Belgium is the only eurozone country – besides Luxembourg – in which both public and private wages (as well as pensions and benefits) are indexed to inflation. This means that employers are required to adjust wages upwards along with the increase in the cost of living.
However, this automatic wage indexation is one of the main sticking points of the Federal Government negotiations between the five 'Arizona' parties (N-VA, CD&V, Vooruit, Les Engagés and MR). As part of formator Bart De Wever's (N-VA) by-now-infamous socioeconomic "supernote," this system might be changed.
In the past, businesses have repeatedly called for the system to be revised, arguing it drives up wages in Belgium – making the country less competitive.
Scrapping the system is entirely out of the question, but the negotiating parties have been stuck on "minor adjustments". Especially Dutch-speaking socialist party Vooruit is against any changes to the scheme.
The main proposal on the table is an adjustment to the timing of the pay rise: public servants should receive the automatic wage indexation just once a year, on 1 January. For around 40% of private sector workers, that pay rise already happens at this set time.
For the others, the calculation is done at different times and sometimes several times a year, depending on the level of inflation (if the index has risen by a certain level). De Wever's proposal would change the calculation, basing it on a 12-month average rather than the four-month period used currently.
Some argue that this adjustment would undermine purchasing power, but others emphasise that making Belgium more competitive should be one of the next Federal Government's priorities. What do you think?
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