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13 January 2017

Belgium: social partners achieve consensus on wage increases

On 11 January, Belgian employers’ and trade union organisations agreed to adopt a social agreement for 2017-2018, paving the way for a 1.1% annual wage rise on top of pay scale increases and automatic wage indexation.

The agreement marks a return to the system of social dialogue which has a long history in Belgium, but which has been severely eroded since the centre-right coalition came to power almost three years ago. One of the first measures taken by the incumbent government, led by the liberal French-speaker Charles Michel, was to suspend the automatic wage indexation mechanism which ensures that the income of Belgian employees and social welfare recipients rises in step with cost-of-living increases. Belgium is one of the last countries in the European Union with a mechanism of this kind.

This Belgian ‘tradition’ regularly comes in for criticism from both the European Commission and international financial institutions such as the OECD and IMF, which claim that it damages the competitiveness of businesses and hampers Belgian exports.

As well as providing for wage increases, the agreement also raises the age of early retirement for employees made redundant as a result of corporate restructuring, workers in strenuous occupations and long-serving employees. As of 2019, employees in these groups will no longer be eligible to join early pension schemes from the age of 55, but must instead wait until they are 60.

The agreement represents the outcome of negotiations between the leaders of employers’ and trade union organisations, and still needs to be approved by the trade union confederations.

The last cross-industry agreement was ratified by the Belgian trade unions in 2009.

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