While just over half of Belgian companies indicated they would be increasing basic pay last year, almost all would be willing to in 2024, in part due to the smaller automatic indexation.
Belgium is among the few countries where the mechanism of automatic wage indexation is implemented to protect purchasing power. Skyrocketing inflation in 2022 resulted in the wages of thousands of employees increasing by more than 10%. This was welcomed by workers and unions alike but led to less room for individual salary increases and bonuses.
The January 2024 annual indexation rates were much lower for workers in all sectors (all under 2%). This is reflected in the number of Belgian companies that intend to increase the basic salary they give employees.
"The high indexation rate in 2023 forced companies to play it safe last year," said Paul-Etienne Siegrist, senior manager at Hudson. "Today, however, they have more budgetary room for manoeuvre, and we see that they are using it mainly to increase the base salary."
This year, over eight out of ten Belgian companies (84%) are willing to increase base salaries, compared to 57% last year, the annual salary survey based on a survey of 188 Belgian organisations by HR consultancy Hudson showed.
Bonus, but no promotions
More than one in four (28%) of surveyed organisations plan to allocate a budget of more than 2.5% of the total wage bill to pay increases, compared to just 8% of organisations in 2023.
Meanwhile, four in ten (39%) of organisations plan a separate budget for variable pay in 2024. The majority of organisations plan to allocate more than 5% of the total salary budget to variable pay, which refers to the payment made for employees' contributions to the organisation's growth and success (incentive pay, bonus, or commission).
When looking specifically at job levels, the survey revealed that the median for variable pay among executives is 7% of the salary bill, while for management and directors, it is 10%.
Less than 1% of the total salary budget will be devoted to promotions. Some seven in ten organisations are not even planning a budget specifically for promotions in 2024.
Siegrist stressed that it takes more than salary to attract and retain talent. "Non-financial benefits, such as flexibility, career development but also the efforts a company makes in terms of mental well-being or how it looks at mobility, among others, are still gaining importance," he noted, concluding that companies must integrate this into their overall remuneration strategy.
