A new study has concluded that wages in Belgium will rise by less than previously estimated compared to neighbouring countries over the next year.
The finding is likely to intensify the fierce debate between employers and workers over how to maintain the country's economic competitiveness.
The analysis, which was conducted by the Central Economic Council (CCE), estimated that wages in Belgium will increase by 1.7% in comparison to neighbouring states by the end of 2024 (relative to a reference year of 1996).
The study follows the CCE's prediction last year that salaries in Belgium would grow by almost three times as much (4.6%) over the same period. According to De Tijd, which reported on the study, the downward revision is principally a consequence of two different factors.
The first is Belgium's unexpectedly low levels of inflation, which means that forthcoming government-mandated wage indexations (which closely track the inflation rate) will be less than previously estimated.
The second is that salaries have recently risen much faster in neighbouring countries than they have in Belgium. According to L'Echo, which also reported on the study, in the second quarter of this year wage growth in France (4.6%) exceeded the rate of inflation (4.4%).
Unsatisfied parties
The study is unlikely to appease employers or workers. In particular, businesses have long argued that Belgium's relatively high wages pose a serious threat to its competitiveness – and place the blame squarely on the country's unique system of wage indexations.
The view is partially corroborated by a recent study by the OECD, which found that wage indexations pose one of the "main risks" to the country's economic outlook by potentially inducing "more persistent inflation".
Workers, by contrast, claim that wage indexations are not doing enough to protect them from rising prices: a study published last year found that 73% of Belgians claim that wage indexations constitute an inadequate safeguard against inflation.
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Trade unions also argue that rising wages have little to do with Europe's current inflation rate. Indeed, both the International Monetary Fund (IMF) and the ECB have concluded in recent months that rising corporate profits, rather than increasing wages, are the principal cause of Europe's high inflation rate.
Belgian workers have also long been engaged in efforts to repeal the 1996 Wage Margin Act, which effectively prohibits companies from raising wages above the rate of inflation so long as salaries remain higher than in neighbouring countries.
"The 1996 law must be urgently reviewed," President of the Belgian Workers' Party (PTB-PVDA) Raoul Hedebouw said during union-organised protests in Brussels last year. "It is not tenable. Neither economically or socially. This message is supported by the entire working class, its trade unions, and its political representatives. It must be heard."
