Belgium remains the most expensive eurozone country in which to employ people, according to the latest figures from Eurostat. While government reforms are yielding some returns – as evidenced by the decreasing wage gap with neighboring countries – further efforts are needed.
In a repeat performance of last year, Belgium can again lay claim to the highest cost of labor in the eurozone and the second highest in the EU, behind only Denmark. The average gross cost of labor in Belgium is €39.20 per hour, €5 more than in neighboring countries.
Yet, Belgian figures are leveling off. They increased by only 0.2% year-on-year, whereas neighboring countries saw an average increase of 1.2%. Belgium’s wage handicap with neighboring countries may shrink further this year, thanks to the full implementation of the tax shift by 2018 and the recent reform of 1996 law on competitiveness. The latter aims at limiting the annual wage increase to 1.1% over indexation.
Indexation remains a thorn. High inflation risks triggering an automatic indexation of wages, partially nullifying the measures to control labor costs. Belgium’s slowly growing labor costs were also a result of the 2015 ‘index jump’, the temporary freeze on automatic wage indexation.
This is why AmCham Belgium recommends to restructure the automatic indexation of salaries by applying the wage indexation to a fixed salary to protect lower-income households and only up to an agreed salary level.
AmCham Belgium supports the governments’ actions to reduce labor costs and looks forward to a future of more business-friendly measures. Reforms need to continue to close the wage gap with neighboring countries.