The cap on index-linked wage rises that is part of the Federal Government economic programme is set to come into force in June this year. Under the measure only the first 4,000 euro of a salary will rise to match inflation.
Those working in the public sector see their wages increase by 2% a couple of months after the so-called “trigger index” is exceeded. Meanwhile, those in the private sector see their wages increase to match inflation at a set date (or dates) each year. This is agreed at an industry level by representatives of the employers’ federations and the trade unions.
While in the past all salaries have been given index-linked pay increases in full, this legislature the Federal Government intends to limit the index-linked increase to the first 4,000 euro gross of a person’s salary.
The measure also affects those on pensions and benefits. Only the first 2,000 euro/month gross of benefits will be increased by 2% if the trigger index is exceeded. Those that work part-time with a gross salary of under 4,000 euro/month will also be inpacted. For example, a person that works 50% and earns 2,500 euro gross per months will only see the first 2,000 euro of their salary increased to match inflation. This is because they would earn 5,000 euro gros per month if they were to work full-time.
If the cap takes effect in June, the metal and construction industries and the cleaning sector will be affected as their wages are increased to match inflation each year in July.