Indexation threat to Belgian living standards

In a surprise move, the Belgian public services minister Hendrik Bogaert has suggested making changes to the country’s pay setting mechanism, which would lead to a fall in real wages.

The current system guarantees that pay rises automatically in line with inflation, and that every two years unions and employers are able to negotiate additions on top of this.

However, Bogaert argues that this has left Belgium uncompetitive and that “the pay handicap in relation to neighbouring countries”, Germany, France and the Netherlands, is 4.6%. He therefore suggests that for each of the next five years the automatic indexation should be 0.92% below the actual increase in prices.

The unions have not welcomed the minister’s proposal. The CGSP, which represents public sector workers, has said that it opposes making changes to the index and it points out that this is not part of the government’s programme.