The hourly wage gap between Belgium and neighbouring countries has fallen from 2.9% to 1.8%, a calculation that has significant consequences for labour costs.
The Central Economic Council's (CCE) annual report, published on Wednesday, reviews and compares Belgium's economic situation with that of France, Germany and the Netherlands. This year, it revealed that wage gaps between Belgium (where wages are higher) and its neighbours rose from 0.9% in 2022 to 2.9% in 2023, then fell to 1.8% in 2024.
Indexation has caused Belgian wages to rise more quickly than in neighbouring countries. Belgium is the only eurozone country besides Luxembourg to index public and private wages to inflation, and inflation has fallen more rapidly here than elsewhere.
France, Germany and the Netherlands have no such indexation system, which explains the gap.
Labour implications
Calculations are based on the 'Law of 1996', which aims to promote employment and safeguard competitiveness. It prevents "salary handicaps" and was tightened by Charles Michel's government in 2017 in an effort to stop staff costs in Belgium being more expensive for employers.
Trade unions and several political parties including the Socialist Party (PS), the Belgian Worker's Party (PTB-PVDA) and Écolo/Groen are strongly opposed to the law. "This law blocks any significant increase in wages," says trade union FGTB. "It is totally disconnected from socio-economic reality. In the interest of workers it must change."
Trade unions have protested about wage indexation in the past. Credit: Belga / Paul Henri Verlooy
While only an interim report, the CCE calculation has a significant impact on labour costs for the next two years, as the differences between countries are used as a guide for what social partners may negotiate on behalf of employees during biennial talks.
Based on the last round of negotiations, collective pay rises have been banned across the private sector during the period 2023-2024. The current 1.8% forecast suggests there will be no room for salary increases during the period 2025-2028 either.
