loonindexering

Loonindexering, or wage indexation, is the automatic adjustment of wages in response to changes in a price index, typically the consumer price index (CPI), with the aim of preserving real purchasing power for workers. The mechanism is often defined in collective labor agreements (cao's) or in government wage policies and may apply to base salaries, allowances, and sometimes bonuses.

How it works: wages are increased by the percentage change in the chosen price index over a specified period, using a defined base year. Some arrangements index wages in full, others apply partial indexing or tiered rules. There may be delays (lags), caps, or floors, and indexing can apply universally or only to certain job grades or sectors.

Context and variations: loonindexering is common in sectors with strong union influence and in countries with long-standing collective bargaining traditions. In the Netherlands, it has appeared in many CAOs and public-sector agreements, though its extent and rigidity have fluctuated with inflation, productivity, and policy reforms. In some periods, partial or conditional indexing was preferred over full automatic adjustments.

Impact and criticism: wage indexation protects workers from inflation erosion but can raise labor costs and reduce price competitiveness. It may limit monetary policy flexibility and contribute to wage-price dynamics in high-inflation periods. Proponents argue it preserves purchasing power and social fairness; opponents favor productivity-based increases or more targeted adjustments.