Inflation has already earned companies billions: we explain why

The rise in the cost of living worries workers across the country: the energy bill has more than doubled; an indexation of the rent that becomes unaffordable; struggling to fill the fridge, … Public support was welcome but inadequate. The Federation of Belgian Enterprises (VBO) reiterates, “that there is no money to do more. Companies are having a hard time”. However, there are margins and we suggest that they be filled.

First of all, let’s give an idea of ​​the severity of the shock that families face. A recent study by KUL (1) shows that automatic wage indexation and government measures only partially protect against inflation. Despite indexation, 90% of households with variable energy contracts become poorer. The poorest 10% of families lose 7% of their income, while the median family loses 2%. To support them, the government has put 2.4 billion on the table through various measures (including an extension of the social tariff, energy checks, VAT and excise duty reductions). However, these measures cannot compensate for the price increases, much less for lower middle class households. Therefore, apart from the families who are subject to the social tariff and the richest families who are better protected from the shock, the measures taken by the government are therefore completely inadequate.

Automatic wage indexation and government measures only partially protect against inflation.

Some point to their budget costs. However, this cost is very relative in the light of the measures taken in recent years. To illustrate: the reform of the Michel government, which aimed to reduce corporation tax (from 33 to 25%), costs twice as much, namely 4.8 billion euros a year, according to the National Bank of Belgium (NBB). According to the Court of Auditors, the corona aid granted exclusively to companies (tax breaks and exemptions, premiums and subsidies) cost € 5.8 billion in 2020 and 2021. These measures were at the expense of collectivity and directly benefited companies. . But current inflation is also due to a huge surplus.

Another essential element of this debate is the question of the causes of inflation. The price increase may be caused by various operating costs that have increased: capital costs (profits), costs for raw materials or wages. In Belgium and most OECD economies, wages have been declining in value for years. As for the price of commodities, it can not explain everything if it rises – not for everything. In other words, a significant part of current inflation is due to an increase in profits. Here are the figures for the US: 54% of private sector inflation is due to an increase in profits, in addition to the rise in commodity prices, which explains 38% of the price increase. Wages are only responsible for 8% of inflation (2).

An important part of current inflation is due to an increase in profits.

These figures correspond at least in part to the Belgian situation. The profit margin for private non-financial corporations has literally exploded in the last 25 years, from 36% in 1996 to 47% in 2021. By 2021, they will even reach historic heights, higher than our neighbors, despite the alarming discourse from employers’ organizations . And with good reason: a recent study by NBB (3) shows that 60% of companies can protect themselves by passing on cost increases to their customers. If this margin is converted to inflation, it turns out that 3.85 percentage points of the inflation rate of 8.2% in 2022 actually finances the margins and thus the companies’ profits. Industry giants like InBev, Puratos or Engie even make record profits. According to CREG (4) For example, Engie made a profit of almost 2.1 billion in 2021-2022 on Belgium’s only second-generation nuclear power plants. Engie’s profits in themselves could fund any government action to tackle inflation.

To solve the problem of inflation and support families, the distribution of wealth (and what to do with it) must be put on the table as soon as possible. The current crisis reveals a structural problem; temporary taxation of a small part of the cost of capital will not be sufficient. In addition to taxation, there are other means in Belgium and some are even included in the law. This is the case in Article 14 of the famous law of 26 July 1996, which, in addition to the wage block, provides for the possibility of taking measures to moderate dividends and rents. Despite this, this law has so far only been used to block wages. Since the law was changed in 2017, making it even stricter on wages, wages have literally been locked in, even though life is getting more expensive and companies have very large margins. Another very simple way to limit profits is simply by increasing wages. It is high time, on the one hand, to finally apply Article 14 of the law to tackle the surplus and block the rent, and on the other hand to revise the law’s provisions on wages so that wage increases are possible again. .


  • Bruno Bauraind, Gresea and the University of Bergen
  • Marc Becker, National Secretary for ACV
  • Bastien Castiaux, Member of Rethinking Economics
  • Stefaan Decock, Chairman of ACV Puls
  • Thomas Englert, Department of Studies at ACV CNE
  • Adriano La Gioia, Member of Rethinking Economics
  • Nancy Pauwels, research department at ACV Puls
  • Olivier Malay, research department at ACV V&D
  • Bruno Poncelet, shaper at CEPAG
  • François Sana, research department at ACV
  • Pia Stalpaert, Chairman of ACV Food and Services
  • Jean-François Tamellini, Secretary General of the Walloon ABVV
  • Felipe Van Keirsbilck, Secretary General of the ACV-CNE
  • Werner Van Heetvelde, Secretary General of the General Central ABVV
  • Clarisse Van Tichelen, Department of Studies at ACV-CNE


  1. Increase in gas and electricity prices: analysis of … (
  2. Corporate profits have contributed disproportionately to inflation. How should politicians react? | Economic Policy Institute (
  3. Bijnens G., Duprez C., (2022), “Businesses and the Rise in Energy Prices”, NBB.

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