Understanding Belgium's government negotiations: Wage indexation
If negotiations stay on track, Belgium will have a new government very soon. The issues that could derail the talks have some specific Belgian characteristics. Belga English looks at some of those issues, starting with the way the government adapts wages to inflation.
Belgium has a system of automatic wage indexation linked to inflation: a mathematical formula stating that when inflation goes up by a certain amount, after a certain period, wages increase by a fixed amount.
For trade unions, this system is sacred. But employers see a major disadvantage. Automatic indexation means that wages follow rising inflation much more quickly than in other countries, where wage adaptation has to be negotiated.
This results in higher labour cost for employers compared to foreign competitors. There have been attempts to remedy this disadvantage over the years, but unions resist any change.
Formateur and likely future prime minister Bart De Wever, the man responsible for negotiations to form the next federal government, has proposed a soft change.
Broader reform
Currently, the mathematical formula varies by sector. Civil servants have the most advantageous formula: their wages follow inflation very frequently. With continual inflation, their wages go up every couple of months, whereas most employees in the private sector see their wages go up only once a year.
De Wever proposes a different method of calculating increases, over a longer reference period, to wipe out peaks, and to adapt all wages only once a year. In times of low inflation, this wouldn’t make much difference, but with high inflation, workers - primarily civil servants - would be slightly worse off.
De Wever would also like employers and unions to negotiate a broader reform of how wages go up, because of inflation and also in real terms.
But with automatic wage indexation considered untouchable by trade unions and therefore the left-wing political parties, finding agreement among the negotiating parties is a serious headache.
© BELGA PHOTO NOE ZIMMER
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