Belgian purchasing power is holding up thanks to the automatic wage indexation

Purchasing power is holding up much better in Belgium than in neighbouring countries because automatic wage indexation is limiting the negative impact of high inflation. So reports the Tijd.

In Belgium, wages rise with life costs through an automatic wage indexation. This ensures that purchasing power does not drop as much as it does in other countries at a time when gas and electricity prices are hitting yet another record high.

"The sky-high inflation certainly weighs temporarily on the purchasing power," says Geert Langenus, economist at the National Bank. Real wages are falling this year. But the indexation mechanism protects the purchasing power in Belgium much better than in other countries.

Belgium and Luxembourg are the only countries in Western Europe with automatic wage indexation. While the purchasing power of households in Belgium remains more or less stable or decreases slightly, it is under much heavier pressure in neighbouring countries. The purchasing power of the average Dutch family will fall by 6.8 percent this year. That of the Germans by 4.2 percent. The French, with a drop of 0.9 percent, have done little damage, as the government has frozen gas prices and limited the increase in electricity prices. ​ ​

Automatic wage indexation is good news for Belgian households, but bad news for Belgian companies. The high inflation rate leads to an increase in wage costs faster here than in neighbouring countries. This weakens the competitiveness of businesses. Employers are asking for a brake on wage indexation in order to protect their competitiveness. To protect competitiveness, Belgium uses a wage standard. This is a rule that states that wage costs per hour may not rise faster than in neighbouring countries.

Early next year, employers and unions must negotiate the margin for wage increases beyond the indexation in 2023-24. The wage standard will most likely prevent the real wage increase that the unions are demanding. "On top of our wage indexation, another wage increase? Then our economy is bankrupt", said Open VLD chairman Egbert Lachaert recently. That promises social unrest in the country.



Get updates in your mailbox

By clicking "Subscribe" I confirm I have read and agree to the Privacy Policy.


Belga News Agency delivers dependable, rapid and high-quality information 24 hours a day, 7 days a week, from Belgium and abroad to all Belgian media. The information covers all sectors, from politics, economics and finance to social affairs, sports and culture, not to mention entertainment and lifestyle.

Every day, our journalists and press photographers produce hundreds of photos and news stories, dozens of online information items, plus audio and video bulletins, all in both national languages. Since the end of March 2022 English has been added as a language.

For public institutions, businesses and various organisations that need reliable information, Belga News Agency also offers a comprehensive range of corporate services to meet all their communication needs.


Arduinkaai 29 1000 Brussels