That's because you're a typical Belgian who knows very little about his own country and as a result derives his opinion on his own country from what stupid little stereotypes our hopelessly chauvinistic neighbouring countries know about it. It's a very common thing and has been going on for a very long time.
Don't worry, the bad news will start as soon as the debt-fueled growth will end and crash the economy, just like in Argentina, Greece, the German Reich etc.
Belgian here. The wage indexation makes sure that everybody's wage goes up. However, due to these wage increases, we're often less likely to get other type of promotions. Companies often point to the index as an excuse to not allow other type of wage increases. Though on that end, I'd rather see everybody get a wage increase rather than the few people assertive enough to ask for a promotion.
@@evryatis9231 its the truth audi gone van hool gone and thats only my sector and i dont need exuses its the truth not even talking about places to go out too eat ect
@@kenleydriessens2918He was reffering to the loonbkokkeringswet That is set in place just for the companies. And you can look at job loss. But that is something that happens in Europa as a whole. Even in countries with other tax rates and without wage indexing
belgium also has the highest median wealth (median not average) in the world. Which is a very good way to show how much a normal guy owns. There aren't many billionaires in Belgium, but there's a very large and wealthy middle class and a good wealth distribution
I think you mean median wealth? Median gdp is far below the US. But yeah both are pretty high. Then again, we have a good location and our economy is propped up by the EU and the port of Antwerp which both serve a much larger area.
@@roelvaneyken211 how are state regulations increasing billionaires while deminishing the middle class? Almost by definition it is the reverse. I assume you mean they are decreasing the upper middle class
In Spain we used to have the same system. After 2008 it was forced to change the system; since then we have not recovered the wealth prior to the financial crisis.
@@ayoCC For Spain the comparison to 2008 is a bit misleading because construction jobs of the time simply don't exist. That wage has a big component of debt from the company that was paying it and debt from the consumers as at the time private debt was around 200% GDP while public debt was below 40%.
@@fujin09 so? By making everybody poorer? Spain had a 40% debt to GDP ratio in 2006 and a surplus on the budget, that didn't meant either that things were going good. Salaries must increase as living costs are slyrocketing.
@@fujin09 and the status of the economy has more to do with the government change and the abolition of all austerity bullshit and the minimum wage increases than with all the nonsensical austerity programmes that were imposed back in the day.
I feel like automatic indexing is simply the fair thing to do. It’s strange how, in other places, real wages just decrease if you don’t explicitly ask for a raise. It’s not like you’re doing less, your labor still produces the same value. So, you should be compensated accordingly.
That's not the whole story. If wages are indexed, expenses also rise for businesses in Belgium, which they factor into their prices, which affects purchasing power all the same (which the wage index is supposed to guarentee). That is why the discussion frequently comes up here in Belgium (I am Belgian) whether we should 'skip' the indexing of wages whenever it comes up.
Well, theoretically, companies who want to attract or keep the best labor offer the highest salaries to remain competitive. Competition is the driving force when the government isn't involved.
You forget that we live in an open world economy. With these higher wages Belgium companies are not able to compete with companies in countries with lower wages. Automatically indexing wages, without any increase in productivity or profits, is detrimental to a country's ability to collect taxes, increases a countries debt burden, decreases its competitivity or investment climate. This is exactly what is happening to Belgium right know. One of the weakest countries in the EU.
HOHO! some media in Belgium says it's not. we have to be competitive with our neighbouring countries and they try to change automatic indexing. Companies complain about it (they dont get to be as greedy as their neighbours poor them). When you get the Automatic indexing some companies act like it's a gift/real raise but they are forced to do it. Thank god our goverment makes it hard to change it because there is much opposition and our Unions protest if they even try too change it. Always a fight against greed.
As a French working in Belgium ( and really loving this little country), do you know that wages were indexed on inflation in France until 1983 when it was cancelled by the left party at the time... in the name of fight against inflation ?
@@Erowens98 yeah I know. But ptb is the leftist workers party. That is the strange part Maybe because they think they will help the trade unions with wage negotiarions. But the trade unions aren't asking to end wage indexation
Sadly we have nearly no real economics in political important positions, that's why our politicians are always trying to make the worst Hayek reform instead to establishing keynesianism
Good to see some positive news about Belgium. The country is doing well, all things considered. Yes we have our problems: - High debt to GDP - Relative decline of industry and not enough economic headroom to turn the tide soon - Economic unevenness between the regions - A heavy state apparatus (though there are efforts to remedy this) But we have our strengths: - Strong social net - Incredible political stability - Stable purchasing power - Strong service sector - A general concern for the wellbeing of the middle class amongst politicians - Great food Belgians are notorious pessimists, it would do us good to see the bright side from time to time.
Yes, people often tend to be pessimistic but it would do us well to 'stop and smell the roses' on occasion... It's really mostly great, but will take efforts to make sure future generations will have the same relative comfort.
@@mmmhorsesteaks A coherent industrial policy would be great. But that will be a bit hard if they try to balance the budget (even if it's not impossible)
Belgian here, our wages were low compared to living costs before inflation, our index helped prevent further losses but living costs, especiallt housing, have still risen faster, We are not rich, our wages are not high when compared to costs.
I do agree with you on that part, although as a fashion designer and tailor in Antwerp and soon opening a store in Brussels I have to disagree on the part of our cost being higher then our income Yes the real estate market has increased dramatically over the past 4 years but that's due to the fact they want to implement a building stop and focus more on renovation rather than new projects. If we are being truthful here, our living situation could be much worse but maybe I shouldn't be the one talking for the crowd as I do live a complete different life then most Many people in other countries can't save half their payout and live on a 95% expense 5% saving route In Belgium the average saving percentage is allot higher then other eu countries Which allows us to pay more for the high demand sectors like "real estate"
@@apophistechandreviews2740 and i agree if you think logicly it makes sence everybodys wage up boss have to pay more so do you indexsation is good but not automatic its going to cost us industry and industry is money so yeah
We're talking about real hourly wages here, not just hourly wages. Real hourly wages are wages adjusted for inflation, by dividing them by a consumer price index. So, unless your consumer price index is inaccurate, the consumer prices are accounted for in real hourly wages. You might feel your wages are low compared to costs, but it's worse in most other European countries.
@@Erowens98 thats bullshit for example go to the store in 2008 and now see the diffrence ik ga effe vlaams met u praten leeft u effectief in belgie ? koopkracht wordt verhoogd met indexering dus @shorunqualtec2070 is correct alle lonen prijzen gaan omhoog bij een indexering en das puur om de grote belastingen die dit land rijk is te betalen het mis manegent van onze politiek wij vullen hun gat in de begroting de werkende mens met als gevolg mooi loon ja je geeft het af aan inkopen de staat ect en nee andere staten lijden niet omdat die zich bewust zijn van de crisis dus zoeken lange termijn een oplosingen spanje italie en frankrijk hebben in verhouding tot meer werkgevers als wij en hoe komt dat ? omdat wij teveel kosten alle berdijven vertekken en in spanje ect niet zo neig waarom omdat daar een plan is hier niet binnen 4 jaar zit belgie tegen de grond net zoals wij betaald een baas nooit graag teveel je moet echt heel geshift zijn om te deznken dat dit werkt
Absolutely loved this video as a proud Belgian citizen and the owner of my own fashion atelier (with a second one opening soon)! It’s so refreshing to hear someone say something positive about Belgium-it’s rare these days. TLDR did an amazing job breaking this down; truly insightful and well-presented! Our country does have a lot of flaws, but so does every other country Their is no perfect country as perfection is diffrent for everybody Our healthcare system is amongst the best in the world and the amount of diffrent cultures and people enhances my proudness to live in this country Looking forward to see more! Subscribed ❤
Glad to see you happy, wondering how many years you are active as an entrepreneur, however a reality check here based on the last 20 years: We see this video’s explaining the employees and current politicians are happy, or somewhat. As an entrepreneur starting or scaling up a national or international operational small to medium sized business growing it in a sustainable way - with common sense, without the scam of (politically stimulated) investor funds - I would advice not to start a business in Belgium: Increasing already high wages, employees strive to work 3 or 4 days with limited hours, not working is more stimulated than anything else in Belgium. Mind you, in Belgium already most company cars in Europe and other benefits like meal vouchers provided by 3 French companies ( ! - Started in the 1960’s to stimulate employees to spend money at local merchants, now 99% is spent at the large supermarket chains) to stimulate work for employers. Horrendous legal system enabling outstanding invoices of an increasing group of customers who know how to play the rigged system while 100% of Belgium lawyers are absolutely unable and unwilling to claim these lost revenues leasing to unbelievable high administrative burden - Lots of newcomers to the Belgium society starting new companies with far less ethics standards resulting in high bankruptcy rate, starting a new business before the previous went down leaving all suppliers with the outstanding invoices with not a single political follow up - Worst financing opportunities by banks and other institutions of whole Europe, hence the low innovation uptake, except for the few connected to the political elite/lobby Finance department’s arrogant position towards any substantial transparency e.g. check the National bank’s ‘secret’ 50% owner - Increasing administrative burden, despite the many claims of incompetent politicians copied by the non-critical and non-objective media of actually removing the burdens. Less and Less competent accountants are stimulated to support entrepreneurs, in stead politics is favoring the standardisation of a few large entities in this market, whole providing more and more legislation and rules to increase the costs while accountancy automation should make it cheaper. Also check the efforts in Europe for digital invoices peppol, not a single SME company has asked for, another layer, should they have focused on the actually payment of invoices.. - Overall people’s nonchalance resulting in crazy negative energy (while most will accept anything) when dealing with: - Increasing already high import fees and logistics fees by dominant Government owned (!!) national postal and logistic company Bpost - Costly overcharging favoring energy suppliers energy (mostly outsourced to French companies) and utility systems - Sub-optimal traffic infrastructure, lack of highways, lack of road maintenance - Entrepreneurs are not stimulated sufficiently, they should be focused on stimulating sales - why not stimulate new entrepreneurs with 3 employees or more to not pay social security fees for the first 3 years, to provide free housing and catering (startup facilities if they want) when meeting certain milestones/deadlines with their startup, enabling the entrepreneurs to stimulate new jobs without relying (too much) on investors - just common sense. - In Belgium Sales jobs are absolutely not favored, as in many countries young people strive to have marketing or communication or management jobs, however the most important job within a company is not stimulated enough, not by educations, schools, but also politics by not stimulating flexible remuneration/salary/bonuses. - Which people will receive horribly high pensions in the next 20 years, killing a decent life of the young and entrepreneurial? Over paid Governmental workers and private sector employees. Who is going to pay for that? - The system has stimulated many private sector workers to work as a freelancer - also in other countries - however this leads obviously to a very costly system, now next to the (mostly highly inefficient run and managed) corporate managers/directors and marketing, financial and IT consultants, also nurses in hospitals and home care nurses are making very high salaries, up to 4 times the normal fees. Everybody a freelancer or nobody a freelancer, otherwise it’s a societal killer as you can expect. - Maybe an international development, but clearly a silent society killer: an overwhelming amount of agencies/brokers in between everything resulting an evidently more costly system, ranging from HR consultancy, payroll, sector agencies (mostly politically connected), market platforms funded by the previously mentioned investor funds scam, etc. - European laws and lazy following national politics stimulating corporates remove email and telephone availability, outsourcing most payment methods to scam (US) credit card companies, not offering sustainable and working European alternatives to Google, Search engines, sociale media, payment, hardware supporting innovative software solutions, removing essential raw materials production and recycling, resulting in higher costs and an'oyance.. But they always say the food is good.. Also, most say that small and medium sized businesses are essential for the country and economy creating most jobs, which should mean that it’s necessary to stimulate the persistent (some say crazy) entrepreneurs to start and scale businesses while only 5 to 10% of them succeed in selling the company to profit sufficiently from the many hours/days/years spent or lost building the business. When looking at all concerned items, do you think it’s worthwhile to start a professional business in Belgium, other than being a time consuming - keep you off the street - project if you already secured your basic life needs (house, food)? Good luck!
Strong social safety net, robust worker protections, and the big one: automatic indexation. We also have extremely strong unions...make of that what you will. Also worth mentioning, belgium being a wealthy state affords it more room to carry a higher debt burden. This is all to the benefit of the financial sector who vacuum up belgian domestic savings and park them in belgian gov debt for profit. Belgian consumers are very risk adverse, which laeads to abnormally high savings in typical saving accounts that act as a sponge for belgian public debt. This is also helped by the robust safety net; people end up being able to afford more savings in a positive feedback loop.
@@p.1019 The wage index in Belgium is a system designed to protect purchasing power by automatically adjusting wages to match inflation. This means that as the cost of living rises, wages increase accordingly. For entrepreneurs like us, while we pay out these indexed wages, we also benefit from tax incentives. This system ensures that both the working class and business owners can thrive in a fair and balanced economy. It's a smart and effective way to maintain economic stability and support everyone involved.
Belgium has also the highest income tax in the EU...to give you an idea an €100,000 gross annual salary is effectively taxed at 48%, leaving you with €52,000. In the UK, the same amount is taxed at 29%, leaving you €71,000 while healthcare is free and you likely still get private healthcare insurance from your employer on top of it. In Belgium you still have to pay extra social security "cotisations" and healthcare is not free (only part of it). So with this level of taxation it is basically not felt by the average people as the taxman gets back 50% of the extra money anyway. Food is also super expensive and huge GDP discrepancies between Flanders and Wallonia hiding the real picture, including high unemployment in the south part (8.2%).
@@diskette it's more or less correct - from 100k you'll pay 47k taxes before any returns if you are not resident. If you are resident then instead of 7% municipal tax you'll pay 0-9% depending on the municipality.
@@viora_ it's hard to have a decent life even on 85k as the prices for everything are absolutely insane, especially given the service you get in return... Luckily expats get some tax discounts, but even then it's still ridiculous. I can't imagine trying to live on 50k here, poor people, maybe only possible as a big family where all work and pay really low for a living.
I am now retired, living in the Belgian Ardenne. As I've has approximately hafl my career in France and half in Belgium, I perceive reitrement benefits from both countries. When I stopped working, a bit over four years ago, I was receiving roughly the same amount from both sides. Nowadays, I'm so thankful having worked in Belgium, as my Belgian pension significantly exceeds the French one, indexation on one side and close-to-stagnation on the other side.
Side note: the indexation mechanism doesn't actually cover inflation entirely, this is due to its complex calculation method. And it has also been proven that there are certain income groups profit more from wage indexation than other groups. So these groups have actually seen a loss in purchasing power.
Actually over time it covers more then the actual inflation for most people. Because for a lot of workers it is a set date % increase from a basket of goods. For example if food increases alot, then everybody is almost hit equally. If energy prices increase a lot, then low and middle income are (in percentages) hit harder, because rich people can invest in better houses, better technology,... If luxury goods increase more then rich people are hit harder (in percentages) then low income families, who just get more money because of something they barely purchase. Indexation is good, but a hard thing to manage correctly without disturbing the economy. Inflation of 0,5 - 2 % is perfect, all higher of lower is just not good.
Belgium here - the thing is, things don’t get cheaper and the owners of businesses want bigger margins each year, so when salaries are forced up, the services/goods get pushed up higher
Even if those goods/services get made a bit more expensive, we are incredibly rich compared to other countries and most working people are able to put money aside every month for saving/investing, which is a rare luxury these days. Just go to any other neighbouring country and talk to people about wages, you'll be very happy to live in Belgium.
That’s where free european market comes in. Sure, there are companies that can capitalise on prices being increased. Some can’t capitalise on it much. Prices increase more and more, which doesn’t help inflation much, but having the Europe around means that it is also kept under wraps. The issue is in how to tackle other ways for employers to get bigger margins. With AI, quite a few employers can get away with laying off a few employees. This is usually an easier and more optimal way to go.
The fact wages are indexed allows worker to have a piece of the cake to share from price increases. Inflation increase production costs, thus end-product costs for the Belgians to buy. Indexing wages allows them to keep having the means to buy the same stuff. This cost a part of the increased (inflated) benefits from bosses, thus give them a fair share.
@@DarkAngelEU I have to say "a bit more expensive" is a "bit" of an understatement. ;) 5 years ago i signed my lease for my single room apartment at about 580 Euro. Now it's 780 Euro. Now that's still great for the area, but if i have to move, i'll find nothing in that pricerange with the competition on the housing market (checking a couple of sites, shows me about 30 residences under 800 Euro in my city/surrounding muncipalities). My income hasn't gone up by 200 Euro in that timeframe either though and that's not taking into account the energy pricing (i'm lucky that i don't mind things being chilly), nor the increase in price of just buying food, transport, and other goods and services. @mathixvw That's the theory. In practice, that doesn't happen though. The indexation helps for sure, but far from enough to "keep having the means to buy the same stuff". Everyone i know has had to cut back a lot in recent years. That said, i don't know how to fix that either, given that we're in a global economy with very different rules in different area's.
Deze video zit vol onzin! België is virtueel failliet en dat al zeker 2 decenia! Wij als Vlaamse wroeters weten nog nie half hoe rampzalig alles er voor staat omdat we simpelweg niet correct worden geïnformeerd!
@@romanempire7170 Miserabel niet. Zoals aangehaald in de video hebben we zeker onze zorgen dat we iets aan moeten doen. Maar je kan toch ook niet achter je toetsenbord zitten en beweren dat we met alles in de stront zitten.
A wage index tied to basic necessities like food, shelter, clothing, etc., creates an incentive for the government (and private industry) to keep those costs low. A government that provides, for example, more public housing can keep costs low in the housing market in general, protecting themselves from wage price spirals. The wage price spirals in the 1970s and 80s were tied to Europe's dependence on fossil fuel imports, a thing that has repeated thanks to limiting trade with Russia. If the EU can move itself further and further away from reliance on foreign supplies for basic necessities, or at least friendshore as much as is feasible when that's not possible, it'll have less vulnerability to these sorts of spikes.
Stop harping on about GDP if you want to gauge the wealth of people. Look at the average wage/average house-price multiple. Look at the unemployment rate and median inflation-indexed salaries.
@@Sieuxerr1621 Work for and deliberately aim for a promotion (not without a wage bump) every 5 years; agree milestones with your boss, and make sure they know your intentions. Have a part-time self-employed side job you're able to enjoy, it may save you (at least somewhat) if the labour market has a seismic shift.
Wage price spirals don't just happen. They can only happen when production reaches capacity, like during a war (US during Vietnam, or Russia today) or when critical resources are lacking (oil shocks).
Also, it is mathematically illogical. Consider the price of any product or service. The amount of money that goes towards payroll cannot exceed the product or service cost. So, for any percentage increase in the salary, the overall price increase as a percentage cannot exceed the % salary increase. □ (denotes End of proof) For a spiral, other costs would have to increase above the inflation rate, which is not the employee's fault, so any indexation should not be scrapped because of high inflation rates. Doing so would only make the employees and the working class poorer.
One downside is that my employer uses this as an argument to not give out merit based salary increases, as they claim the salary budget goes entirely to indexation. Which is a bummer if you are an above average performing employee. But still, I'd take this over no indexation...
Benelux is getting it's ass overregulated by the EU ... (just ask the farmers ...) And our Belgian politicians should realy show THE FINGER towards pretentious EU. And right f*cking now!!!
As a Belgian and head of a company who is depending on export sales (like many companies in this small country), I am missing the perspective of the companies in this otherwise excellent video. The automatic wage increase poses a threat to exporting companies as the already very high labor costs rise even further with the indexation, reducing the margin as competition is fierce internationally - especially now, when wages in Belgium grow much stronger than in the rest of the EU. This results in Belgian companies who depend on export being pushed out of the market, and only companies who are focused on internal market remain strong. On the longer term, this results in a weaker economy and GDP. On a side note: it would be much better to have the indexation being calculated on an average wage, instead of a fixed % on all wages. Right now, there is overcompensation of the highest wages.
Nearly 20 years in Belgium from U.K. you’ll never see more quiet quitters anywhere than in Belgian companies. The salary has bounced up but being resource deficient we have some the highest direst taxes and energy costs in continental Europe. In real terms you can be in France get paid less, and pay out a lot less. Food and Energy are far cheaper just across the border along with property.
I've been in BE five years (also from UK) and completely get that 'quiet quitting' phenomenon. My 'expat' colleagues have the same frustrations or eventually succumb to it too, after trying to work around sullen colleagues that have been with the company way too long. Except the ones trying to kiss rings in order to get promoted - good luck with that. It's most overt when trying to contact customer services, e.g. for car rentals or insurance companies - it's incredible how hard it is to get a reply to an email or even get them to answer the phone. Was stuck at Charleroi airport for 45 minutes as no-one at the rental desk could be bothered to pick up the phone! Insurance co ignored my claim for months until I wrote a very hot review on Google Maps. TL;DR: no one seems to give a crap!
Italy decided with the agreement of Trade Unions , not to index wages anymore in 1992. In real terms current wages decreased since that date. And Italy's economy doesn't fare well. What a surprise.
@Duck-wc9de yes, I was there. Inflation 5,3 GDP growth 0,8 , more or less like today. The public debt was high but now it is much higher.What is your point? Belgium, where I live and work, has the highest median ( not average) personal and household income in the world, has a solid welfare and the economy is thriving, even if ,or because, the wages are indexed.
You clearly don't know how salary can increase. Salaries doesn't grow because you make a law, but because productivity per hour of work increase, if productivity doesn't increase, increasing wages by law only creates unemployment. The real problem of Italy isn't political as you say, but it's productivity that stagnated in the last 20 years.
@@antdele99you clearly do not know how salaries increase in Belgium. They increase by law as well because they are indexed BY LAW. On top of that there are of course increases due to TFP increase and other factors like collective bargaining. It is not difficult to grasp. Did you get it? Btw , thanks to this system ( and to other factors) Belgium has the highest median ( not average/ mean ) wealth in the World and the lowest Gini factor in the World as well. And the economy is thriving , Chicago boy.
@@antoniotorcoli5740 The factors that lead to an increase in wages are the same all over the world, because wages increase ONLY and exclusively with an increase in productivity. If from tomorrow Belgium's productivity continues to increase and wages are not increased by law, wages would still increase. Because salaries depend on productivity, not on laws.
Belgium's financial situation is far from ideal. Our national debt has reached unprecedented levels, and with every passing second, an additional €508 is added to it.
It's a pretty complex issue. Higher wages also lead to higher government income tax collection and overall taxation is the highest in Belgium for the whole of Europe, if not the world.
Hello from Belgium. Not sure at all automatic indexation is the main cause of Belgian debt crisis. It might be one of the problems but far from being the only reason
The fact that there's so many governments plus a royal family, and the lack of transparency in public services and investment execution doesn't help either
None of the above, it's about high costs of social security. High pensions to civil servants for example. I'm betting the next federal governement will address it thouroughly. albeit low key.
Each government is already cutting spending, instead of diversing the incomes. We have mutinational companies that pay minimum tax or have enormous tax cuts, other banks have "fiscal optimisation", and meanwhile last time i lost my id card, i had to wait 10 days to get an appointment at the city hall and had to wait 3 additionnal weeks to get my card. Cutting cost in the administration won't help.
Yes, indexation is amazing, but the cost of living and the taxes are extremely punishing. As someone who lives here, I can say that the tax scheme is overcompensates this indexation.
Just to be clear: since indexation also applies to the tax brackets and those tax brackets are progressive, even since this indexation applies to your gross income it should translate fairly well to your net income. :)
This is false, I am Italian and I work in Belgium and I can assure you that - without indexation - After the last years of +20% inflation you would feel way poorer, and people in Italy feel way poorer now, taxes are ok, they are High but you get good services out of them
I find it strange to say the Belgian economy is performing well. There are massive differences between the north (Flemish) side and the south (Walloon) side, including Brussels. We have one of the highest tax rates and have an enormous national debt that's growing.
Yes, data and complaints aren't all equal. Every country has better and worse economic regions. The easy way out is to blame a different cultural region. What a lazy argument
Perhaps you should try to learn something about economics instead of just swallowing all that Flemish state propaganda politicians and media are trying to force on you? Belgium is an incredibly wealthy country with great economic savvy politicians, esp. the liberals. PLUS, our liberal politicians understand and respect worker rights, social safety, benefits of healthcare, while promoting investment opportunities for corporations. We live in a walhalla that is being punched into a fissure by dumb nationalist polemics and everyone grabs the bait.
@Game_Hero indeed, free lunch doesn't exist. But it's 100x better that the state forces you to spare and invest in social protection through taxes than getting to a situation where you're incapable to face the price of health care the moment "shit hits the fan". That's why I believe in Europe's social policies vs USA.
As a Belgian, I'd rather pay more taxes and get all the benefits that come with it. If my daughter gets sick it only costs me 3€/hour to get an at home carer to look after her while I go to work (or work from home).
@@francisdebriey3609 Oh boy, the americans have the balls to claim their "healthcare is the best" while paying 30k to fix their back, 600 dollars for emergency room, 2500 dollars for an ambulance.... of course our "communist, socialist" way of living is a gazillion times better! 😄
In the short run, this looks manageable. However, rising wage costs are weakening our competitiveness. We’ve seen this happen in the 1970s and 1980s, which led to budget problems and ultimately forced a currency devaluation. Today, we no longer have that option, so this will weigh on economic growth in the long term. Our system is set up to shield citizens from severe shocks initially, but that comes with long-term repercussions.
One factor that is not mentioned here but is always mentioned in Belgian news is how this indexation supposedly reduces our wage competitiveness with our neighbors. Do you have any information on that aspect?
well, in pure economic theory thats true. why bother with employees whose salary will rise every year, (and they are usually pricy to begin with), compared to say, serbia. you have other advantages to make up for it, but its true that its still a point of worry
I am an Italian engineer living and working in Belgium. To be honest, Belgium Is by far one of the ugliest Place I have ever been. However, salaries are good and overall work Life balance is excellent. I pay 50% of taxes and I am ok with that becuase highways are free and education and healthcare are decent. If they stop the indexation, no International talent will accept to live here.
@@marcoac-sx6lq totally agree, apparently we have to choose between sun and friends or career and Money. Anyway I hate Belgium geographically but I can't complain about working conditions, at all.
You gotta love how economists call it a 'wage/price' spiral. As if wages going up that caused the price increases, whereas it's the opposite: prices go up, so workers demand higher wages. Therefore it should be called a price/wage spiral.
@@kevoreilly6557 There was supply shortages after the pandemic that caused prices to go up (among other things). After which salaries started to go up. So, prices first, salaries after = price/wage spiral.
Wait !!!! Yes, we have this index thing in Belgium, but that doesn't mean we are rich. Like in most western countries most people in their 20s (including late 20s) can't buy a house (unlike their parents who were born in the 1970s and 1980s). People often say "Hotel mama" over here. (Btw: our national debt is almost the worst in the EU and many people don't work)
The median net worth numbers don't lie though. I suspect home ownership is steady as ever. Just get that mortgage, amortize it and you'll be fine. groeten
@@tibodeclercq2131 net even de nbb gelezen over betaalbaarheid v woningen en daar schrok ik van. Dus dat neem ik terug. Toch wil ik je moed en geluk toewensen op die woningmarkt mocht je daar zelf nog mee worstelen. Dat punt van mediaan-rijkdom blijft wel overeind dus gelukkig is niet alles zwart. De kwaliteit vd huizen ligt bvb ook hoger.
Not me working a fulltime job in Belgium and not being able to make ends meet by having only the bare necessities. Index goes up so prices go up, but wages remain just about the same with minimal increase. The inflation is hitting people like me hard.
If the Belgian government is able to apply the index system, it is because Belgians pay a lot of taxes on all types of common products. More than 70 % of the price of gasoline in Belgium are different types of taxes, the real price only 29 % of the total. In a way, the government gives back what it took away with its other hand... Still, apparantly the figures suggest it has some positive effect after all, unless these figures do not take into account certain facts. Maybe other figures, taking a broader scope into account would show that the differences between Spain and Finland, France and Belgium etc. aren't really as spectacular as the figures shown here suggest. Maybe Hungarians don't feel the negative effects so much as the figures suggest, because they pay less taxes or because there are other corrective measures we don't hear about. Their pro Russia prime minister seems still to be very popular, so it can't be that bad ?
Important sidenote: Belgium has one of the highest tax on wages in the word (up to 50%). So even though in theory it's a good concept to index your wages to inflation in order to maintain purchasing power, it puts a lot of stress on government financials and the competitiveness of Belgian companies and it's market as a whole. Combined with the immensely high taxation due to an imbalanced social security system, we still have a lot of work to do.
If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
Real wage is rising. Thats wages adjusted according to consumer price index. Which means that increased cost of living is accounted for in the statistic.
And what should we Northern Italians say? A tiny studio in Milano will cost you around 1 million euro. If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
I am an italian living in Belgium and my hypothesis is that we do not see wage price spiraling because belgian money is spent abroad and it increases prices there
Were you born in Belgium or did you move recently? I am thinking of studying at the KUL Leuven. I could do my intership with an Italian professor at the UZ of Leuven. Is it a pleasant country to live?
It's basically only possible because Belgium and Luxembourg only a small part of the EU, so they can't affect the Euro too much. If we see more European countries follow suit, that would likely risk higher inflation.
Owning several shops in Belgium and having lots of staff. Every year i have to cough up more and more to pay staff . This for doing the same thing. This money has to come from somewhere so every year my prices go up. While the company doesn't make more money in the end. However what you don't mention and this is the elephant in the room . Its not the staff that runs away with the money but the government!! BIG difference. A country the size of new york with 3 governments. Thousands of mayors and 100.000 government workers just can not be profitable. 😢
What's more complicated to explain is why that doesn't matter :) The federal government doesn't actually hold all that much power over people's daily lives.
Well they do have a government most of the time, and it is a colorful government with a lot of voices and it only allows for really good laws to pass. Multi-pqrty governments are the best.
On the energy issue, I want to point out that's its own problem. Belgium has made some really bad choices on energy production to the point where we now buy much of it from France. This is why the cost has shot up. The energy issue is an ongoing issue here where people seem unsure whether to bank on green energy - which is insufficient - while closing down nuclear plants, or instead investing in new plants to become more energy independent.
Don't get too excited, as belgian, I can tell you that the cost of life has tripled since the pandemic, but the wages didn't. The taxes are ones of the highest in the world, the inflation rate is the biggest in EU and the indexation doesn't keep up. In any border country except Netherlands, the prices are at least half or even one-third of what they are here. The belgian economy is in dire straits too.
Yes! It really feels great seeing the city I grew up in, studied in, and still live very close by in Pellenberg Prices for houses are expensive like in most villages laying around leuven like Heverlee, Kessel-lo, Lubbeek and Linden but it's still one of the richest cities in terms of history besides Brussels and Antwerp Proud of being a part of it
The index system is a bit flawed sometimes. Because it compares to a number of products that are considered necessary for living. Then they took bread out at some point and the cost of bread quickly doubled without influencing the index
I hit $113k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject.
I'm happy because It's good to have a trusted professional like Ms. Evelyn Vera services handling your investments because every week when I receive my profit I feel like I didn't even work a day to get this far in life, having a wonderful family of 6 and paid off my loans I have in the past looking forward to retirement!! Life is good when you have the cash pooping in 😊
small caveat, as a counter-policy (friendly to employers) we also have since 1996 a law that makes it very difficult to get a wage rise (indexation not being a wage rise, merely a maintenance of the status quo in real terms).
I'm from Brussels. With the huge inflation of 2022-2023 we all got about 11% indexation going from 2022 to 2023. My boss sent us all an e-mail announcing this like a raise for everyone xD while he had no choice as it's mandatory - he was just pretending as if he gave us all a present. And it's nothing like a raise because that's how much life became more expensive for everyone.
To be fair, every company does that. Last January my employers made a big point about how i got a raise of 1,5%. No i didn't, the indexing was 1,48%. So i got a 0.02% raise. That 30 cents really makes the difference! :p
Combining the VAT on electricity and gas part with the index and the conclusion that the index has an unsustainable strain on state finances is misleading. The reason Belgium had to decrease the VAT on energy is because energy prices were through the roof in a never before seen scenario. We are talking about suddenly having to pay 2000+ euro a month on energy bills for an average household. Absolutely insane scenario's. A very large part of that disaster has to do with The state's complete lack of care for Belgium's energy supply. Mostly in energy. We are in deep trouble with our nuclear energy supply. To this day it's still not fixed. So that disaster is the reason that strain happened.
And they don't seem to hurry too much to form a federal government to fix the historical mistakes that have been done in the past two decades in regards to nuclear power... we need to cancel the closure and build new plants ASAP
That‘s true but the index calculations are based on our country‘s minimum wage. So we all get the same increase in wages. Doing separate calculations for lower- and high wages (i.e. giving workers with high wages a smaller increase than those with lower wages) wouldn‘t be fair imo.
@cawashka I know right, there'll always be pros and cons in this matter. Treating all wages equally may sound fair, but in the end a 2,5% or 5% hike might deliver much needed relief for low wages but will only widen the gap when it applied to very high wages too. If you earn 26.000€ a year, the additional 1300€ (5% case) might be just enough to pay for highes prices. If you earn 150.000€ a year, this will be 7500€ more due to indexation.
@@Marc_lux Which is why you should tax lower wages CONSIDERABLY less! The tax burden in Belgium and Luxemburg is disproportionately high even for "normal or lower" wages...
The real kicker is that belgium is one of the most taxed county's in the world. The VAT on allmost everything is 21% and between wath the employer pays and what you get is like between half and one third. That is where aour politicians have realy dropped the ball in the last like 20 years.
Terrible terrible coverage. Wage indexing "works" for governments and large corporations, but it doesn't work SMEs, which represent a significant part of the Belgian economy. Wage indexing led to a record number of bankruptcies, which had a domino effect on local economies and employment. The most affected sectors are retail, construction, and services; so pretty much all businesses.
@@juniboyy It's easy to complain but that sounds like a situation that is better than most of Europe. People need to learn some perspective sometimes.
@@juniboyy so much to unpack: 1. new gas cars can't be sold beyond 2035. You will still be able to buy second hand gas cars until like 2040. Businesses are changing to electric cars today because tax incentives and at work charging. 2. the immigrants don't live in Wallonia, have you been to Mechelen recently? 3. wages increases are automatic .. but those same wage increases are used as an excuse not to buy out productivity bonuses.
Interesting video and well-covered! I would add two points, as a Belgian from Wallonia: First, it seems like you don't really take into account the implications of those decreasing exports on the belgian current account deficit in the balance of payments. While it is not catastrophic yet, it might become a problem and I think it's worth talking about. Yes, exports are only a fraction of the GDP but it's still not sustainable to have a deficit in the long term, that will need to be solved one way or another. When import prices increase, we need to increase our exports and wage indexation doesn't really help with that. Second, when talking about state finances, I think it's important to understand the difference between regions. Wallonia is a much more in-debt region, especially some cities which are really poor and where labour costs have become really high given the GDP per capita. This leads to very low employment rates, which doesn't help to restore growth and prosperity. Overall, I still believe that indexation is a good way to protect the quality of life of workers, but it also has its limitations. Inflation exists for a reason and it cannot be cancelled solely by making wages follow it unfortunately. Maybe a system of indexing salaries by 1% every time the 2% threshold has been reached could be a great middle-ground solution for the rest of Europe to take inspiration from.
Absolutely true, wish more people would follow up on your comments and aldo practical suggestion. As an entrepreneur starting or scaling up a national or international operational small to medium sized business growing it in a sustainable way - with common sense, without the scam of (politically stimulated) investor funds - I would advice not to start a business in Belgium: Increasing already high wages, employees strive to work 3 or 4 days with limited hours, not working is more stimulated than anything else in Belgium. Mind you, in Belgium already most company cars in Europe and other benefits like meal vouchers provided by 3 French companies ( ! - Started in the 1960’s to stimulate employees to spend money at local merchants, now 99% is spent at the large supermarket chains) to stimulate work for employers. Horrendous legal system enabling outstanding invoices of an increasing group of customers who know how to play the rigged system while 100% of Belgium lawyers are absolutely unable and unwilling to claim these lost revenues leasing to unbelievable high administrative burden - Lots of newcomers to the Belgium society starting new companies with far less ethics standards resulting in high bankruptcy rate, starting a new business before the previous went down leaving all suppliers with the outstanding invoices with not a single political follow up - Worst financing opportunities by banks and other institutions of whole Europe, hence the low innovation uptake, except for the few connected to the political elite/lobby Finance department’s arrogant position towards any substantial transparency e.g. check the National bank’s ‘secret’ 50% owner - Increasing administrative burden, despite the many claims of incompetent politicians copied by the non-critical and non-objective media of actually removing the burdens. Less and Less competent accountants are stimulated to support entrepreneurs, in stead politics is favoring the standardisation of a few large entities in this market, whole providing more and more legislation and rules to increase the costs while accountancy automation should make it cheaper. Also check the efforts in Europe for digital invoices peppol, not a single SME company has asked for, another layer, should they have focused on the actually payment of invoices.. - Overall people’s nonchalance resulting in crazy negative energy (while most will accept anything) when dealing with: - Increasing already high import fees and logistics fees by dominant Government owned (!!) national postal and logistic company Bpost - Costly overcharging favoring energy suppliers energy (mostly outsourced to French companies) and utility systems - Sub-optimal traffic infrastructure, lack of highways, lack of road maintenance - Entrepreneurs are not stimulated sufficiently, they should be focused on stimulating sales - why not stimulate new entrepreneurs with 3 employees or more to not pay social security fees for the first 3 years, to provide free housing and catering (startup facilities if they want) when meeting certain milestones/deadlines with their startup, enabling the entrepreneurs to stimulate new jobs without relying (too much) on investors - just common sense. - In Belgium Sales jobs are absolutely not favored, as in many countries young people strive to have marketing or communication or management jobs, however the most important job within a company is not stimulated enough, not by educations, schools, but also politics by not stimulating flexible remuneration/salary/bonuses. - Which people will receive horribly high pensions in the next 20 years, killing a decent life of the young and entrepreneurial? Over paid Governmental workers and private sector employees. Who is going to pay for that? - The system has stimulated many private sector workers to work as a freelancer - also in other countries - however this leads obviously to a very costly system, now next to the (mostly highly inefficient run and managed) corporate managers/directors and marketing, financial and IT consultants, also nurses in hospitals and home care nurses are making very high salaries, up to 4 times the normal fees. Everybody a freelancer or nobody a freelancer, otherwise it’s a societal killer as you can expect. - Maybe an international development, but clearly a silent society killer: an overwhelming amount of agencies/brokers in between everything resulting an evidently more costly system, ranging from HR consultancy, payroll, sector agencies (mostly politically connected), market platforms funded by the previously mentioned investor funds scam, etc. - European laws and lazy following national politics stimulating corporates remove email and telephone availability, outsourcing most payment methods to scam (US) credit card companies, not offering sustainable and working European alternatives to Google, Search engines, sociale media, payment, hardware supporting innovative software solutions, removing essential raw materials production and recycling, resulting in higher costs and an'oyance.. But they always say the food is good.. Also, most say that small and medium sized businesses are essential for the country and economy creating most jobs, which should mean that it’s necessary to stimulate the persistent (some say crazy) entrepreneurs to start and scale businesses while only 5 to 10% of them succeed in selling the company to profit sufficiently from the many hours/days/years spent or lost building the business. When looking at all concerned items, do you think it’s worthwhile to start a professional business in Belgium, other than being a time consuming - keep you off the street - project if you already secured your basic life needs (house, food)? Good luck!
@ don’t worry, I’m from the UK and our prices have all at least doubled too…but our wages have barely changed at all…in fact this year was the worst wage increase for me personally in the last decade
@@olska9498 I don’t agree with that. The support hasn’t been because of the index but because of the rise of energy prices, which are excluded from the index. The deficit belgium has is because of our complex political structure and other things, not because of the indexation of wages. The energy support (also for Companies) also influenced the debt: it was huge.
If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
I rather have bad roads and be like Belgium the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
Belgium also has a law on competetiveness to limit wage increases given by employers. So even though the indexation mechanism helps to keep up with inflation, the law on competetiveness will kick in a bit later to make sure that labour costs stay roughly in line with those in our neighbouring countries.
The conclusion is totally wrong. Automatically indexing wages, without any increase in productivity or profits, is detrimental to a country's ability to collect taxes, increases a countries debt burden, decreases its competitivity or investment climate. This is exactly what is happening to Belgium right know. One of the weakest countries in the EU.
As a 25j Belgian yea wage go up but prices also go up like creazy it stil feels like pennies so we have a very long way to go... also they really need to lower te tax on evrything mentalety and fix the coruption in politiks...
7:09 "Perhaps the general lesson here is that wage price indexing's main risk is an unsustainable strain on state finances" Well, that's disappointing. I thought the Belgians protected their wage prices by being clever, but it looks like they're just funding it with debt.
5:27 your analysis is completely wrong. I am residing in Belgium. Because of this automatic wages increases, all companies are closing here and reopen in other countries, since wages are lower there. In the company I am working for, because of last year 11% wage increase, the company make now losses, and we had to get rid of 20% of the personnel
The indexation of the wages are not the cause of bankruptcy of companies. The industry is losing competition in the entire continent of Europe. Energy prices are one of the main reasons we lose ground towards mega power economies such as India and China.
@@lennaertvanhee You must be badly informed. All economist know this automatic wage increase is a disaster for the economy. We now finally have a new liberal government, and the first they will do is get rid of that disastrous mechanism.
Just a small question: howmuch bonus did the bosses award themselves this year? Of course it can depend, and on small businesses it can mean one person got fired and the bosses don't give themselves a big bonus. In bigger companies it can mean 100 people laid off, and you can be sure the bosses got their bonus. There's plenty of scandals about that in the past years. Just recently, VanHool went under, but the bosses did get their nice bonusses while over 1000 people lost their jobs. Sabena in the past is another prime example. Belgacom and Telenet do the same. It happens all the time, but the only ones noticing the problems are the people working at the companies, and not those who actually own and direct the companies.
Please tutor me im mistaken - but doesnt Belgium have a very good infrastructure for gas and oil imports from overseas? Could that be a reason for increase in standard, compared to other EU countries since 22?
@@M-tl4xt No, the "Scala Mobile" was proven not to work, Italy already had 90% Debt to GDP in 1990 and a 10% budget deficit, hence the reform in 1992. The reunification of Germany and collapse of the Eastern bloc also meant Italian manufacturing was outcompeted. You're poor because you never reformed the underlying problems from the 70s and 80s.
Concerning the energy package: the government did indeed bring the VAT rate down to 6%, but it introduced a new special (state) contribution. This together with the new VAT rate ends up being about the same as the 21% rate. The government introduced this new system so they could intervene more quickly and easy, without touching the VAT rate.
Personal experience. Living in Belgium i don't feel it at all. The salary re-indexing is not keeping up with the cost of living increase since COVID. Like at all.
You're right the indexation is lower than the inflation but we're still much better off than without it and everyone with a job can afford to live a decent to good life here.
you dont feel it because it is normal to you. If you went to Germany or france for 2 years and then come back you would be surprised how good we are doing
@@kianlakchi7182 well the indexation affects the gross salaries, if we consider the crazy taxes Belgium has, then the net indexation effected is effectively halved for the employee. However, rents are also increasing with similar indexation rates, but there is not net/gross difference.
Better than other countries anyway, take bread for example. It only got a little bit more expensive in real terms. Bread price in Belgium in 2014 was €2.40, average salary €3.414. One bread was 0.0702% of an average salary Bread price in Belgium in 2024 was €2.98, average salary €4.076. One bread was 0.0731% of an average salary
@@squitz7056 People always idealize other places, they keep believing grass is greener elsewhere... the sad thing being, they'd gladly vote to change what they believe is bad... and they'd end up making everything worse !
One would think that the idea of a wage price spiral doesn't happen isn't actually a cause of inflation. I kept saying this for freaking years, including on this channel about how the banking class has stifled actual research in economics and pushed a narrative that says "slight inflation is good." Which is only true if you are a person with extremely high debt... which the banking class caused in the first place.
“It risks Wage-price Spirals!” In other words, corporations don’t get to charge double, and allocate Higher percentage pays to their “shareholders.” So basically the Banks telling us: “Inflation isn’t fun unless the Rich can benefit from it.” This inequality is directly resulting in people feeling contemptuous all around the world, something Bad happens, it affects everybody else, not the rich. In Belgium of course, this didn’t effect much since everyone is already rich so people are more capable of curbing the Rich’s enthusiasm with equitable action.
Here's the kicker - inflation is a good justification for increasing prices, but inflation in itself is a monetary issue! So indexation preserves spending power and living standards of the majority of workers, preventing the growth from being based on the squeezing of the majority out of their wealth.
@ In my opinion, spending power and living standards should stay steady. Prices shouldn’t be raised to make employees bear the burden of a company’s financial trouble. The indignity infuriates me.
As was experienced with the end of old liberalism unless we return to the postwar consensus we will have socialist revolutions and fascist counterrevolutions. People will get more angry and polarised as inequality gets worse.
A thing you didn't mention is the "loonnormwet" or "wage norm law", it limits the percentage that wages can rise to stay competitive compared to neighbouring countries. The two keep each other in balance and are a compromise between trade unions and employers.
if they aren’t how come that Belgium is the wealthiest country in the world in median wealth per household. Source Credit swiss median weath per household 2024. The median Belgian is 5 times wealthier than the median Dutch. If everything is so bad, how do you explain these numbers?
🚨Spoiler alert 🚨it didn't. Belgium recorded a record number of bankruptcies, especially among small and medium-sized enterprises (SMEs) in 2023, and 2024 is expected to be far worse.
Easy to understand: salary indexation will either cause wage-price spiral (private sector) or public deficit (public sector). It's impossible to just increase salaries without expecting any effects on costs (whatever those costs may be).
Trump is pro-AI so NVIDIA will succeed. Trump's policies had been viewed by many experts as more positive for the financials sector, spurring this massive across all sectors. It's enticing to consider purchasing some stocks, I'm contemplating investing more than $300k. Thoughts?
I would say find quality stocks that have long term potential and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
I agree. A financial advlsor can really help you re-adjust and identify blind spots that you yourself do not notice, like mine did in advising me during COVID on how the pandemic will shape things, and I made it out big and still make up to at least 20k in dividend per month.
That's really great. I've tried doing some research myself to hire a financial advisor, but it's really overwhelming. Could you recommend who you work with, please?
the health index is only for civil servants and bank employees or rent increase. it has a seperate system for wage increases called the spilindex. the automatic indexation depends from sector and isn't anytime the 2 percent is passed. it can be for example that people in construction get a wage increase of 3 percent, but people in the hospitality get 1.3 percent. also it always has to be convened by sector, so one company can not just increase its wages freely. btw the index for the private sector is the consumption price index.
As a Belgian. Wage indexing is horrible and goes to waste in extremely high tax rates. We literally have one of the highest debt in the EU while having one of the highest income taxrates in the world.
You can't look at only tax rate. Yes, you do have a faster 50% start at 41k and up, but instead companies can do things like company car (basically any IT position has this), direct pay mortgage, etc., which makes figures like GDP PPP misleading, and even then Belgium is doing pretty well. The mean in Belgium is 3500 EUR/month or 42k a year which ends up around 2400 net (29% total tax), Germany is slightly higher at 3700 EUR mean and will end up being 2300 net (37%). Averages distort the picture a bit, it's when you're actually well off in Belgium that taxes kick in and I'm fine with that, it's why Belgium's class divide is actually decent.
@ thr median net income a month in Belgium is 1750-1900 a month. Company cars and direct pay mortgages are paid for through taxcuts for a company aka taxpayers money. Its how you end up with some of the most debt out of all European countries while having some of the highest taxes in the world. Belgiums class divide is even worse as someone who’s unemployed can earn more than someone who does work resulting in high unemployment rates when compared to its peers.
@@Masterrunescapeer I really hate all of these stupid tax optimisation tricks that we're forced to do because of how insane our taxes are. I wish I could take this money and spend it how I please (investments, hobbies, general savings) instead of being punished if I don't choose to get a salary car (we have one of the highest CO2 emission per capita for some reason, hmmm), mortgage payments, more holidays, etc. Such a rigid and stupid system.
In a way, wage increase is directly in favor of tax department. The amount of increase in most of the employee's case would fall in the highest tax slab + since the raise in salary would directly increase the social contributions, here also the state gets the cut. ;-)
@@kobbebauws the Belgian tax brackets are very steep. A significant part of your income falls into the 50% one. So everything on top also falls into the 50% bracket, even when the bracket boundaries are adjusted.
I'm Belgian and I fail to see how any of this really helps ? Don't get me wrong, our wages are probably better than a lot of other EU countries but the cost of living has gone crazy over the last few years and rent is on a whole other level. What good does it do to earn 50% more than 5 years ago when everything costs 3 times as much ? 10 years ago I could spend 150 bucks on groceries and eat for 3 weeks. These days I'll spend half that amount and live for a week. Heck, I paid 320€/month for rent 10 years ago, these days I'm paying around 700€. That's only 10 years of inflation.
Belgian who lives abroad, here 👋 I get it, but in real terms rent is incredibly cheap in Belgium compared to its neighbours, and taxes may be high but real world quality of life is likewise significantly higher because of what all that tax money pays for (healthcare, social security, ...). In isolation, things may look bad. When you look at other places in Europe, things in Belgium are going incredibly well for the average person.
I wonder if the risk of wage-price spirals could alleviated if wages rose in line with a 5 year average rather than rising directly in line with inflation
This is super interesting, especially because, if we were to believe many CEOs, every time the index approaches the tipping point, it supposedly makes us less competitive compared to neighboring countries and harms the Belgian economy. Another notable point is the higher taxation on labor compared to corporate profits, which means that it also increases government revenue when people get paid better. As for the reduction in energy taxes from 21% to 6%, they’ve offset this (after the price lowerd again) with an additional levy per kWh. This mostly decouples the tax from price fluctuations, that kinda sucks if you got a dynamic energy contract since even if the price is 0 you have to pay that . But i would imagine made it a more stable goverment income and does not increase the tax on top of the price shoots up so that something.
@@jorik41 As a business owner with 30 employees, I see both sides of the debate. The wage index undeniably helps employees maintain their purchasing power, which is essential for morale and productivity. However, as you mentioned, it does create challenges for competitiveness, especially when neighboring countries don't have a similar system. Balancing these increased costs while staying competitive is a constant struggle for businesses like mine. The higher taxation on labor compared to corporate profits is another interesting point-it’s a double-edged sword. While better wages increase government revenue, it also means businesses have to be even more strategic about managing labor costs. As for the energy tax adjustment, you're right-it does create stability for government income, but it’s frustrating for those of us with dynamic energy contracts. The fixed levy adds an extra layer of cost we can’t avoid, even during times of low energy prices. It’s a trade-off, like much of the Belgian system, where the focus seems to be on creating long-term stability at the expense of short-term flexibility.
As a Belgian it is rare to hear good news. Thanks TLDR!
That's because you're a typical Belgian who knows very little about his own country and as a result derives his opinion on his own country from what stupid little stereotypes our hopelessly chauvinistic neighbouring countries know about it. It's a very common thing and has been going on for a very long time.
Don't worry, the bad news will start as soon as the debt-fueled growth will end and crash the economy, just like in Argentina, Greece, the German Reich etc.
As a Belgian too, amen to that! :D
@@Gliese380Take your meds
That's right ! Hello fellow belgians
Belgian here. The wage indexation makes sure that everybody's wage goes up.
However, due to these wage increases, we're often less likely to get other type of promotions. Companies often point to the index as an excuse to not allow other type of wage increases.
Though on that end, I'd rather see everybody get a wage increase rather than the few people assertive enough to ask for a promotion.
yeah exactly. i like the system the way it is right now.
it has nothing to do with promotions just look at how much companys are leaving that and taxes its making us happy with a dead horse
they would find a different excuse anyways. might as well keep it that way
@@evryatis9231 its the truth audi gone van hool gone and thats only my sector and i dont need exuses its the truth
not even talking about places to go out too eat ect
@@kenleydriessens2918He was reffering to the loonbkokkeringswet
That is set in place just for the companies. And you can look at job loss. But that is something that happens in Europa as a whole. Even in countries with other tax rates and without wage indexing
belgium also has the highest median wealth (median not average) in the world. Which is a very good way to show how much a normal guy owns. There aren't many billionaires in Belgium, but there's a very large and wealthy middle class and a good wealth distribution
true
@michielp1922 For the moment, yes... Though increasing state regulations are increasingly ruining that.
I think you mean median wealth? Median gdp is far below the US. But yeah both are pretty high. Then again, we have a good location and our economy is propped up by the EU and the port of Antwerp which both serve a much larger area.
@@roelvaneyken211 how are state regulations increasing billionaires while deminishing the middle class? Almost by definition it is the reverse. I assume you mean they are decreasing the upper middle class
Belgistan
In Spain we used to have the same system. After 2008 it was forced to change the system; since then we have not recovered the wealth prior to the financial crisis.
Things like this should not be abolished due to a crisis, but just turned off temporarily, it should have been a part of the constitution.
@@ayoCC For Spain the comparison to 2008 is a bit misleading because construction jobs of the time simply don't exist. That wage has a big component of debt from the company that was paying it and debt from the consumers as at the time private debt was around 200% GDP while public debt was below 40%.
but you now have one of the fastest growing economies in the developed world, and the credit worthiness of spain has surpassed even france.
@@fujin09 so? By making everybody poorer? Spain had a 40% debt to GDP ratio in 2006 and a surplus on the budget, that didn't meant either that things were going good. Salaries must increase as living costs are slyrocketing.
@@fujin09 and the status of the economy has more to do with the government change and the abolition of all austerity bullshit and the minimum wage increases than with all the nonsensical austerity programmes that were imposed back in the day.
I feel like automatic indexing is simply the fair thing to do. It’s strange how, in other places, real wages just decrease if you don’t explicitly ask for a raise.
It’s not like you’re doing less, your labor still produces the same value. So, you should be compensated accordingly.
That's not the whole story. If wages are indexed, expenses also rise for businesses in Belgium, which they factor into their prices, which affects purchasing power all the same (which the wage index is supposed to guarentee). That is why the discussion frequently comes up here in Belgium (I am Belgian) whether we should 'skip' the indexing of wages whenever it comes up.
Well, theoretically, companies who want to attract or keep the best labor offer the highest salaries to remain competitive. Competition is the driving force when the government isn't involved.
You forget that we live in an open world economy. With these higher wages Belgium companies are not able to compete with companies in countries with lower wages.
Automatically indexing wages, without any increase in productivity or profits, is detrimental to a country's ability to collect taxes, increases a countries debt burden, decreases its competitivity or investment climate. This is exactly what is happening to Belgium right know. One of the weakest countries in the EU.
@@roelvaneyken211there are multiple statistics in the video that contradict your assessment
HOHO! some media in Belgium says it's not. we have to be competitive with our neighbouring countries and they try to change automatic indexing. Companies complain about it (they dont get to be as greedy as their neighbours poor them).
When you get the Automatic indexing some companies act like it's a gift/real raise but they are forced to do it.
Thank god our goverment makes it hard to change it because there is much opposition and our Unions protest if they even try too change it.
Always a fight against greed.
As a French working in Belgium ( and really loving this little country), do you know that wages were indexed on inflation in France until 1983 when it was cancelled by the left party at the time... in the name of fight against inflation ?
Yeah PTB in Belgium is also against indexing for some reason
And look at French situation nowadays : people are getting poorer and poorer while the debt is way higher than in Belgium.
@@jannoottenburghs5121 There is always someone who can benefit from not paying people as much.
In Belgium it's a right wing party trying to kill it (NVA)
@@Erowens98 yeah I know. But ptb is the leftist workers party. That is the strange part
Maybe because they think they will help the trade unions with wage negotiarions. But the trade unions aren't asking to end wage indexation
Wage driven economic growth? Whoever could have predicted that?!
Oh right Keynes.
Sadly we have nearly no real economics in political important positions, that's why our politicians are always trying to make the worst Hayek reform instead to establishing keynesianism
I find it funny that everytime a nation does well its because of socialist or socialist leaning politics.
@@Alexander-z6x I honestly think that is a selection bias...
did keynes predict everything moving to china?
@@LoneWolf-wp9dnChina have one od the most interventionistic economy model in the world
Good to see some positive news about Belgium. The country is doing well, all things considered.
Yes we have our problems:
- High debt to GDP
- Relative decline of industry and not enough economic headroom to turn the tide soon
- Economic unevenness between the regions
- A heavy state apparatus (though there are efforts to remedy this)
But we have our strengths:
- Strong social net
- Incredible political stability
- Stable purchasing power
- Strong service sector
- A general concern for the wellbeing of the middle class amongst politicians
- Great food
Belgians are notorious pessimists, it would do us good to see the bright side from time to time.
Yes, people often tend to be pessimistic but it would do us well to 'stop and smell the roses' on occasion... It's really mostly great, but will take efforts to make sure future generations will have the same relative comfort.
@@mmmhorsesteaks A coherent industrial policy would be great. But that will be a bit hard if they try to balance the budget (even if it's not impossible)
@@CasperSteuperaertI think the biggest budget cuts are gonna be in that social net and not so much for the economy.
is this great belgian food in the room with us right now?
@@blakedake19 Best beer, best chocolate, best fries, best waffles,...
Belgian here, our wages were low compared to living costs before inflation, our index helped prevent further losses but living costs, especiallt housing, have still risen faster,
We are not rich, our wages are not high when compared to costs.
I do agree with you on that part, although as a fashion designer and tailor in Antwerp and soon opening a store in Brussels
I have to disagree on the part of our cost being higher then our income
Yes the real estate market has increased dramatically over the past 4 years but that's due to the fact they want to implement a building stop and focus more on renovation rather than new projects.
If we are being truthful here, our living situation could be much worse but maybe I shouldn't be the one talking for the crowd as I do live a complete different life then most
Many people in other countries can't save half their payout and live on a 95% expense 5% saving route
In Belgium the average saving percentage is allot higher then other eu countries
Which allows us to pay more for the high demand sectors like "real estate"
@@apophistechandreviews2740 and i agree if you think logicly it makes sence everybodys wage up boss have to pay more so do you indexsation is good but not automatic its going to cost us industry and industry is money so yeah
We're talking about real hourly wages here, not just hourly wages. Real hourly wages are wages adjusted for inflation, by dividing them by a consumer price index. So, unless your consumer price index is inaccurate, the consumer prices are accounted for in real hourly wages. You might feel your wages are low compared to costs, but it's worse in most other European countries.
@@Erowens98 thats bullshit for example go to the store in 2008 and now see the diffrence ik ga effe vlaams met u praten leeft u effectief in belgie ? koopkracht wordt verhoogd met indexering dus @shorunqualtec2070 is correct alle lonen prijzen gaan omhoog bij een indexering en das puur om de grote belastingen die dit land rijk is te betalen het mis manegent van onze politiek wij vullen hun gat in de begroting de werkende mens met als gevolg mooi loon ja je geeft het af aan inkopen de staat ect en nee andere staten lijden niet omdat die zich bewust zijn van de crisis dus zoeken lange termijn een oplosingen spanje italie en frankrijk hebben in verhouding tot meer werkgevers als wij en hoe komt dat ? omdat wij teveel kosten alle berdijven vertekken en in spanje ect niet zo neig waarom omdat daar een plan is hier niet binnen 4 jaar zit belgie tegen de grond net zoals wij betaald een baas nooit graag teveel je moet echt heel geshift zijn om te deznken dat dit werkt
And we spend because we get money !
Absolutely loved this video as a proud Belgian citizen and the owner of my own fashion atelier (with a second one opening soon)! It’s so refreshing to hear someone say something positive about Belgium-it’s rare these days. TLDR did an amazing job breaking this down; truly insightful and well-presented!
Our country does have a lot of flaws, but so does every other country
Their is no perfect country as perfection is diffrent for everybody
Our healthcare system is amongst the best in the world and the amount of diffrent cultures and people enhances my proudness to live in this country
Looking forward to see more!
Subscribed ❤
Glad to see you happy, wondering how many years you are active as an entrepreneur, however a reality check here based on the last 20 years:
We see this video’s explaining the employees and current politicians are happy, or somewhat.
As an entrepreneur starting or scaling up a national or international operational small to medium sized business growing it in a sustainable way - with common sense, without the scam of (politically stimulated) investor funds - I would advice not to start a business in Belgium:
Increasing already high wages, employees strive to work 3 or 4 days with limited hours, not working is more stimulated than anything else in Belgium. Mind you, in Belgium already most company cars in Europe and other benefits like meal vouchers provided by 3 French companies ( ! - Started in the 1960’s to stimulate employees to spend money at local merchants, now 99% is spent at the large supermarket chains) to stimulate work for employers.
Horrendous legal system enabling outstanding invoices of an increasing group of customers who know how to play the rigged system while 100% of Belgium lawyers are absolutely unable and unwilling to claim these lost revenues leasing to unbelievable high administrative burden - Lots of newcomers to the Belgium society starting new companies with far less ethics standards resulting in high bankruptcy rate, starting a new business before the previous went down leaving all suppliers with the outstanding invoices with not a single political follow up - Worst financing opportunities by banks and other institutions of whole Europe, hence the low innovation uptake, except for the few connected to the political elite/lobby
Finance department’s arrogant position towards any substantial transparency e.g. check the National bank’s ‘secret’ 50% owner
- Increasing administrative burden, despite the many claims of incompetent politicians copied by the non-critical and non-objective media of actually removing the burdens. Less and Less competent accountants are stimulated to support entrepreneurs, in stead politics is favoring the standardisation of a few large entities in this market, whole providing more and more legislation and rules to increase the costs while accountancy automation should make it cheaper. Also check the efforts in Europe for digital invoices peppol, not a single SME company has asked for, another layer, should they have focused on the actually payment of invoices..
- Overall people’s nonchalance resulting in crazy negative energy (while most will accept anything) when dealing with:
- Increasing already high import fees and logistics fees by dominant Government owned (!!) national postal and logistic company Bpost
- Costly overcharging favoring energy suppliers energy (mostly outsourced to French companies) and utility systems
- Sub-optimal traffic infrastructure, lack of highways, lack of road maintenance
- Entrepreneurs are not stimulated sufficiently, they should be focused on stimulating sales - why not stimulate new entrepreneurs with 3 employees or more to not pay social security fees for the first 3 years, to provide free housing and catering (startup facilities if they want) when meeting certain milestones/deadlines with their startup, enabling the entrepreneurs to stimulate new jobs without relying (too much) on investors - just common sense.
- In Belgium Sales jobs are absolutely not favored, as in many countries young people strive to have marketing or communication or management jobs, however the most important job within a company is not stimulated enough, not by educations, schools, but also politics by not stimulating flexible remuneration/salary/bonuses. - Which people will receive horribly high pensions in the next 20 years, killing a decent life of the young and entrepreneurial? Over paid Governmental workers and private sector employees. Who is going to pay for that?
- The system has stimulated many private sector workers to work as a freelancer - also in other countries - however this leads obviously to a very costly system, now next to the (mostly highly inefficient run and managed) corporate managers/directors and marketing, financial and IT consultants, also nurses in hospitals and home care nurses are making very high salaries, up to 4 times the normal fees. Everybody a freelancer or nobody a freelancer, otherwise it’s a societal killer as you can expect.
- Maybe an international development, but clearly a silent society killer: an overwhelming amount of agencies/brokers in between everything resulting an evidently more costly system, ranging from HR consultancy, payroll, sector agencies (mostly politically connected), market platforms funded by the previously mentioned investor funds scam, etc.
- European laws and lazy following national politics stimulating corporates remove email and telephone availability, outsourcing most payment methods to scam (US) credit card companies, not offering sustainable and working European alternatives to Google, Search engines, sociale media, payment, hardware supporting innovative software solutions, removing essential raw materials production and recycling, resulting in higher costs and an'oyance..
But they always say the food is good..
Also, most say that small and medium sized businesses are essential for the country and economy creating most jobs, which should mean that it’s necessary to stimulate the persistent (some say crazy) entrepreneurs to start and scale businesses while only 5 to 10% of them succeed in selling the company to profit sufficiently from the many hours/days/years spent or lost building the business.
When looking at all concerned items, do you think it’s worthwhile to start a professional business in Belgium, other than being a time consuming - keep you off the street - project if you already secured your basic life needs (house, food)?
Good luck!
Strong social safety net, robust worker protections, and the big one: automatic indexation. We also have extremely strong unions...make of that what you will. Also worth mentioning, belgium being a wealthy state affords it more room to carry a higher debt burden. This is all to the benefit of the financial sector who vacuum up belgian domestic savings and park them in belgian gov debt for profit. Belgian consumers are very risk adverse, which laeads to abnormally high savings in typical saving accounts that act as a sponge for belgian public debt. This is also helped by the robust safety net; people end up being able to afford more savings in a positive feedback loop.
What makes Belguim great. It produces good stuff. It also has a varied market so no one industry is adversely affected.
Wow. I know there are probably downsides to some of those things, but compared to the US's situation it sounds like heaven.
@@stereomachine I am actually an american whose been living here for over three years, and I would never ever go back :)
@@stereomachine Well, 50-55% taxes on your revenues might be one
@@liamtahaney713 In the Dutch speaking part or the French speaking part? :)
Do you speak any of the languages? :)
First title of the video: "How Belgium's Economy is doing surprisingly well"
2nd title of the video: "How wage Indexing Saved Belgium's Economy"
What's wage indexing? Sorry I have not watched the whole video.
@@p.1019 The wage index in Belgium is a system designed to protect purchasing power by automatically adjusting wages to match inflation. This means that as the cost of living rises, wages increase accordingly.
For entrepreneurs like us, while we pay out these indexed wages, we also benefit from tax incentives. This system ensures that both the working class and business owners can thrive in a fair and balanced economy. It's a smart and effective way to maintain economic stability and support everyone involved.
@@apophistechandreviews2740 Thanks!
@@p.1019 of course, no problem
3rd title (that's not there): "How Belgium took loans to subsidize fake economic growth, and now has the highest debt growth of the EU."
Belgium has also the highest income tax in the EU...to give you an idea an €100,000 gross annual salary is effectively taxed at 48%, leaving you with €52,000. In the UK, the same amount is taxed at 29%, leaving you €71,000 while healthcare is free and you likely still get private healthcare insurance from your employer on top of it. In Belgium you still have to pay extra social security "cotisations" and healthcare is not free (only part of it). So with this level of taxation it is basically not felt by the average people as the taxman gets back 50% of the extra money anyway. Food is also super expensive and huge GDP discrepancies between Flanders and Wallonia hiding the real picture, including high unemployment in the south part (8.2%).
This is incorrect, tax rates vary depending on the income bracket. 48% is not applied to the entire income.
@@diskette it's more or less correct - from 100k you'll pay 47k taxes before any returns if you are not resident. If you are resident then instead of 7% municipal tax you'll pay 0-9% depending on the municipality.
100k is more than double Belgian median salary so indeed if you are earning that much, you will be contributing more.
@@viora_ it's hard to have a decent life even on 85k as the prices for everything are absolutely insane, especially given the service you get in return... Luckily expats get some tax discounts, but even then it's still ridiculous. I can't imagine trying to live on 50k here, poor people, maybe only possible as a big family where all work and pay really low for a living.
@@Fiztex553 not being able to live off the median salary says more about you than the economy of Belgium. Clearly the average earner is not ‘poor’
I am now retired, living in the Belgian Ardenne. As I've has approximately hafl my career in France and half in Belgium, I perceive reitrement benefits from both countries. When I stopped working, a bit over four years ago, I was receiving roughly the same amount from both sides. Nowadays, I'm so thankful having worked in Belgium, as my Belgian pension significantly exceeds the French one, indexation on one side and close-to-stagnation on the other side.
As a Belgian, I confirm that indexing wages saved many families.
Side note: the indexation mechanism doesn't actually cover inflation entirely, this is due to its complex calculation method. And it has also been proven that there are certain income groups profit more from wage indexation than other groups. So these groups have actually seen a loss in purchasing power.
Actually over time it covers more then the actual inflation for most people.
Because for a lot of workers it is a set date % increase from a basket of goods.
For example if food increases alot, then everybody is almost hit equally.
If energy prices increase a lot, then low and middle income are (in percentages) hit harder, because rich people can invest in better houses, better technology,...
If luxury goods increase more then rich people are hit harder (in percentages) then low income families, who just get more money because of something they barely purchase.
Indexation is good, but a hard thing to manage correctly without disturbing the economy.
Inflation of 0,5 - 2 % is perfect, all higher of lower is just not good.
Belgium here - the thing is, things don’t get cheaper and the owners of businesses want bigger margins each year, so when salaries are forced up, the services/goods get pushed up higher
Even if those goods/services get made a bit more expensive, we are incredibly rich compared to other countries and most working people are able to put money aside every month for saving/investing, which is a rare luxury these days. Just go to any other neighbouring country and talk to people about wages, you'll be very happy to live in Belgium.
That’s where free european market comes in.
Sure, there are companies that can capitalise on prices being increased. Some can’t capitalise on it much.
Prices increase more and more, which doesn’t help inflation much, but having the Europe around means that it is also kept under wraps.
The issue is in how to tackle other ways for employers to get bigger margins. With AI, quite a few employers can get away with laying off a few employees. This is usually an easier and more optimal way to go.
The fact wages are indexed allows worker to have a piece of the cake to share from price increases. Inflation increase production costs, thus end-product costs for the Belgians to buy. Indexing wages allows them to keep having the means to buy the same stuff. This cost a part of the increased (inflated) benefits from bosses, thus give them a fair share.
@@DarkAngelEU I have to say "a bit more expensive" is a "bit" of an understatement. ;)
5 years ago i signed my lease for my single room apartment at about 580 Euro. Now it's 780 Euro. Now that's still great for the area, but if i have to move, i'll find nothing in that pricerange with the competition on the housing market (checking a couple of sites, shows me about 30 residences under 800 Euro in my city/surrounding muncipalities). My income hasn't gone up by 200 Euro in that timeframe either though and that's not taking into account the energy pricing (i'm lucky that i don't mind things being chilly), nor the increase in price of just buying food, transport, and other goods and services.
@mathixvw That's the theory. In practice, that doesn't happen though. The indexation helps for sure, but far from enough to "keep having the means to buy the same stuff". Everyone i know has had to cut back a lot in recent years.
That said, i don't know how to fix that either, given that we're in a global economy with very different rules in different area's.
so your standard of living has diminished?
We staan er weer goed op jongens!
Simpel figuur. België staat er miserabel voor!
@romanempire7170 das wat ze je willen doen geloven. Maar zoals je ziet in de video zeggen de cijfers iets volledigs anders!
Deze video zit vol onzin! België is virtueel failliet en dat al zeker 2 decenia! Wij als Vlaamse wroeters weten nog nie half hoe rampzalig alles er voor staat omdat we simpelweg niet correct worden geïnformeerd!
Mag ook wel eens heh.
@@romanempire7170 Miserabel niet. Zoals aangehaald in de video hebben we zeker onze zorgen dat we iets aan moeten doen. Maar je kan toch ook niet achter je toetsenbord zitten en beweren dat we met alles in de stront zitten.
A wage index tied to basic necessities like food, shelter, clothing, etc., creates an incentive for the government (and private industry) to keep those costs low. A government that provides, for example, more public housing can keep costs low in the housing market in general, protecting themselves from wage price spirals. The wage price spirals in the 1970s and 80s were tied to Europe's dependence on fossil fuel imports, a thing that has repeated thanks to limiting trade with Russia. If the EU can move itself further and further away from reliance on foreign supplies for basic necessities, or at least friendshore as much as is feasible when that's not possible, it'll have less vulnerability to these sorts of spikes.
Stop harping on about GDP if you want to gauge the wealth of people. Look at the average wage/average house-price multiple. Look at the unemployment rate and median inflation-indexed salaries.
All which means nothing if GDP is shrinking
@@kevoreilly6557 i've been an economist since 2007. you dont know what you're saying
@@BOZ_11 Curious what kind of advice you would give to newly graduates entering the labor market xD
@@Sieuxerr1621 Work for and deliberately aim for a promotion (not without a wage bump) every 5 years; agree milestones with your boss, and make sure they know your intentions. Have a part-time self-employed side job you're able to enjoy, it may save you (at least somewhat) if the labour market has a seismic shift.
you mean 'median wage' (?)
Wage price spirals don't just happen. They can only happen when production reaches capacity, like during a war (US during Vietnam, or Russia today) or when critical resources are lacking (oil shocks).
Also, it is mathematically illogical. Consider the price of any product or service.
The amount of money that goes towards payroll cannot exceed the product or service cost.
So, for any percentage increase in the salary, the overall price increase as a percentage cannot exceed the % salary increase. □ (denotes End of proof) For a spiral, other costs would have to increase above the inflation rate, which is not the employee's fault, so any indexation should not be scrapped because of high inflation rates. Doing so would only make the employees and the working class poorer.
One downside is that my employer uses this as an argument to not give out merit based salary increases, as they claim the salary budget goes entirely to indexation. Which is a bummer if you are an above average performing employee. But still, I'd take this over no indexation...
Benelux is one of the best and richest ! Proud to live in one of those !❤
Thanks dad!
Same! :) very proud and grateful
Same here ⚫🟡🔴
❤🇧🇪🇳🇱🇱🇺❤️
Benelux is getting it's ass overregulated by the EU ... (just ask the farmers ...) And our Belgian politicians should realy show THE FINGER towards pretentious EU. And right f*cking now!!!
As a Belgian and head of a company who is depending on export sales (like many companies in this small country), I am missing the perspective of the companies in this otherwise excellent video. The automatic wage increase poses a threat to exporting companies as the already very high labor costs rise even further with the indexation, reducing the margin as competition is fierce internationally - especially now, when wages in Belgium grow much stronger than in the rest of the EU. This results in Belgian companies who depend on export being pushed out of the market, and only companies who are focused on internal market remain strong. On the longer term, this results in a weaker economy and GDP. On a side note: it would be much better to have the indexation being calculated on an average wage, instead of a fixed % on all wages. Right now, there is overcompensation of the highest wages.
Nearly 20 years in Belgium from U.K. you’ll never see more quiet quitters anywhere than in Belgian companies. The salary has bounced up but being resource deficient we have some the highest direst taxes and energy costs in continental Europe. In real terms you can be in France get paid less, and pay out a lot less. Food and Energy are far cheaper just across the border along with property.
I've been in BE five years (also from UK) and completely get that 'quiet quitting' phenomenon. My 'expat' colleagues have the same frustrations or eventually succumb to it too, after trying to work around sullen colleagues that have been with the company way too long. Except the ones trying to kiss rings in order to get promoted - good luck with that. It's most overt when trying to contact customer services, e.g. for car rentals or insurance companies - it's incredible how hard it is to get a reply to an email or even get them to answer the phone. Was stuck at Charleroi airport for 45 minutes as no-one at the rental desk could be bothered to pick up the phone! Insurance co ignored my claim for months until I wrote a very hot review on Google Maps. TL;DR: no one seems to give a crap!
Italy decided with the agreement of Trade Unions , not to index wages anymore in 1992. In real terms current wages decreased since that date. And Italy's economy doesn't fare well. What a surprise.
You remember what was going on in Italy before 1992, rigth?
Pre 1992 Italy is why this system, the "Scala Mobile" was proven to not work.
@Duck-wc9de yes, I was there. Inflation 5,3 GDP growth 0,8 , more or less like today. The public debt was high but now it is much higher.What is your point? Belgium, where I live and work, has the highest median ( not average) personal and household income in the world, has a solid welfare and the economy is thriving, even if ,or because, the wages are indexed.
You clearly don't know how salary can increase. Salaries doesn't grow because you make a law, but because productivity per hour of work increase, if productivity doesn't increase, increasing wages by law only creates unemployment. The real problem of Italy isn't political as you say, but it's productivity that stagnated in the last 20 years.
@@antdele99you clearly do not know how salaries increase in Belgium. They increase by law as well because they are indexed BY LAW. On top of that there are of course increases due to TFP increase and other factors like collective bargaining. It is not difficult to grasp. Did you get it? Btw , thanks to this system ( and to other factors) Belgium has the highest median ( not average/ mean ) wealth in the World and the lowest Gini factor in the World as well. And the economy is thriving , Chicago boy.
@@antoniotorcoli5740 The factors that lead to an increase in wages are the same all over the world, because wages increase ONLY and exclusively with an increase in productivity. If from tomorrow Belgium's productivity continues to increase and wages are not increased by law, wages would still increase. Because salaries depend on productivity, not on laws.
Belgium's financial situation is far from ideal. Our national debt has reached unprecedented levels, and with every passing second, an additional €508 is added to it.
It's a pretty complex issue.
Higher wages also lead to higher government income tax collection and overall taxation is the highest in Belgium for the whole of Europe, if not the world.
Hello from Belgium.
Not sure at all automatic indexation is the main cause of Belgian debt crisis. It might be one of the problems but far from being the only reason
Yeah, I'd say failing to put a cap on immigrant unemployment money is another. At least, I heard that a lot while in West Vlaams.
The fact that there's so many governments plus a royal family, and the lack of transparency in public services and investment execution doesn't help either
@stefanhaeussler821 Belgian policians are especially skilled at multiplying seats they can be elected on.
None of the above, it's about high costs of social security. High pensions to civil servants for example. I'm betting the next federal governement will address it thouroughly. albeit low key.
Each government is already cutting spending, instead of diversing the incomes. We have mutinational companies that pay minimum tax or have enormous tax cuts, other banks have "fiscal optimisation", and meanwhile last time i lost my id card, i had to wait 10 days to get an appointment at the city hall and had to wait 3 additionnal weeks to get my card. Cutting cost in the administration won't help.
All of this is relative! We pay way too much taxes on EVERYTHING
Yes, indexation is amazing, but the cost of living and the taxes are extremely punishing. As someone who lives here, I can say that the tax scheme is overcompensates this indexation.
its like double whammy for industries... increasing wages and tax. No wonder manufacturing or any of sort wont survive in this kind of economy.
Just to be clear: since indexation also applies to the tax brackets and those tax brackets are progressive, even since this indexation applies to your gross income it should translate fairly well to your net income. :)
This is false, I am Italian and I work in Belgium and I can assure you that - without indexation - After the last years of +20% inflation you would feel way poorer, and people in Italy feel way poorer now, taxes are ok, they are High but you get good services out of them
I find it strange to say the Belgian economy is performing well. There are massive differences between the north (Flemish) side and the south (Walloon) side, including Brussels. We have one of the highest tax rates and have an enormous national debt that's growing.
Yes, data and complaints aren't all equal. Every country has better and worse economic regions. The easy way out is to blame a different cultural region. What a lazy argument
National debt isnt growing as fast as the american one
And they dont tax as much as belgium
On European views, Flanders and Wallonia still mean nothing.
Perhaps you should try to learn something about economics instead of just swallowing all that Flemish state propaganda politicians and media are trying to force on you? Belgium is an incredibly wealthy country with great economic savvy politicians, esp. the liberals. PLUS, our liberal politicians understand and respect worker rights, social safety, benefits of healthcare, while promoting investment opportunities for corporations. We live in a walhalla that is being punched into a fissure by dumb nationalist polemics and everyone grabs the bait.
Ah, yes. Belgium is so special having more and less wealthy regions. This isn't a thing in any other country. /s
What a wild take.
You forget to mention that this wage is counterbalanced by one of the highest taxes on income with France.
exactly i rejected a job of 4000 eur per month in belgium
gotta pay for these quality services
@Game_Hero indeed, free lunch doesn't exist. But it's 100x better that the state forces you to spare and invest in social protection through taxes than getting to a situation where you're incapable to face the price of health care the moment "shit hits the fan". That's why I believe in Europe's social policies vs USA.
As a Belgian, I'd rather pay more taxes and get all the benefits that come with it. If my daughter gets sick it only costs me 3€/hour to get an at home carer to look after her while I go to work (or work from home).
@@francisdebriey3609 Oh boy, the americans have the balls to claim their "healthcare is the best" while paying 30k to fix their back, 600 dollars for emergency room, 2500 dollars for an ambulance.... of course our "communist, socialist" way of living is a gazillion times better! 😄
In the short run, this looks manageable. However, rising wage costs are weakening our competitiveness. We’ve seen this happen in the 1970s and 1980s, which led to budget problems and ultimately forced a currency devaluation. Today, we no longer have that option, so this will weigh on economic growth in the long term. Our system is set up to shield citizens from severe shocks initially, but that comes with long-term repercussions.
One factor that is not mentioned here but is always mentioned in Belgian news is how this indexation supposedly reduces our wage competitiveness with our neighbors. Do you have any information on that aspect?
That's why you get an index jump every once in a while and raises are restricted to the index and not higher most of the time
well, in pure economic theory thats true. why bother with employees whose salary will rise every year, (and they are usually pricy to begin with), compared to say, serbia. you have other advantages to make up for it, but its true that its still a point of worry
I am an Italian engineer living and working in Belgium. To be honest, Belgium Is by far one of the ugliest Place I have ever been. However, salaries are good and overall work Life balance is excellent. I pay 50% of taxes and I am ok with that becuase highways are free and education and healthcare are decent. If they stop the indexation, no International talent will accept to live here.
@@youssu no one in the world would ever accept to live above the latitude of Milan if salaries were not sensibly higher
@@marcoac-sx6lq totally agree, apparently we have to choose between sun and friends or career and Money. Anyway I hate Belgium geographically but I can't complain about working conditions, at all.
You gotta love how economists call it a 'wage/price' spiral. As if wages going up that caused the price increases, whereas it's the opposite: prices go up, so workers demand higher wages. Therefore it should be called a price/wage spiral.
Not true
@@kevoreilly6557 There was supply shortages after the pandemic that caused prices to go up (among other things). After which salaries started to go up. So, prices first, salaries after = price/wage spiral.
Wait !!!!
Yes, we have this index thing in Belgium, but that doesn't mean we are rich.
Like in most western countries most people in their 20s (including late 20s) can't buy a house (unlike their parents who were born in the 1970s and 1980s).
People often say "Hotel mama" over here. (Btw: our national debt is almost the worst in the EU and many people don't work)
Many people don’t work because its easy to life on wellfare.. all thanks to PS.😂
The median net worth numbers don't lie though. I suspect home ownership is steady as ever. Just get that mortgage, amortize it and you'll be fine. groeten
@Timmerdetimmerdetim Nee, we hebben weinig reden om optimistisch te zijn.
@@tibodeclercq2131 dat is jouw keuze
@@tibodeclercq2131 net even de nbb gelezen over betaalbaarheid v woningen en daar schrok ik van. Dus dat neem ik terug. Toch wil ik je moed en geluk toewensen op die woningmarkt mocht je daar zelf nog mee worstelen.
Dat punt van mediaan-rijkdom blijft wel overeind dus gelukkig is niet alles zwart. De kwaliteit vd huizen ligt bvb ook hoger.
Not me working a fulltime job in Belgium and not being able to make ends meet by having only the bare necessities.
Index goes up so prices go up, but wages remain just about the same with minimal increase.
The inflation is hitting people like me hard.
If the Belgian government is able to apply the index system, it is because Belgians pay a lot of taxes on all types of common products. More than 70 % of the price of gasoline in Belgium are different types of taxes, the real price only 29 % of the total. In a way, the government gives back what it took away with its other hand... Still, apparantly the figures suggest it has some positive effect after all, unless these figures do not take into account certain facts. Maybe other figures, taking a broader scope into account would show that the differences between Spain and Finland, France and Belgium etc. aren't really as spectacular as the figures shown here suggest. Maybe Hungarians don't feel the negative effects so much as the figures suggest, because they pay less taxes or because there are other corrective measures we don't hear about. Their pro Russia prime minister seems still to be very popular, so it can't be that bad ?
Состояние Венгрии зависит от дотаций от EU, венгры хорошо живут за счёт Бельгии, Франции, Германии и др.
Important sidenote: Belgium has one of the highest tax on wages in the word (up to 50%). So even though in theory it's a good concept to index your wages to inflation in order to maintain purchasing power, it puts a lot of stress on government financials and the competitiveness of Belgian companies and it's market as a whole. Combined with the immensely high taxation due to an imbalanced social security system, we still have a lot of work to do.
If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
Wage raises yes but the cost of living is mindboggling high so in the long run you earn the same as you did before in some cases even less
The cost of living has more or less remained comparable to the surrounding countries, where wages are not indexed.
Literally - no
Real wage is rising. Thats wages adjusted according to consumer price index. Which means that increased cost of living is accounted for in the statistic.
And what should we Northern Italians say? A tiny studio in Milano will cost you around 1 million euro. If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
I am an italian living in Belgium and my hypothesis is that we do not see wage price spiraling because belgian money is spent abroad and it increases prices there
Were you born in Belgium or did you move recently? I am thinking of studying at the KUL Leuven. I could do my intership with an Italian professor at the UZ of Leuven. Is it a pleasant country to live?
It's basically only possible because Belgium and Luxembourg only a small part of the EU, so they can't affect the Euro too much.
If we see more European countries follow suit, that would likely risk higher inflation.
Owning several shops in Belgium and having lots of staff. Every year i have to cough up more and more to pay staff . This for doing the same thing. This money has to come from somewhere so every year my prices go up. While the company doesn't make more money in the end. However what you don't mention and this is the elephant in the room . Its not the staff that runs away with the money but the government!! BIG difference. A country the size of new york with 3 governments. Thousands of mayors and 100.000 government workers just can not be profitable. 😢
It's really very simple to explain it. They don't have a government 😂
What's more complicated to explain is why that doesn't matter :) The federal government doesn't actually hold all that much power over people's daily lives.
We have several backup governments :)
@@RobinJ I know, I live in Brussels, but I´m not Belgian. I love it here, despite the weather... LOL
That's not true, we have like 5 at any one time.
Well they do have a government most of the time, and it is a colorful government with a lot of voices and it only allows for really good laws to pass. Multi-pqrty governments are the best.
On the energy issue, I want to point out that's its own problem. Belgium has made some really bad choices on energy production to the point where we now buy much of it from France. This is why the cost has shot up. The energy issue is an ongoing issue here where people seem unsure whether to bank on green energy - which is insufficient - while closing down nuclear plants, or instead investing in new plants to become more energy independent.
Thanks god some good news. I'm refusing to watch any bad news till after Christmas.
Good job, keep it up!
Don't get too excited, as belgian, I can tell you that the cost of life has tripled since the pandemic, but the wages didn't. The taxes are ones of the highest in the world, the inflation rate is the biggest in EU and the indexation doesn't keep up. In any border country except Netherlands, the prices are at least half or even one-third of what they are here. The belgian economy is in dire straits too.
My real estate tax has increased by a whopping 50% in the span of 4 years.
You helped to make me feel more positive about my country, thanks for that
Yet people will always complain. Even in the richest parts of the world, people are always unhappy and whining.
Never been different
0:48 This is beautiful Leuven (Louvain) ! Home to almost 60.000 students at the KULeuven University.
Yes!
It really feels great seeing the city I grew up in, studied in, and still live very close by in Pellenberg
Prices for houses are expensive like in most villages laying around leuven like Heverlee, Kessel-lo, Lubbeek and Linden
but it's still one of the richest cities in terms of history besides Brussels and Antwerp
Proud of being a part of it
The index system is a bit flawed sometimes. Because it compares to a number of products that are considered necessary for living. Then they took bread out at some point and the cost of bread quickly doubled without influencing the index
I hit $113k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject.
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Greetings from North London k I connected with her last month and invested 6,000
small caveat, as a counter-policy (friendly to employers) we also have since 1996 a law that makes it very difficult to get a wage rise (indexation not being a wage rise, merely a maintenance of the status quo in real terms).
I'm from Brussels. With the huge inflation of 2022-2023 we all got about 11% indexation going from 2022 to 2023.
My boss sent us all an e-mail announcing this like a raise for everyone xD while he had no choice as it's mandatory - he was just pretending as if he gave us all a present. And it's nothing like a raise because that's how much life became more expensive for everyone.
To be fair, every company does that. Last January my employers made a big point about how i got a raise of 1,5%. No i didn't, the indexing was 1,48%. So i got a 0.02% raise. That 30 cents really makes the difference! :p
Glad I discovered this channel!
Combining the VAT on electricity and gas part with the index and the conclusion that the index has an unsustainable strain on state finances is misleading. The reason Belgium had to decrease the VAT on energy is because energy prices were through the roof in a never before seen scenario. We are talking about suddenly having to pay 2000+ euro a month on energy bills for an average household. Absolutely insane scenario's. A very large part of that disaster has to do with The state's complete lack of care for Belgium's energy supply. Mostly in energy. We are in deep trouble with our nuclear energy supply. To this day it's still not fixed. So that disaster is the reason that strain happened.
And they don't seem to hurry too much to form a federal government to fix the historical mistakes that have been done in the past two decades in regards to nuclear power... we need to cancel the closure and build new plants ASAP
This video is yet another proof that an image perceived through chosen statistics and the reality seen with a “naked eye” do not necessarily match.
So it's the wage indexes that caused economic growth and not the Belgian government's deficit spending? I would not be so sure.
Might be interesting to do a follow up video on this. As the party´s that are trying to form a coalition might change the automatic indexation.
We got wage indexing too in Luxembourg.
The problem imo is that high wages are affected in the same way than lower wages.
That‘s true but the index calculations are based on our country‘s minimum wage. So we all get the same increase in wages. Doing separate calculations for lower- and high wages (i.e. giving workers with high wages a smaller increase than those with lower wages) wouldn‘t be fair imo.
@cawashka I know right, there'll always be pros and cons in this matter. Treating all wages equally may sound fair, but in the end a 2,5% or 5% hike might deliver much needed relief for low wages but will only widen the gap when it applied to very high wages too. If you earn 26.000€ a year, the additional 1300€ (5% case) might be just enough to pay for highes prices. If you earn 150.000€ a year, this will be 7500€ more due to indexation.
@@Marc_lux Which is why you should tax lower wages CONSIDERABLY less! The tax burden in Belgium and Luxemburg is disproportionately high even for "normal or lower" wages...
@@ABC-ABC1234 agree 100%
The wage indexation is not a tool to narrow the gap. it is done so everyone will have the same purchasing power that he had before.
The real kicker is that belgium is one of the most taxed county's in the world. The VAT on allmost everything is 21% and between wath the employer pays and what you get is like between half and one third. That is where aour politicians have realy dropped the ball in the last like 20 years.
Terrible terrible coverage. Wage indexing "works" for governments and large corporations, but it doesn't work SMEs, which represent a significant part of the Belgian economy. Wage indexing led to a record number of bankruptcies, which had a domino effect on local economies and employment. The most affected sectors are retail, construction, and services; so pretty much all businesses.
Automatic indexation of wages not only strains public finances but employers are greatly affected as well.
At least one part of Europe is doing great
@@juniboyy It's easy to complain but that sounds like a situation that is better than most of Europe. People need to learn some perspective sometimes.
doing great? with every index our mony is worth less and less.
@@maximusasauluk7359”we’re unbelievably rich and are being slightly robbed, pwease hewp 😢”
@@juniboyy so much to unpack:
1. new gas cars can't be sold beyond 2035. You will still be able to buy second hand gas cars until like 2040. Businesses are changing to electric cars today because tax incentives and at work charging.
2. the immigrants don't live in Wallonia, have you been to Mechelen recently?
3. wages increases are automatic .. but those same wage increases are used as an excuse not to buy out productivity bonuses.
@@juniboyy most immigrants live in brussels and flanders.
Interesting video and well-covered! I would add two points, as a Belgian from Wallonia:
First, it seems like you don't really take into account the implications of those decreasing exports on the belgian current account deficit in the balance of payments. While it is not catastrophic yet, it might become a problem and I think it's worth talking about. Yes, exports are only a fraction of the GDP but it's still not sustainable to have a deficit in the long term, that will need to be solved one way or another. When import prices increase, we need to increase our exports and wage indexation doesn't really help with that.
Second, when talking about state finances, I think it's important to understand the difference between regions. Wallonia is a much more in-debt region, especially some cities which are really poor and where labour costs have become really high given the GDP per capita. This leads to very low employment rates, which doesn't help to restore growth and prosperity.
Overall, I still believe that indexation is a good way to protect the quality of life of workers, but it also has its limitations. Inflation exists for a reason and it cannot be cancelled solely by making wages follow it unfortunately.
Maybe a system of indexing salaries by 1% every time the 2% threshold has been reached could be a great middle-ground solution for the rest of Europe to take inspiration from.
Absolutely true, wish more people would follow up on your comments and aldo practical suggestion.
As an entrepreneur starting or scaling up a national or international operational small to medium sized business growing it in a sustainable way - with common sense, without the scam of (politically stimulated) investor funds - I would advice not to start a business in Belgium:
Increasing already high wages, employees strive to work 3 or 4 days with limited hours, not working is more stimulated than anything else in Belgium. Mind you, in Belgium already most company cars in Europe and other benefits like meal vouchers provided by 3 French companies ( ! - Started in the 1960’s to stimulate employees to spend money at local merchants, now 99% is spent at the large supermarket chains) to stimulate work for employers.
Horrendous legal system enabling outstanding invoices of an increasing group of customers who know how to play the rigged system while 100% of Belgium lawyers are absolutely unable and unwilling to claim these lost revenues leasing to unbelievable high administrative burden - Lots of newcomers to the Belgium society starting new companies with far less ethics standards resulting in high bankruptcy rate, starting a new business before the previous went down leaving all suppliers with the outstanding invoices with not a single political follow up - Worst financing opportunities by banks and other institutions of whole Europe, hence the low innovation uptake, except for the few connected to the political elite/lobby
Finance department’s arrogant position towards any substantial transparency e.g. check the National bank’s ‘secret’ 50% owner
- Increasing administrative burden, despite the many claims of incompetent politicians copied by the non-critical and non-objective media of actually removing the burdens. Less and Less competent accountants are stimulated to support entrepreneurs, in stead politics is favoring the standardisation of a few large entities in this market, whole providing more and more legislation and rules to increase the costs while accountancy automation should make it cheaper. Also check the efforts in Europe for digital invoices peppol, not a single SME company has asked for, another layer, should they have focused on the actually payment of invoices..
- Overall people’s nonchalance resulting in crazy negative energy (while most will accept anything) when dealing with:
- Increasing already high import fees and logistics fees by dominant Government owned (!!) national postal and logistic company Bpost
- Costly overcharging favoring energy suppliers energy (mostly outsourced to French companies) and utility systems
- Sub-optimal traffic infrastructure, lack of highways, lack of road maintenance
- Entrepreneurs are not stimulated sufficiently, they should be focused on stimulating sales - why not stimulate new entrepreneurs with 3 employees or more to not pay social security fees for the first 3 years, to provide free housing and catering (startup facilities if they want) when meeting certain milestones/deadlines with their startup, enabling the entrepreneurs to stimulate new jobs without relying (too much) on investors - just common sense.
- In Belgium Sales jobs are absolutely not favored, as in many countries young people strive to have marketing or communication or management jobs, however the most important job within a company is not stimulated enough, not by educations, schools, but also politics by not stimulating flexible remuneration/salary/bonuses. - Which people will receive horribly high pensions in the next 20 years, killing a decent life of the young and entrepreneurial? Over paid Governmental workers and private sector employees. Who is going to pay for that?
- The system has stimulated many private sector workers to work as a freelancer - also in other countries - however this leads obviously to a very costly system, now next to the (mostly highly inefficient run and managed) corporate managers/directors and marketing, financial and IT consultants, also nurses in hospitals and home care nurses are making very high salaries, up to 4 times the normal fees. Everybody a freelancer or nobody a freelancer, otherwise it’s a societal killer as you can expect.
- Maybe an international development, but clearly a silent society killer: an overwhelming amount of agencies/brokers in between everything resulting an evidently more costly system, ranging from HR consultancy, payroll, sector agencies (mostly politically connected), market platforms funded by the previously mentioned investor funds scam, etc.
- European laws and lazy following national politics stimulating corporates remove email and telephone availability, outsourcing most payment methods to scam (US) credit card companies, not offering sustainable and working European alternatives to Google, Search engines, sociale media, payment, hardware supporting innovative software solutions, removing essential raw materials production and recycling, resulting in higher costs and an'oyance..
But they always say the food is good..
Also, most say that small and medium sized businesses are essential for the country and economy creating most jobs, which should mean that it’s necessary to stimulate the persistent (some say crazy) entrepreneurs to start and scale businesses while only 5 to 10% of them succeed in selling the company to profit sufficiently from the many hours/days/years spent or lost building the business.
When looking at all concerned items, do you think it’s worthwhile to start a professional business in Belgium, other than being a time consuming - keep you off the street - project if you already secured your basic life needs (house, food)?
Good luck!
Wow, people get payed more, meaning they can help the economy by spending money…
not if prices in the store's are dubble now !!!
@ don’t worry, I’m from the UK and our prices have all at least doubled too…but our wages have barely changed at all…in fact this year was the worst wage increase for me personally in the last decade
It's literally fueled by debt, as explained in the video. Once the debt is high enough, the economy will crash. It always does.
@@olska9498 I don’t agree with that. The support hasn’t been because of the index but because of the rise of energy prices, which are excluded from the index. The deficit belgium has is because of our complex political structure and other things, not because of the indexation of wages. The energy support (also for Companies) also influenced the debt: it was huge.
Wages may have grown, but we are still amongst the most heavily taxed people on this planet. Despite our country’s huge debt.
We do pay 50% on taxes tho.. the highest in europe
And everything is stupidly expensive
yea but getting very high´ wages for nothing also...
If everything is so bad how come that Belgium is after Luxembourg the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
famous quote from my belgian uncle: a belgian is a frenchman who succeeded
😂😂😂 You mean little Mussels. But that was hilarious. Cheers from 🇮🇹
yeah sure, want to see Belgium road's state ? easy to have money when you pocket it instead of using it for the people
It's getting much better, especially in Flanders. Not so in Wallonia though
I rather have bad roads and be like Belgium the wealthiest country in the world in median wealth per household. 5 times richer than the median Dutch household and almost 10 times richer than the American. Source Credit Swiss annual report median wealth per household 2024
Belgium also has a law on competetiveness to limit wage increases given by employers. So even though the indexation mechanism helps to keep up with inflation, the law on competetiveness will kick in a bit later to make sure that labour costs stay roughly in line with those in our neighbouring countries.
The conclusion is totally wrong. Automatically indexing wages, without any increase in productivity or profits, is detrimental to a country's ability to collect taxes, increases a countries debt burden, decreases its competitivity or investment climate. This is exactly what is happening to Belgium right know. One of the weakest countries in the EU.
As a 25j Belgian yea wage go up but prices also go up like creazy it stil feels like pennies so we have a very long way to go... also they really need to lower te tax on evrything mentalety and fix the coruption in politiks...
The prices go up, therefore your wage go up. At your age I was short on money too. Just work and try to increase your wages.
Prices go up- check
High taxes-check
High Corruption for eu standards -check
What’s the difference compared to my southern European country?
7:09 "Perhaps the general lesson here is that wage price indexing's main risk is an unsustainable strain on state finances" Well, that's disappointing. I thought the Belgians protected their wage prices by being clever, but it looks like they're just funding it with debt.
5:27 your analysis is completely wrong. I am residing in Belgium. Because of this automatic wages increases, all companies are closing here and reopen in other countries, since wages are lower there.
In the company I am working for, because of last year 11% wage increase, the company make now losses, and we had to get rid of 20% of the personnel
The indexation of the wages are not the cause of bankruptcy of companies. The industry is losing competition in the entire continent of Europe. Energy prices are one of the main reasons we lose ground towards mega power economies such as India and China.
@@lennaertvanhee You must be badly informed. All economist know this automatic wage increase is a disaster for the economy. We now finally have a new liberal government, and the first they will do is get rid of that disastrous mechanism.
Just a small question: howmuch bonus did the bosses award themselves this year?
Of course it can depend, and on small businesses it can mean one person got fired and the bosses don't give themselves a big bonus. In bigger companies it can mean 100 people laid off, and you can be sure the bosses got their bonus.
There's plenty of scandals about that in the past years. Just recently, VanHool went under, but the bosses did get their nice bonusses while over 1000 people lost their jobs. Sabena in the past is another prime example. Belgacom and Telenet do the same. It happens all the time, but the only ones noticing the problems are the people working at the companies, and not those who actually own and direct the companies.
Please tutor me im mistaken - but doesnt Belgium have a very good infrastructure for gas and oil imports from overseas? Could that be a reason for increase in standard, compared to other EU countries since 22?
The wages going up with the indexation in Belgium is automatic because it is the law since the 1970's
it was the same in italy, then we abolished it because europe asked us to. now we´re poor
@@M-tl4xt No, the "Scala Mobile" was proven not to work, Italy already had 90% Debt to GDP in 1990 and a 10% budget deficit, hence the reform in 1992. The reunification of Germany and collapse of the Eastern bloc also meant Italian manufacturing was outcompeted. You're poor because you never reformed the underlying problems from the 70s and 80s.
Concerning the energy package: the government did indeed bring the VAT rate down to 6%, but it introduced a new special (state) contribution. This together with the new VAT rate ends up being about the same as the 21% rate. The government introduced this new system so they could intervene more quickly and easy, without touching the VAT rate.
Personal experience. Living in Belgium i don't feel it at all. The salary re-indexing is not keeping up with the cost of living increase since COVID. Like at all.
You're right the indexation is lower than the inflation but we're still much better off than without it and everyone with a job can afford to live a decent to good life here.
you dont feel it because it is normal to you. If you went to Germany or france for 2 years and then come back you would be surprised how good we are doing
@@kianlakchi7182 well the indexation affects the gross salaries, if we consider the crazy taxes Belgium has, then the net indexation effected is effectively halved for the employee. However, rents are also increasing with similar indexation rates, but there is not net/gross difference.
Better than other countries anyway, take bread for example. It only got a little bit more expensive in real terms.
Bread price in Belgium in 2014 was €2.40, average salary €3.414. One bread was 0.0702% of an average salary
Bread price in Belgium in 2024 was €2.98, average salary €4.076. One bread was 0.0731% of an average salary
@@squitz7056 People always idealize other places, they keep believing grass is greener elsewhere... the sad thing being, they'd gladly vote to change what they believe is bad... and they'd end up making everything worse !
One would think that the idea of a wage price spiral doesn't happen isn't actually a cause of inflation.
I kept saying this for freaking years, including on this channel about how the banking class has stifled actual research in economics and pushed a narrative that says "slight inflation is good."
Which is only true if you are a person with extremely high debt... which the banking class caused in the first place.
if only Belgium was a real country
You forgot to mention that one of the reasons Belgium can sustain their economy is their colonization benefits they get in DRC congo
“It risks Wage-price Spirals!”
In other words, corporations don’t get to charge double, and allocate Higher percentage pays to their “shareholders.” So basically the Banks telling us: “Inflation isn’t fun unless the Rich can benefit from it.” This inequality is directly resulting in people feeling contemptuous all around the world, something Bad happens, it affects everybody else, not the rich.
In Belgium of course, this didn’t effect much since everyone is already rich so people are more capable of curbing the Rich’s enthusiasm with equitable action.
Here's the kicker - inflation is a good justification for increasing prices, but inflation in itself is a monetary issue! So indexation preserves spending power and living standards of the majority of workers, preventing the growth from being based on the squeezing of the majority out of their wealth.
@ In my opinion, spending power and living standards should stay steady. Prices shouldn’t be raised to make employees bear the burden of a company’s financial trouble. The indignity infuriates me.
As was experienced with the end of old liberalism unless we return to the postwar consensus we will have socialist revolutions and fascist counterrevolutions. People will get more angry and polarised as inequality gets worse.
A thing you didn't mention is the "loonnormwet" or "wage norm law", it limits the percentage that wages can rise to stay competitive compared to neighbouring countries. The two keep each other in balance and are a compromise between trade unions and employers.
Belgian wages are high? Someone forgot to tell my boss.
Yes the median salary is high in Belgium
if they aren’t how come that Belgium is the wealthiest country in the world in median wealth per household. Source Credit swiss median weath per household 2024. The median Belgian is 5 times wealthier than the median Dutch. If everything is so bad, how do you explain these numbers?
Belgium is where Bruxelles is located, and that city is the HQ of all major EU institutions and bodies. That's also a big part of the reason
🚨Spoiler alert 🚨it didn't. Belgium recorded a record number of bankruptcies, especially among small and medium-sized enterprises (SMEs) in 2023, and 2024 is expected to be far worse.
Why is Ireland always missing from stats?
Nobody care sorry 😔
As Average Rob would say: the most underrated country in the whole galaxy!
Easy to understand: salary indexation will either cause wage-price spiral (private sector) or public deficit (public sector). It's impossible to just increase salaries without expecting any effects on costs (whatever those costs may be).
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the health index is only for civil servants and bank employees or rent increase. it has a seperate system for wage increases called the spilindex.
the automatic indexation depends from sector and isn't anytime the 2 percent is passed.
it can be for example that people in construction get a wage increase of 3 percent, but people in the hospitality get 1.3 percent.
also it always has to be convened by sector, so one company can not just increase its wages freely.
btw the index for the private sector is the consumption price index.
"...also it always has to be convened by sector, so one company can not just increase its wages freely.."
sure they can if they want to
As a Belgian. Wage indexing is horrible and goes to waste in extremely high tax rates. We literally have one of the highest debt in the EU while having one of the highest income taxrates in the world.
You can't look at only tax rate. Yes, you do have a faster 50% start at 41k and up, but instead companies can do things like company car (basically any IT position has this), direct pay mortgage, etc., which makes figures like GDP PPP misleading, and even then Belgium is doing pretty well.
The mean in Belgium is 3500 EUR/month or 42k a year which ends up around 2400 net (29% total tax), Germany is slightly higher at 3700 EUR mean and will end up being 2300 net (37%). Averages distort the picture a bit, it's when you're actually well off in Belgium that taxes kick in and I'm fine with that, it's why Belgium's class divide is actually decent.
@ thr median net income a month in Belgium is 1750-1900 a month. Company cars and direct pay mortgages are paid for through taxcuts for a company aka taxpayers money.
Its how you end up with some of the most debt out of all European countries while having some of the highest taxes in the world.
Belgiums class divide is even worse as someone who’s unemployed can earn more than someone who does work resulting in high unemployment rates when compared to its peers.
@@Masterrunescapeer I really hate all of these stupid tax optimisation tricks that we're forced to do because of how insane our taxes are. I wish I could take this money and spend it how I please (investments, hobbies, general savings) instead of being punished if I don't choose to get a salary car (we have one of the highest CO2 emission per capita for some reason, hmmm), mortgage payments, more holidays, etc. Such a rigid and stupid system.
In a way, wage increase is directly in favor of tax department. The amount of increase in most of the employee's case would fall in the highest tax slab + since the raise in salary would directly increase the social contributions, here also the state gets the cut. ;-)
To bad most of that indexation you end up paying as tax.
Yep 50%
That's not really true. Since the tax brackets are indexed as well and they are progressive, this should translate fairly well to your net income.
@@kobbebauws the Belgian tax brackets are very steep. A significant part of your income falls into the 50% one. So everything on top also falls into the 50% bracket, even when the bracket boundaries are adjusted.
I'm Belgian and I fail to see how any of this really helps ? Don't get me wrong, our wages are probably better than a lot of other EU countries but the cost of living has gone crazy over the last few years and rent is on a whole other level. What good does it do to earn 50% more than 5 years ago when everything costs 3 times as much ? 10 years ago I could spend 150 bucks on groceries and eat for 3 weeks. These days I'll spend half that amount and live for a week. Heck, I paid 320€/month for rent 10 years ago, these days I'm paying around 700€. That's only 10 years of inflation.
Cause it stayed the same meanwhile the rest of Europe has higher costs without getting payed more
Belgian who lives abroad, here 👋 I get it, but in real terms rent is incredibly cheap in Belgium compared to its neighbours, and taxes may be high but real world quality of life is likewise significantly higher because of what all that tax money pays for (healthcare, social security, ...). In isolation, things may look bad. When you look at other places in Europe, things in Belgium are going incredibly well for the average person.
700 is not that high these days, unless you live in the middle of nowhere.
Exactly same perspective from me. Belgian too.
Brother 700 euro is GOLDEN for rent these days, especially if it is the private sector
I wonder if the risk of wage-price spirals could alleviated if wages rose in line with a 5 year average rather than rising directly in line with inflation
This is super interesting, especially because, if we were to believe many CEOs, every time the index approaches the tipping point, it supposedly makes us less competitive compared to neighboring countries and harms the Belgian economy.
Another notable point is the higher taxation on labor compared to corporate profits, which means that it also increases government revenue when people get paid better.
As for the reduction in energy taxes from 21% to 6%, they’ve offset this (after the price lowerd again) with an additional levy per kWh. This mostly decouples the tax from price fluctuations, that kinda sucks if you got a dynamic energy contract since even if the price is 0 you have to pay that . But i would imagine made it a more stable goverment income and does not increase the tax on top of the price shoots up so that something.
@@jorik41 As a business owner with 30 employees, I see both sides of the debate. The wage index undeniably helps employees maintain their purchasing power, which is essential for morale and productivity. However, as you mentioned, it does create challenges for competitiveness, especially when neighboring countries don't have a similar system. Balancing these increased costs while staying competitive is a constant struggle for businesses like mine.
The higher taxation on labor compared to corporate profits is another interesting point-it’s a double-edged sword. While better wages increase government revenue, it also means businesses have to be even more strategic about managing labor costs.
As for the energy tax adjustment, you're right-it does create stability for government income, but it’s frustrating for those of us with dynamic energy contracts. The fixed levy adds an extra layer of cost we can’t avoid, even during times of low energy prices. It’s a trade-off, like much of the Belgian system, where the focus seems to be on creating long-term stability at the expense of short-term flexibility.