Most workers in the Belgian labor force are covered by collective agreements established by joint commissions (JCs), which provide for automatic adjustments of salaries in the form of an indexation. This automatic salary indexation is predominantly based on inflation with a purpose to somehow soften the impact inflation has on employees.
Employers however, have had mixed reactions concerning the latest salary indexation from January 2023 (according to JC200 – covering about 60,000 companies in Belgium). Total labor costs have increased tremendously which forced organizations to find ways to control costs, as well as to find ways to differentiate themselves from their competitors.
In light of these recent concerns, WTW has conducted a local Belgian survey in order to understand the measures that companies have taken, if any.
This survey was conducted amongst 41 organizations from a variety of industries, such as the Tech, Media and Gaming Industry, as well as the Pharmaceutical and Health Sciences, Financial Services and Consumer Products industry. Around 2 thirds of organizations (62%) in this survey are tied to the JC200. All have a presence on the Belgian market.
The automatic salary indexation (11.08% for the JC200 on January 1st, 2023), seems to leave the majority of employers hung up when it comes to granting additional merit salary increases based on performance, to their employees. Approximately 2 out of 3 have not provided (and are not planning to provide) any additional salary increases for the remainder of 2023. Those few that do provide salary increases are also rather reserved compared to prior years, with only 1.6% overall salary increases on average for 2023. We observe little, to no difference between employee groups.
| 25th Percentile | Median | 75th Percentile | Average | |
|---|---|---|---|---|
| Overall | 0.9% | 1.7% | 2.4% | 1.6% |
In order to differentiate themselves from their direct competitors, or to simply offset themselves against the market as attractive employer, there seems to be a general consensus across organizations in Belgium to take a variety of compensation related actions (other than salary increases), with 68% of organizations looking to do so.
68% of organisations plan to take other measures (other than pay rises) in response to high indexation in 2023
Compensation actions come in all shapes and sizes. Overall, companies tend to vastly focus on changing broader benefits such as health, wellness and flexible benefits (70% of organizations), as well as improving the employee experience (70% of organizations). Other actions such as one-off equity/LTI’s payment or grants (14%) or skills premiums or increases (5%) are less prominent across respondents.
While the most popular actions for those companies not granting additional increase are the changes to broader benefits and improving the employee experience overall, the most common action for companies granting merit is changing the compensation philosophy (i.e. updating salary ranges/structures).
Further actions taken by organizations. “Other” indicates actions such as enhancing the company car mobility budget/policy, implementing CAO90 increases.
When it comes to monitoring total costs, it comes as no surprise that organizations are now more than ever looking to find ways to contain these as much as possible. 75% of respondents indicated to take actions to contain the costs due to the high indexation, with 1 out of 4 looking to hire contingent workers and 1 out of 8 reducing (or completely stopping) the bonus funding for 2023. Other actions that were also indicated were referencing a complete hire stop/reduction in hiring, increase the organizational focus on capital expenditure, review employee contracts and insurances, optimize work processes...
It is certain that employers will need to keep monitoring the economic market and source themselves with the right information to make informed pay/rewards decisions.
We are committed to supporting organizations during these uncertain times. Reach out to us, to expand the conversation.
