As part of its recently announced budget for 2013 designed to economize 3.700 million €, the Belgian government has declared that wages in both the public and private sector will be frozen during 2013 and 2014. The freeze is however not total and involves only a prohibition of any new increases negotiated between companies and the trade unions via the collective bargaining system. Individually negotiated salary increases will remain possible, as will already existing scale increases based on age and seniority. There are also exceptions for low income earners who do not earn more than the minimum wage, for whom a 0.9% increase during 2013-2014 will be possible. These low income earners will also benefit from tax reductions which will have the effect of increasing their net income.
Contrary to the wishes of industry, Belgium’s relatively unique system of the automatic linking of wages to a special cost of living index has not been abolished and will remain in effect. However the “basket “ of products on which the cost of living is calculated has been modified to include cheaper products, leading to less frequent automatic increases in salary. It is expected that in practice there will be a 2% increase in salaries in 2013 as a result of the indexation system but any further increase in 2013 or 2014 remain doubtful.
This wage freeze is not necessarily the end of the battle regarding the automatic wage indexation system and it is probable that the question will come up again in the next round of measures already predicted for mid-2013.
The current measures are designed to increase Belgium’s international competitiveness since it is known that wages have remained higher than in surrounding countries such as France, Germany and the Netherlands.