Of all member countries in the Organisation for Economic Co-operation and Development (OECD), Belgium was among the few that saw real wages rise and has even led the way when it comes to protecting purchasing power.
Inflation in recent months reached levels not seen for several decades due in particular to the post-Covid recovery and unprecedented energy prices following Russia’s invasion of Ukraine. In October, the inflation rate in Belgium reached 12.27% – the highest since June 1975, while across the OECD, it peaked at an average of 10.7%.
The fact that life became so much more expensive gnawed at residents’ purchasing power in almost all countries, the latest statistics from the OECD showed. Compared with the first quarter of 2022, real wages were on average 3.8% lower in the mostly rich member countries in the first three months of this year.
Not so bad after all
Despite the pick-up in nominal wages, real annual wage growth was negative in 30 of the 34 countries with available data, with an average decline of 3.8%.
“Tensions on labour markets have led to an increase in nominal wages, but this remains below the rate of inflation, resulting in a fall in real wages in the vast majority of OECD sectors and countries,” the OECD report read.
But four countries went against the grain and saw real wages (inflation-adjusted) rise. With an increase of 2.9% Belgium was the absolute outlier in this regard, recording the highest increase in wages. Belgium’s system of automatic wage indexation has been the primary means of guarding against wage deflation, despite criticisms that the mechanism will trigger spiralling inflation – grave cautions that have yet to transpire.