Index-linked wage designates one that, by which inflation caused, automatically adapted content. It serves the purchasing power for the social security and preservation with risen cost of living. In the Grand Duchy Luxembourg, in which this system is only used, is legally prescribed the automatic adjustment of the wages and salaries.

Computation

The statistic service (STATEC) determines each month by a fixed Warenkorb the level of the consumer goods prices (consumer price index) of an average employee. This contains 254 goods and 7,312 prices of the daily need.

Each mark, if the consumer price index is in the term average around 2,5% risen or fallen, the wages and salaries, in addition, pensions, family allowances, guaranteed minimum income, etc., around 2,5% are adapted.

Law

Since a law of 1984 the automatic adjustment of the wages and salaries is used continuously to the price history.

Criticism

The system been based on a political decision and can be also adapted thereby or abolished again. The debate over a possible abolishment or alteration partially disputed index-linked wage leads in the policy and in the population again and again to violent discussions.

Per:

• Employees and their families are secured better against the constantly rising cost of living.

• The purchasing power of the population is maintained.

• The starting situation at discussion between employers and trade unions is more neutral.

• Strikes around higher salaries arise in Luxembourg extremely rarely. The problems and costs of the employer, resulting from it, are omitted.

Against:

• The index-linked wage propels the inflation.

• Lower labour costs became the economy and the job market ankurblen.

• Since beside the wages and salaries also the pensions are adapted, this is a load of the pension schemes.

• The weighting or the absence of individual goods is criticized.

• Particularly by the constantly rising fuel costs the labour costs are propelled and harm thus the employer.

• The salaries rise both for the Gutverdienden as well as for the simple worker around in each case 2.5%. With same the consumer costs gets the property-earning rose importantly more moneys than the bad-paid workers. Thus social differences continue to increase.

Articles in category "Index-linked wage"

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Related Websites

We found here 3 related websites.

• OECD Economic Outlook: Developments in individual OECD countries ...
  With consumer price inflation slowing, index-linked wage increases should become less frequent (they occur whenever cumulative price rises since the last ...


• Taxation, Wage Bargaining, and Unemployment - Cambridge University ...
  demands for coordination between fiscal, monetary, and wage policies and, 139


• Taxation, Wage Bargaining, and Unemployment - Cambridge University ...
  demands for coordination between fiscal, monetary, and wage policies and, 139