Belgium is one of the few countries that practices automatic indexation. This mechanism ensures that salaries and social benefits are always adapted to
The increase in the general price level. The original meaning (literally “to blow up”) is monetary inflation, which means that the amount of money increases. Today, inflation primarily refers to price inflation. This means an implicit monetary depreciation. This causes the purchasing power to drop.
. Since salaries increase along with the cost of living, a risk of a
The extent to which salaries in a certain country are higher than in one or more competitive countries. As a general rule, a wage handicap has a negative impact on economic growth and on the creation of jobs. This is why there has been a law in force since 1996 which stipulates that we may no longer build up any additional wage handicap.
arises, which undermines
The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained.
. The temporary stop of wage indexation, where the automatic adaptation to the index is skipped, provides a solution to this.