this year. Over the next two years this figure would need to drop to 0%, Le Soir reports. In other words, companies and unions would be denied the legal framework to negotiate average wage increases for their employees; attempts to do so could then be punished. Unions, naturally, are vehemently opposed to the suggestion.

Belgian wages will continue to increase through Belgium’s automatic wage indexation which aims to raise wages in line with inflation. However, the reduced maximum wage margin will have an overall negative weighting on these future increases.

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In a press release, the FGTB (national socialist union) has already stated that it will not sign any agreement setting wage growth standard at 0%. While worker salary increases have been presented by business owners as a luxury that Belgium’s economy can ill afford, corporate profits have never been so high: 45.2%, according to the latest National Bank of Belgium (NBB) report.

Against the backdrop of record-high energy bills, inflation, and the growing burden on household finances, unions are once again calling on Belgium to make the 1996 wage margin laws optional. Until recently, this has been seen as taboo by successive Belgian governments. Nevertheless, these calls have become more vocal following repeated demonstrations and an upcoming 9 November general strike.

Unions maintain that without an improvement in purchasing power in addition to wage indexation, many Belgians will fall into poverty. State-mandated wage stagnation serves as an additional kick in the teeth of the working and middle classes. Unions uphold the right for employers, in cooperation with unions, to increase wages as they see fit.

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