The galloping inflation that we are currently experiencing is regarding to be passed on to the incomes of Belgians via the wage indexation system. If it is not applied uniformly to all workers, it should be around 10% for the various sectors concerned. But what will be the real effect on net income?
Automatic indexing, collective agreements and negotiations
Let us first recall that several regimes coexist. For social allowances and civil servants, income is automatically indexed each time the pivot index is exceeded. In 2022, four overruns have already occurred, and a fifth should occur in December according to forecasts by the Planning Office.
For other sectors, the indexation mechanism is determined in collective labor agreements, signed between employers and unions. Indexing can be monthly, quarterly or even annually. The only constant between all the sectors: it is linked to the evolution of the health index, determined every month by the FPS Economy, recalls Geert Vermeir, of the HR service provider SD Worx, in the columns of our colleagues from the Newspaper. This index does not take into account the evolution of the prices of fuels, alcohol and tobacco, but does take into account those of gas and electricity, which are the main drivers of inflation at the present time.
An increase in the relative net salary, especially for low salaries
In short, for several sectors, in particular those included in joint committee 200 (in which we find construction, automobile trade, consultancy, design offices, travel agencies, etc.), the largest in Belgium since ‘it covers more than 450,000 workers, the indexation is annualized and will be applied in January 2023.
If the increase in gross income will exceed 10% (11.59% according to SD Worx, 10.84% according to the Bureau du Plan), the effect on net income will be (much) lower. “According to the main simulations offered online by the social secretariats, the indexation of 10% of the gross allows an increase of 4 to 7% of the net” once more indicates the Newspaper. Who also adds that indexation will benefit less… low incomes. “When they go from a gross of 2,000 to 3,000 euros, their bonuses decrease when their salary increases. The progressive reduction of these bonuses will dilute the effect of indexation. Proportionally, the increase in their net income will be lesser”adds Bart Hollebekkers, consultant for SD Worx.
