Belgian trade union confederations are leading strikes and other actions today to challenge the impact of inflation on workers’ purchasing power.
Many Belgian workers can no longer make ends meet: bills are too high, wages too low. That is why Belgian trade unions are shifting gear, with strike action today to put pressure on employers and the government.
Gas prices have gone up by 130 per cent in just one year, electricity by 85 per cent and fuel by 57 per cent. And now food prices are going up too.
Under pressure from trade unions, the government has taken steps to ease energy bills. Value-added tax on energy products was reduced, one-off grants were introduced and a lower, ‘social’ tariff was extended to more vulnerable groups.
These steps were welcome but the Belgian government should do more to cap prices for everyone. If it is not possible at a European level, Belgium must take steps at the national level: France, Spain and the Netherlands have already done so.
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Wage indexation is the best system to protect purchasing power in times of inflation. But indexation in Belgium does not offer 100 per cent protection. Some 850,000 workers have to wait a year for their next indexation, until January 1st 2023.
They have meantime had to pay their higher bills, but received no compensation. Wage indexation does not take into account higher fuel prices specifically, so there is always a loss in purchasing power.
Employers and the political right are pushing for an ‘index jump’ or even an alteration to the index mechanism. This is unacceptable to the trade unions. It would be suicide from a social but also from an economic perspective, because it would destroy consumer confidence and plunge us into recession.
There is no evidence that a wage-price spiral exists. Inflation in Germany and the Netherlands is higher than in Belgium, although they have no wage-indexation clauses in their collective agreements.
Profits not shared
Many companies have used the easing of the pandemic to increase their prices and profits, contributing to higher inflation, as a member of the executive board of the European Central Bank has conceded. This has also happened in Belgium. In the second quarter of 2022 profit margins were at an all-time high of 46 per cent. Only the Netherlands came close at 40 per cent.
Companies thus have sufficient financial buffers not only to cope with wage indexation but also to increase wages in a more structured manner. Yet since the 2009 financial crisis real wage increases (over and above indexation) have been non-existent in Belgium.
Contrast the Netherlands and France, where real wages have risen by 3 and almost 6 per cent respectively since 2009, and Germany where they have increased by 19 per cent. It is not that the productivity of Belgian companies has not increased since the financial crisis—it is that the additional profits have not been shared with workers.
Wage increases on top of indexation are limited in Belgium through a very restrictive law, the infamous ‘law on competitiveness’. Although Belgian trade unions contest this law (at national and international levels), the government is applying it strictly.
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Employers are pushing for a wage freeze in 2023-24, based on the law. Today’s general strike, following the 80,000-strong demonstration in Brussels in the spring, is a loud call for urgent reform of it.
Major energy companies are seeing their profits double or even treble compared with last year. This crisis is certainly not affecting everyone equally.
But those profiting from it are not only to be found in the energy sector. Other companies are making high profits due to the exceptional circumstances—they too should do their bit. Those who record exceptionally high margins should be subject to an increased tax rate.
Meanwhile, many social benefits are often too low to provide for a decent living and fall under under the European poverty line. Trade unions and employer organisations have an important say in which social benefits are increased and how.
The employers have however blocked such discussion, so it is up to the federal government to take a unilateral decision to raise social-security benefits. Today’s strike is also an important signal of solidarity between those working and those on benefits.