"This is not a wage freeze" claims minister

Economy Minister Johan Vande Lanotte (Flemish socialist) says that the most important point of the budget agreement is the decision to maintain the index, Belgium's unique system of pegging public sector wages, some private sector wages and benefits to the rise in prices. Mr Vande Lanotte is clearly chuffed that the index mechanism remains in tact even in these days of economic woe.

Pointing to the higher taxes on dividends and on the increase in the value of financial holdings the Deputy Prime Minister spoke of the important switch being made to make labour cheaper and to tax capital gains more.

Mr Vande Lanotte also stressed the importance of the 300 million euros to increase the wages of the lowest earners and people on a low retirement pension. The Flemish socialist also pointed to the fact that no holidays were being abolished and there would not be any return to the 40 hour working week.

The Economy Minister also rejected the use of the word 'wage freeze'. He said that wages are not being frozen because wages will continue to rise in step with the index where this is presently the case.

"In other countries people go on strike to prevent wages from being cut. Here wages are adapted in line with the rise in prices."

Mr Vande Lanotte also stressed the importance of the government's tackling of the wage handicap, i.e. closing the gap between higher Belgian wages and those in neighbouring countries. He also lauded the decision not to legislate in favour of a tax amnesty for fraudsters.