Rising Costs Squeeze Belgian SMEs, Limiting Pay Raises and Bonuses

Brussels, Belgium – Financial pressure continues to mount on small and medium-sized enterprises (SMEs) across Belgium, with rising company costs—largely driven by automatic wage indexation—leaving little room for additional employee compensation.

This financial strain is particularly pronounced in Brussels, where businesses are struggling to balance remuneration priorities.

According to a report from HR services provider SD Worx, SMEs, which make up approximately 99% of Belgian businesses, are facing difficulties in granting individual pay raises or bonuses beyond the legally mandated wage indexation.

The report highlights a concerning trend where financial constraints are curbing companies’ ability to reward performance-based contributions.

Limited Financial Breathing Space

“More than four in ten SME employers indicate that there is no financial room in 2025 for new remuneration priorities,” said Anneleen Verstraeten, SME consultant at SD Worx.

“Automatic wage indexation results in a gross pay increase for all employees, regardless of performance, which limits the budget available for individual rewards.”

The situation is most severe in Brussels, where 60% of employers report having no capacity to offer additional financial incentives. In Flanders, 40% of businesses face the same challenge, while in Wallonia, the figure stands at 44%.

Despite the widespread financial constraints, some businesses still see opportunities to provide extra compensation.

In Brussels, 16% of SMEs believe they can offer financial incentives, the highest percentage among the regions. In Flanders, 15% of companies report having some flexibility, while in Wallonia, only 6% see a possibility for additional remuneration.

Prioritizing Performance-Based Rewards

While broad-based pay raises remain difficult, six in ten SME employers are willing to offer salary increases—but only to employees who demonstrate strong performance.

“We see that the majority of employers are keen to emphasize individual performance,” Verstraeten noted. “Rather than across-the-board increases, many businesses are focusing their resources on rewarding top-performing employees.”

The methods of employee compensation also vary by region. In Brussels, company bicycles have become a popular perk for employees, reflecting the city’s push for sustainable mobility.

In Flanders, meal vouchers and bonuses are common incentives, while Walloon companies favor bonuses and gross wage increases as primary forms of additional compensation.

Challenges Ahead for Belgian SMEs

As SMEs navigate financial tightness, the broader economic outlook remains uncertain. Businesses are balancing the need to retain talent and motivate employees while managing rising operational costs.

With automatic wage indexation set to continue, many companies may need to explore alternative benefits or creative compensation strategies to keep their workforce engaged.

Industry experts warn that without structural reforms or financial relief measures, Belgian SMEs—especially in Brussels—could face continued difficulties in maintaining competitive pay structures.

Employers will need to find a delicate balance between financial sustainability and employee satisfaction in the years to come.

 

This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members

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