A background paper by the European Foundation for the Improvement of Living and Working Conditions.

 The first section describes the functioning and the principle of wage indexation, providing a summary of the main elements of the academic debate on this issue as well as the respective views of the social partners.

The second sectionexplores in detail the different systems of wage indexation and wage formation in Belgium, Cyprus, Luxembourg and Malta.
The third section completes the picture by looking at various examples of countries that previously had anindexation system and subsequently abolished it, examining the reasons leading to such  developments.
There is need, especially in the West, to bring the employee increasingly into the government of the workplace community.
Peter Drucker