Concern as wage rises exceed foreign tempo

14 October 2005

BRUSSELS — Wage costs in Belgium have been rising since 2000 quicker than the agreed maximum (wage standard) and much more quickly than wages in neighbouring countries.

The figures were compiled by the Central Business Council (CRB) and made public by the former head of the employers association VBO, Tony Vandeputte.

The official CRB report will be published in the near future, newspaper ‘De Standaard’ reported on Friday.

Vandeputte used the figures to urge for a revision of legislation aground the maximum agreed wage rise. His recommendations are included in a book over the successes and failings of Belgian social discussions.

The wage standard was introduced 10 years ago by the government led by then Prime Minister Jean-Luc Dehaene.

It was (and still is) the intention to restrict Belgian wage rises to the average increases in the three most important neighbouring countries and trading partners, Germany, France and the Netherlands.

Since the end of 1995, the CRB has made an annual prognosis over expected foreign wage developments. The report is based on OECD figures.

The trend in the neighbouring countries is the guideline for Belgium’s standard wage. It indicates how far unions and employers may go with wage rises agreed on in biennial workplace negotiations.

However, the OECD figures — and by extension the wage standard — do not appear to be precisely correct. The actual rise of wage costs in the neighbouring countries is slightly lower than forecast.

Between 1997 and 2000, Belgian wages increased less than what the wage standard allowed. They thus remained well equated to the foreign tempo.

However, since 2000 that is no longer the case and the actual increase of Belgian wages are above the wage standard and thus well above the foreign tempo.

In comparison with neighbouring countries, it means Belgian wages are rising too quickly. This is bad news for the competitive position of Belgian companies.

Vandeputte urged for “all-in wage accords” in which the effect of a high inflation rate (an automatic indexation) are kept within the wage standard.

If the wage standard is breached, a correction must be implemented and the margin for new wage rises would be reduced, he said.

Subject: Belgian news