The National Bank of Belgium published research showing that Belgium’s wage share, the portion of value added attributed to employee compensation, has declined since 2013, while remaining broadly stable in the euro area. The fall is visible across most sectors and the analysis notes that the wage share reflects employers’ labour costs rather than employees’ net wages. The decline is primarily linked to rising labour productivity without a corresponding increase in real hourly wages, alongside wage moderation policies including the temporary suspension of automatic indexation in 2015 and reductions in employer social security contributions, complemented by other measures to curb labour cost growth and a wage norm system that limits real wage increases beyond inflation adjustments. Between 2013 and 2023, around one-third of the decline is attributed to “composition effects” from shifts in sector weights, including a larger role for the more capital-intensive pharmaceutical industry, while two-thirds reflects falling wage shares within sectors, particularly market services. At firm level, value added has shifted toward companies with lower wage shares, although slightly less than half of firms saw their wage share decline, with the overall trend driven mainly by the largest firms. The research flags potential macro and fiscal implications: weaker labour income can weigh on household consumption and tilt GDP composition toward business investment, while also pressuring public finances because labour income is taxed most heavily. Although the literature often links a falling wage share to higher inequality, the analysis finds no such evidence for Belgium, with inequality indicators declining over the past decade, likely supported by a lower unemployment rate.
National Bank of Belgium 2025-09-08
National Bank of Belgium research finds Belgium’s wage share has fallen since 2013 as productivity rose without real wage gains
Research by the National Bank of Belgium shows a decline in Belgium's wage share since 2013, unlike the stable euro area. This is due to increased labor productivity without wage growth, wage moderation policies, and shifts towards capital-intensive industries like pharmaceuticals. The study notes potential macroeconomic and fiscal impacts, such as reduced household consumption and pressure on public finances, but finds no evidence of increased inequality in Belgium.