2023-05-17 05:52:07
Laura Van Lerberghe, edited by Corentin Alloune / Photo credit: Samuel Boivin / NurPhoto / NurPhoto via AFP
The waltz of the unions continues this Wednesday at Matignon, with the aim of withdrawing the pension reform. But not only. Sophie Binet, leader of the CGT, the last received by Elisabeth Borne, intends to demand indexation of wages to inflation, taking the example of Belgium. However, this system has limitations.
A model with some flaws
In Belgium, the wages of all workers are indexed to inflation. When prices rise, earnings follow. Indexation to inflation from a 2% price increase. The average annual inflation rate is estimated to be 4.5% this year, up from 9.6% in 2022.
For Sophie, business manager of an organic cosmetics company in Belgium, this is a substantial burden to take into consideration. “In addition, I make sure that this additional charge is absorbed by the result”, explains the business manager. Catherine, manager of a Brussels cannery, had to increase the price of her jams. She fears a loss of competitiveness. “The consumer, very clearly, is changing his habits. We are obliged to conquer other markets”, adds Catherine.
But for Bruno Colmant, economist, this system remains necessary: ”The indexation of wages is considered to be the dividing wall of this same social consultation to avoid useless discussions by sector, by company and even at the national level.” Opposite, for the International Monetary Fund, this system accentuates Belgium’s budget deficit.
To help companies, the Belgian government has decided to reduce employers’ contributions in the first two quarters of 2023, but this is not always enough.
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