Payments

Some workers in Belgium may receive an 11.6% pay increase in 2023

The country is one of just two in the European Union that practice automatic pay increases.
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Frank Scialabba

· less than 3 min read

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On Mondays, we explore what’s happening abroad in the world of HR.

Smell that? Belgium has more than chocolate wafting through the air. Its workers are also taking in the sweet scent of cash as the country prepares to dole out pay increases to the masses.

What in the world? Many workers around the world are hoping for higher wages amid record inflation, but those in Belgium are likely to get them. Inflation in the country topped 12% in October, according to US News & World Report, but its citizens are somewhat shielded from the effects because their pay is directly tied to the rising prices. In January 2023, nearly one million Belgians can expect a raise as high as 11.59%.

Not everyone is happy about the policy, though. Over the summer, the Brussels Times reported that employers tried to negotiate a 3% increase instead, saying they cannot afford high pay raises since labor costs have increased 7% in the last year and are expected to rise a further 8% over the next year.

Satellite view. The practice of automatically raising wages with inflation is known as “indexation” and is “used by governments to connect prices and asset values,” according to Investopedia.

In the US, a similar process is often referred to as a cost-of-living adjustment. Belgium and Luxembourg are the only European Union countries that currently require indexation; Denmark, France, and Italy stopped doing so in the 1970s. It is not the same as raising the minimum wage, something France, Germany, Greece, and the Netherlands have all done this year to help those in their lowest wage brackets.

According to Bloomberg, indexation could ultimately hurt workers in Belgium, because it could lead to job losses if employers can’t afford the steep wages. “At the international level, rising wage costs in addition to other costs increases will harm our competitiveness and share of the market,” the Federation of Belgian Enterprises said in a statement.

What about you, readers? Are you considering inflation as you review pay bands in 2023? Has it been part of raise discussions for annual performance reviews? Let us know by responding to this email.—KP

Do you work in HR or have information about your HR department we should know? Email [email protected] or DM @Kris10Parisi on Twitter. For completely confidential conversations, ask Kristen for her number on Signal.

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.