Flemish MP Mercedes van Volsem (Open Vld) warns of a spiral of inflation as a result of the automatic wage index in our country. This is why she argues in favor of downsizing that indexing.
Inflation in our country has been on the rise for months in a row. The Belgian inflation figure in March was no less than 8.31 percent, the highest since 1983. In almost all countries, in such a situation, employees themselves (or through unions) have to discuss a wage increase with the employer. Belgium is one of the few countries in Europe where wages rise with inflation, also known as the automatic wage index.
Invisible pay increase
According to SD Worx, wages could be reduced by this system by 2023 by 12 percent to raise. The HR service provider is talking about an unprecedented situation. As a result, companies see wage costs rising sharply. This, in turn, leads to higher prices for consumers, because companies will pass on part of the costs incurred to the end user. In such a case we are talking about an inflationary spiral.
So van Volsem suggests doing something about the automatic wage index mechanism. “Doing nothing will lead to a downward spiral of price increases and stagnation, which will lead to mass impoverishment,” she told the news agency. Belgium†
Not all costs are subject to inflation
The representative believes that the index should be net, not total. Indexing is suggested only on the first tranche of the total 2,500 or 3,500 euros instead of the full salary. She points out that not all costs are subject to inflation. families that Loan (at a fixed rate of interest), you have more budget left after making the monthly payment thanks to the wage index.
It adds that renters will be affected by inflation. It appears that “low incomes are the ones who rent, while that rent is under the index”.
“It’s not a good idea, but if we don’t want to end up in a recession, we have to do something. We must stop the inflationary spiral. A solution must be found,” van Volsem continues. “Tough times require courageous and decisive decisions.”
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