As a self-employed person, how do you adjust your rates correctly after a wage indexation?
March 2023 – In January 2023, hundreds of thousands of private sector workers received a hefty wage indexation. This mechanism came into effect as a result of rising longevity in recent months. However, this indexation does not apply to the self-employed. How do you adjust your rates correctly?
Automatic wage indexation in action
Through the mechanism of automatic wage indexation, the wages of Belgian private-sector employees are linked to the prices of goods and services. Incidentally, the same applies to civil servants' salaries and social benefits (for pension, unemployment and sickness, among others).
In other words, when the prices of goods and services rise, the wages of private-sector workers rise. Only in some small joint committees are wages not indexed, although company-level agreements are possible there.
Exceptionally high wage indexation in January 2023
For the past 10-15 years, the average indexation in our country has been less than 2 per cent per year. But when the conflict between Russia and Ukraine erupted in February 2022, prices of goods and services skyrocketed. The result of exploding energy and food prices, among other things.
The result? On 1 January 2023, the wages of more than half a million white-collar workers in the private sector (Joint Committee 200) rose by a whopping 11.08%. Specifically, this means that a white-collar worker with a gross monthly salary of EUR 3,300 will receive a salary of EUR 3,666 since the beginning of 2023.
Create financial breathing space for yourself
Employees will certainly appreciate that financial breathing space. But what do you do as a self-employed person who is not eligible for such indexation? After all, life has become a lot more expensive for you too.
For price agreements per hour, per service or per day, there are no legal ground rules regarding mandatory indexation. Whether or not a client has to index depends on what you have stipulated in a cooperation contract. Note, however, that in long-term contracts indexation is usually applied in practice afterwards, instead of having to negotiate it annually.
Rate indexing as a basis for worry-free business
Correct clients create the necessary space to sit down at the negotiating table with you. In any case, as a self-employed person, you determine your own rates. You must therefore also decide for yourself whether to apply any indexation. A lot of self-employed people doubt whether this is possible and - if they do consider a rate adjustment - how to do it correctly.
One thing is clear: a lifetime rate adjustment is totally okay! After all, such a decision ensures that you can continue to do your job in a sustainable, professional and worry-free manner, to the great satisfaction of existing and future customers.
Ask yourself the following questions:
● Has it been a long time since I raised my rate?
● Has the rent of my office space, warehouses or other facilities increased?
● How have other expenses been stored?
● Am I working in a more expensive region?
● Do I provide a niche product or service, including a unique service, and therefore can I charge a higher price?
How do you calculate your rate increase?
Do you want to increase your rate as a self-employed person? Then it is definitely a wise move to use the so-called pivot index as a benchmark. You could add 2% to your rate each time that spindle index was exceeded. In the past two years, this happened no less than seven times (August and December 2021, and February, April, July, October and November 2022).
In figures, since August 2021, you could increase your rate by 14% (exceeded seven times * 2%). Did you have an hourly rate of 60 euros in August 2021? Then, according to this calculation, you could charge 68.40 euros today.
We definitely recommend discussing this calculation with your accountant so that he or she can analyse with you which expenses have become significantly more expensive in recent years.
