Although the Federal Planning Bureau is not happy about the budget deficit and the lower economic growth forecast figures there is some good news in the economic forecasts for this year and next. The daily ‘De Standaard’ reports that wages will continue to rise and despite the relatively high rate of inflation purchasing power will rise too.
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Wages will continue to rise next year as will purchasing power
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This year wage costs will rise by 7.9% with a rise of a further 4.3% forecast for next year. De Standaard has calculated that by the end of next year wages will be 25% higher than they were at the beginning of 2021.
But what about inflation? The relatively high level of inflation during the past couple of years has meant that we are all paying more for our goods and services. However, despite this most people are still better off.
Last year the energy crisis meant that real disposable income in Belgium fell by 1.4%. Things are different this year though and if the forecasts are correct real disposable income in Belgium will increase by 3.5% this year. A further rise in real disposable income of 0.4% is forecast for next year.
Much of the increase in real disposable income is thanks to the soc-called “trigger index” system that sees public sector wages and benefits rise automatically by 2% each time the “trigger index” is exceeded. The trigger index is expected to be exceeded this month. The Federal Planning Bureau forecasts that the trigger index will be exceeded again in February and June next year and possibly for a 3rd time at the end of 2024.
More jobs despite higher wage costs
Despite the rise in what it costs to employ someone in Belgium, new jobs are still being created here. By the end of the year the net number of jobs in Belgium will have increased by 50,000. A further net increase of 40,000 jobs is forecast for next year. The Federal Planning Bureau also forecasts that the employment rate (the percentage of people of working age that are working) to rise to 72.9%. In 2020 70% of people in Belgium that were of working age were in work.
Less positive news that the economy is now predicted to grow less strongly next year that was originally forecast. The Federal Planning Bureau also predicts a further increase in the budget deficit.