Wages and benefits in Belgium expected to rise twice next year

Wages and benefits in Belgium expected to rise twice next year
Credit: Belga / Eric Lalmand

Wages and benefits are expected to increase by 2% twice in 2024 as the pivotal index will be exceeded in both March and September next year, the Federal Planning Bureau confirmed in its latest outlook for the Belgian economy on Tuesday.

Belgium's "smoothed health index" – used to calculate wage indexations for public sector workers as well as social security and pension increases – was exceeded in October, triggering automatic social benefit hikes in November and salary rises for civil servants in December to reflect the increased the cost of living.

The previous time the index rose so much that it exceeded the threshold to trigger these increases in benefits and wages was in November 2022.

Next, however, this is expected to happen not once, but twice: in March as well as September, the Planning Bureau reported on Tuesday. Consequently, social benefits are expected to rise by 2% in both April and October, and civil service wages in May and November.

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The Planning Bureau expects inflation to average 4.1% in 2023, followed by 4% in 2024. Last month, the Bureau also forecast an inflation average of 4.1% this year, but came in slightly lower at 3.9% for next year. In any case, the figures come out much lower than last year: in 2022, inflation was at 9.59%, and in 2021 at 2.44%.

Belgium's health index is largely based on the consumer price index but excludes alcoholic beverages, tobacco products, and certain kinds of fuel. The smoothed health index is the average health index value over the previous four months.

Currently, Belgium is the only eurozone country other than Luxembourg in which both public and private wages are automatically indexed to inflation.

Earlier this year, the Organisation for Economic Co-operation and Development (OECD) stated that Belgium's wage indexation system poses one of the "main risks" to the country's economic outlook, as it could potentially induce "more persistent inflation."

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