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The incomes and financing balance of individuals and companies


  • A. Bruggeman

    (National Bank of Belgium, Research Department)


The article begins by establishing that the share of wages in GDP has declined quite sharply in Belgium over the past five years. The fall in the wage share in 2003-2005 was due partly to the deteriorating economic conditions at the beginning of this century. It can also be seen as a continuation of the decline which started in the early 1980s, attributable to structural developments such as globalisation, technological progress and the growing importance of the services sector. However, the downward trend in the total disposable income of individuals as a percentage of GDP is due mainly to the reduction in their net interest income, which is in turn attributable to falling interest rates. In absolute terms, however, the disposable income of individuals has risen, even if inflation is taken into account. The main effect of the reduction in the gross disposable income of individuals in relation to GDP has been to cut the savings ratio, as consumption expenditure has only fallen slightly as a percentage of GDP. Moreover, since 2004 individuals’ investment spending has surged, reducing their financing balance to less than 1 p.c. of GDP. The primary counterpart of the recent contraction of the wage share has been the strong rise in the gross operating surplus of companies. On the other hand, companies have also paid more taxes on income and wealth, made higher net dividend payments to other sectors, and invested more in fixed assets. Nonetheless, the financing balance of companies has risen steadily, reaching an average of 2.4 p.c. of GDP in the past three years, so that they have been able to move gradually towards financing more of their investment out of internal resources, thus further consolidating their balance sheets.

Suggested Citation

  • A. Bruggeman, 2008. "The incomes and financing balance of individuals and companies," Economic Review, National Bank of Belgium, issue iii, pages 75-91, September.
  • Handle: RePEc:nbb:ecrart:y:2008:m:september:i:iii:p:75-91

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    References listed on IDEAS

    1. Philip Ducaju & Erwan Gautier & Daphné Momferatou & Mélanie Ward-Warmedinge, 2008. "Institutional features of wage bargaining in 23 European countries, the US and Japan," Working Paper Research 154, National Bank of Belgium.
    2. Michael Rusinek & François Rycx, 2013. "Rent-Sharing under Different Bargaining Regimes: Evidence from Linked Employer–Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 51(1), pages 28-58, March.
    3. Aucremanne, Luc & Druant, Martine, 2005. "Price-setting behaviour in Belgium: what can be learned from an ad hoc survey?," Working Paper Series 448, European Central Bank.
    4. Alan S. Blinder & Don H. Choi, 1990. "A Shred of Evidence on Theories of Wage Stickiness," The Quarterly Journal of Economics, Oxford University Press, vol. 105(4), pages 1003-1015.
    5. Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
    6. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 759-789.
    7. Agell, Jonas & Bennmarker, Helge, 2002. "Wage policy and endogenous wage rigidity: a representative view from the inside," Working Paper Series 2002:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    8. Luc Aucremanne & Martine Druant, 2005. "Price-setting behaviour in Belgium: what can be learned from an ad hoc survey ?," Working Paper Research 65, National Bank of Belgium.
    9. Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
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    Cited by:

    1. V. Baugnet & L. Dresse, 2011. "Developments in private consumption over the past three years," Economic Review, National Bank of Belgium, issue ii, pages 47-58, September.

    More about this item


    wage share; operating surplus; disposable income; financing balance;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs


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