Wages rising fast in Belgium

Belgium's wage cost handicap is rising at an abnormally fast rate due to an ineffective wage indexation system, reports the Central Economic Council (CEC) on its internet site. Since 1996, wages in Belgium have risen 5.1 percent more than in neighbouring countries Germany, France and the Netherlands. Two years ago, this wage handicap was 4.2 percent. According to the CEC, natural price increases translate into unnaturally higher wages because the wages in Belgium are automatically adjusted to inflation. As one of the last EU countries to use an automatic wage indexation, Belgium has been advised by the European Commission to reform this mechanism. Ideally such a reform would result in increased competitiveness of Belgian enterprises and more job creation, say employers. Unions, on the other hand, are against the reform, claiming that purchasing power will fall if the cost of living increases more than earnings.