While the massive wage indexation at the start of 2023 was welcomed by thousands of workers, it led to less room for individual salary increases and bonuses, while also reducing hires, according to Liantis, a consultancy which helps employers recruit.
Due to high inflation in 2022, many people's salaries received a large automatic indexation, especially in January 2023. More than half a million white-collar workers from the Joint Committee 200, for example, received an 11% pay rise, an increase awarded to workers in other sectors too.
While this had a positive impact in many ways – including by helping people regain financial confidence and resulting in more money being saved – companies continue to argue that the government-mandated salary hikes are unaffordable and are causing Belgium to become less economically competitive.
This negative impact on businesses was highlighted by the HR service provider Liantis, which surveyed over 1,000 SMEs and found it limited their ability to hire new people and offer their existing teams higher remuneration, on top of the indexation.
Return to 'normal'?
Half of the business owners indicated that there was little room for individual wage increases, while 31% no longer saw any margin for a collective bonus, for example, the wage bonus or profit bonus.
"Employers can decide each year whether they want to grant these bonuses to their employees. Due to the enormously high wage costs, we see that many employers have chosen – often by necessity – to forgo these bonuses," said Mattias Dessein, senior manager of Liantis Consult.
One in three businesses hired fewer people due to high wage costs, and one in five offered job candidates a lower remuneration package.
Automatic indexation is much lower at the start of this year, which could see the tide turn on bonuses and recruitment. "The mild index figures are undoubtedly a windfall for many SME employers," said Dessein.
"After all, it eases pressure on the wage bill and that creates more room to grant individual wage increases and collective wage bonuses. Moreover – in addition to those financial perks – it also potentially makes additional recruitment possible again."
The wages of more than 1.3 million employees in the private sector automatically rose on 1 January as a result of Belgium's wage indexation system.
