Income restrictions imposed in Belgium are starting to show results. Unit labour costs decreased by 1.1% in the first quarter of 2015, which is the strongest decline amongst OECD countries, according to figures published by the Paris-based organisation on Tuesday. Unit labour costs measure the average cost of labour per unit produced. They are worked out as a ratio of total labour costs by output (in volume). Overall in the OECD zone, these costs are up by 0.5%.
The decrease registered in Belgium is explained by increased productivity but mainly by a reduction in wage costs, with the inter-professional agreement not scheduling any gross pay increase in 2015. Weak inflation also helps the trend by reducing the impact of the automatic wage indexation.
“This is a first step in the right direction,” rejoiced FEB (Federation of Belgian Businesses). “But there is still a long way to go” before we can reduce the Belgian wage handicap compared to its neighbours, highlighted Edward Roosens , chief economist at the Belgian employers’ association.