Van Volcem wants to limit wage indexation to avoid “collective impoverishment”

Flemish MP Mercedes Van Volcem (Open Vld) warns of an inflation spiral as a result of automatic wage indexation in our country. That is why she argues in favor of curtailing that indexation.

Inflation in our country has been soaring high for months in a row. The Belgian inflation figure in March amounted to no less than 8.31 percent, the highest level since 1983. In almost all countries, in such a case, the employees themselves (or through the unions) have to discuss a pay increase with the employer. Belgium is one of the few countries in Europe where wages rise together with inflation, also known as automatic wage indexation.

Unseen wage increase

According to SD Worx, wages can be reduced by this system by 2023 by 12 percent to rise. The HR service provider speaks of an unprecedented situation. As a result, the companies see the wage costs rise sharply. This in turn leads to higher consumer prices, because the companies will pass on part of the incurred costs to the end user. In such a case we speak of an inflationary spiral.

Van Volcem therefore proposes to do something about the mechanism of automatic wage indexation. “Doing nothing will lead to a spiral of price increases and recession, which will lead to collective impoverishment,” she told the news agency. Belgian.

Not all costs subject to inflation

The indexation should be net and not gross, the MP believes. She suggests only indexing on a first bracket of 2,500 or 3,500 euros gross instead of on the full salary. She notes that not all costs are subject to inflation. Families who a loan (with a fixed interest rate), have more budget left over after the payment of the monthly repayment thanks to wage indexation.

She adds that tenants are affected by inflation. “It is mainly low incomes who rent, while that rent is subject to the index,” it sounds.

“It’s not a nice idea, but if we don’t want to end up in a recession, we have to do something. We must stop the inflation spiral. There has to be a solution,” continues Van Volcem. “Tough times require courageous and decisive decisions.”

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