Each year in January, there is wage indexation for blue collar employees and white collar employees working in private sector industries in Belgium. In 2023, the indexation is gigantic high, the largest in the last 50 years. This indexing signifies a serious increase in labor costs for the employers that must apply them.
- 1 What is wage indexation?
- 2 What is the calculation of how much the salary is after indexing?
- 3 Which are the sectors with high wage indexation on 1 January, 2023?
- 4 What will the future bring?
What is wage indexation?
Driven by very high energy prices, inflation remained very high in Belgium and other European countries in recent months. To protect workers’ purchasing power, an automatic salary indexation system is designed many years ago. Wage indexation is the mechanism whereby salaries are linked to the consumer price index.
There are several types of indexation. Some sectors with fixed indexing have an adjustment once a year. Other sectors have multiple indexations per year, each time a certain threshold is exceeded.
The system by which wages are automatically indexed in line with inflation exists only in Belgium and Luxembourg,
What is the calculation of how much the salary is after indexing?
The calculation is very simple. Let us take the example of an employee with a gross salary of € 2 500,00 in December 2022. He is working in for a company resorting under a Joint Industrial Committee that has 3,58% salary indexation. His new monthly gross salary as from January 2023 will be equal to € 2 589,50 (= € 2 500,00 x 103,58%).
Which are the sectors with high wage indexation on 1 January, 2023?
January is the fixed time for several sectors in Belgium to index the salaries of blue collar employees and white collar employees. This totals more than 1,3 million private sector workers in Belgium.
Joint Industrial Committee 200 (JIC 200)
Belgium’s largest sector is Joint Industrial Committee 200 (JIC 200) representing 60 000 companies and 500 000 employees.
The final percentage of indexation amounts to 11,08%. This implies in practice that the gross salaries will be increased with 11,08% as from 1 January 2023 onwards.
It also entails that the yearly premium that needs to be paid in June 2023 (if not replaced by an equivalent benefit), will amount to € 307,94.
Joint Industrial Committee 226 (JIC 226)
Companies in international trade, transport and logistics (JIC 226) must raise wages by 11,19%. This is applicable for 55 000 workers in this sector of industry.
Joint Industrial Committee 302 (JIC 302)
In the hospitality industry (JIC 302) the automatic wage indexation happens only once a year. In January 2023 wages increase by 10,964% for 152 000 employees.
What will the future bring?
For 2023, inflation is expected to cool off. By all expectations – but with the greatest reservations – wage indexation on 1 January, 2024 will be a lot lower with a preliminary figure of 3,16%.
In Belgium, only a few payroll providers like Pro-Pay are offering payroll services in English language to international employers. They are providing regular indexation forecasts for clients in various sectors.