Corporate dividends rose twice as fast as wages in Belgium last year, adding weight to the growing consensus that soaring profit margins are the principal cause of Europe's inflation crisis, rather than rising labour costs.
According to a recent report by the European Trade Union Confederation (ETUC), nominal salaries in Belgium rose by 6.4% last year. At the same time, shareholder payouts increased by 11.7%.
This shows that wage growth in Belgium was significantly below – and dividend growth comfortably above – last year's annual inflation rate of 10.3%.
The data cited by the ETUC also revealed that $3.1 billion was paid out to Belgian shareholders in just the second quarter of this year – $1 billion more compared to the same period in 2020.
Nevertheless, the stark discrepancy between nominal wage growth and shareholder payouts was smaller in Belgium compared to the rest of the EU. On average, dividends increased by 14% throughout the bloc in 2022, while wages grew by 4.3%.
ETUC General Secretary Esther Lynch. Credit: Facebook / ETUC
In an open letter to European Commission President Ursula von der Leyen, ETUC General Secretary Esther Lynch called for collective bargaining rights to be strengthened, green investment increased, and general working conditions improved to address the growing "social justice emergency in Europe".
"The status quo is not working, change is needed," Lynch said. "Workers are not getting a fair deal, they are not receiving their fair share, instead they are faced with a cost of living crisis and calls for wage restraint while greedflation is caused by CEOs' and corporate profits."
"The ETUC believes that it is time to forge a route to a rebalanced European economy that puts people and planet first."
Blaming the victims?
Lynch's comments echo her previous criticisms of European policymakers. In a recent statement to The Brussels Times, the union leader pointed to the fact that both the International Monetary Fund (IMF) and the European Central Bank (ECB) have concluded that rising corporate profits, rather than increasing wages, are the principal cause of Europe's high inflation rate.
Lynch also argued that the ECB's policy of battling price pressures through repeated rate hikes will only exacerbate Europe's continuing economic malaise.
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"Both the ECB and the IMF have said that profits are the largest contributor to inflation and yet they are still making working people pay the price by raising interest rates or advocating real wage cuts," she said.
Lynch argued that rather than hiking interest rates, European policymakers should impose windfall taxes on highly profitable companies, as has already been done in several EU Member States including Italy and the Czech Republic.
"We need to stop hitting the victims of inflation and finally tackle its root cause by ensuring every country has an effective windfall tax on excess profits."
