According to SD Worx, a company specializing in human resources, wage indexation might exceed 12% by 2023. But how is such an increase possible?
Wage indexation would be welcome, to increase our purchasing power a little while prices keep rising. Over the past 10 to 15 years, indexation has been less than 2% per year, on average. This might change, however: according to forecasts by the company specializing in human resources SD Worx, indexation might exceed 12% by 2023.
But how to explain such an increase? “It sounds huge, but it’s linked to the price increase we’ve been experiencing since this year and the years before, and that’s what makes the prognosis so high.“explains Valérie T’Serstevens, legal counsel for SD Worx.
SD Worx, which calculates more than a third of private sector wages in Belgium, sectors such as Joint Commission 200 (employees), Horeca and agri-food, should experience an indexation of 8% from January 1, 2023 , in addition to an indexation of more than 3% at the start of 2022. Other sectors such as construction workers and health establishments and services are experiencing multiple indexations which, when added together, would also exceed 8% just for 2022 (8.12%).
Less encouraging news for businesses
This is very good news for employees, but less so for companies, however: “This will lead to a fairly staggering increase in the wages of their workers and therefore there are not a lot of options since indexation is mandatory. So they must prepare for it now and provision the amounts, and if necessary perhaps see if it is possible for certain salaries. But indeed, companies will have no choice, they will have to apply these increases which are compulsory in Belgium“, said Valérie T’Serstevens.
Automatic indexation in Belgium is a mechanism that allows salaries to be adjusted according to the cost of living. For 2022, the National Bank expects an inflation rate of 7.4%. Inflation of 8.31% for March is the highest observed for forty years (March 1983: 8.92%). The federal government confirmed at the end of March the maintenance of the automatic indexation of wages and allowances.
