Belgium's next automatic wage indexation is set to be delayed by a month as the country's declining inflation rate continues to ease pressure on Belgian consumers.
In a press release published on Tuesday, the Federal Planning Bureau (FPB) predicted that Belgium will cross the next "pivot index" – that is, the point at which price rises automatically trigger wage hikes – in November rather than October this year.
The FPB also noted that, if its forecast is accurate, social benefits for Belgium's citizens – including unemployment benefits and pensions – will be increased by 2% in December this year. Public sector salaries will then be raised by the same amount in January 2024.
According to the latest data from Statbel, Belgium's official statistics office, Belgium registered an inflation rate of 5.2% in May – down from 5.6% in April and 6.7% in March. The FPB predicts that the country's annual inflation rate will further decline to 3.3% next year.
Too little, too late?
Despite the gradual easing of price pressures, a 2% wage hike in December or January this year is unlikely to assuage the financial concerns of Belgians, many of whom are becoming increasingly incapable of affording basic goods.
One study published earlier this year found that 27% of Belgians are unable to save any money at all at the end of each month, while one in eight have recently turned to friends and family members in order to make ends meet. A third declared themselves incapable of absorbing any further price increases.
Moreover, another survey conducted by Belgian media late last year found that 73% of Belgians feel that automatic wage indexations constitute an inadequate safeguard against inflation.
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"This result is not surprising," Philippe Ledent, an economist at ING, told Le Soir following the publication of the latter study. "The respondents are right in the sense that automatic indexation is failing to protect them from rising prices and the consequent decline in purchasing power."
Belgium's current system of wage indexations was introduced in response to rampant inflation in the aftermath of the First World War. It is the only eurozone country other than Luxembourg in which both public and private wages are automatically indexed to inflation.