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Blanborough predicts that the pivot index will be surpassed twice this year

Blanborough predicts that the pivot index will be surpassed twice this year

The pivot index will be surpassed twice this year, in October and December. This is what the Planning Office expects.

This surplus always leads to indexation of civil servant wages and social benefits.

If forecasts come true, the pivotal indicator will exceed the total five times this year. Earlier this year, this actually happened in February, April and July. The pivot index was also exceeded in December 2021. In 2023 there will be two more overshoots. This will be the case in February and July.

If the pivot index is exceeded, social benefits increase by 2 percent after one month. Officials’ salaries will follow after a month.

swell in the sky

The fact that the pivot index is exceeded so often has something to do with high inflation – the rate at which consumer prices rise. It reached 9.94 percent in July, a 46-year high. The Planning Office expects inflation to rise to more than 10 percent in September, and to cross that threshold also in October and December.

For the full year, inflation will be 9.4 percent. In 2023, inflation is expected to ease to 6.5%. This is still well above the level of around 2 per cent the European Central Bank (ECB) is aiming for.

private sector

The salaries of civil servants are not only adjusted by life expectancy. High inflation causes private sector wages to rise. It happens at a different pace in each sector. For some sectors, this happens monthly, for others once a year. But also, for example, vacation pay, year-end premiums, other premiums and a whole host of supplemental pension plans are increasing in line with inflation.

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In April, economic journalist Stijn Decock explained how indexing your wages works: