Economy & Politics

The minimum wage increases, so does the bosses’ discontent

Xavier Bettel announced an increase in the monthly minimum wage for January 1, 2021. It will then amount to 2,642 euros. But, on the employers’ side, we fear that this gesture is more unfortunate than generous.

Patrick JACQUEMOT

Xavier Bettel announced an increase in the monthly minimum wage for January 1, 2021. It will then amount to 2,642 euros. But, on the employers’ side, we fear that this gesture is more unfortunate than generous.

The covid crisis affects the health of the population, as well as that of economic activity. If on the one hand the virus has killed 260 residents to date, it has also weakened Luxembourg’s activity. Some of the 988 bankruptcies already registered in the country testify to this, but also the 3,848 companies still under the infusion of short-time working at the end of November. But eight months after the start of the epidemic, it is also towards the lowest incomes that the government decided to act.

A 2.8% boost the minimum wage which will be appreciated by low-income households. An increase of a few euros which will put butter on the plates of more than 60,000 employees. And this without delay, from January 1, 2021, announced Xavier Bettel between various health measures made to stem the worrying second wave of infections. So here is the minimum social wage (SSM) raised to 2,642 euros, against all expectations.

In the eyes of the Prime Minister, the justification for this increase is readily available in these difficult times: “Despite the crisis, we must ensure that purchasing power can be maintained”. And this choice turns out to be purely political on the part of the DP-LSAP-Gréng majority. Because the decision to raise the minimum wage has nothing to do with the index, for example. The government argues its decision more like “catching up with wage increases means in 2018 and 2019 ”. An adjustment that the coalition in place has promised to achieve both, and which would be timely … So go for 2.8% more!

But the measure is far from unanimous. Some do not hesitate to make fun of the largesse of a Prime Minister who “distributes money that he will not have to take out of his pocket”. Indeed, if it is the State which decides on this increase, it will be well for the employers to pay this unexpected additional cost.

“Admit that this comes at the worst time, regrets Jean-Paul Olinger, director of the Union des entreprises luxembourgeoises (UEL). This will impact the spending of sectors which are already weakened and which will still see their room for maneuver shrink ”.


Wirtschaft, Interview mit Jean-Paul Olinger, UEL, Unions des Entreprises Luxembourgeoise, Foto: Chris Karaba / Luxemburger Wort

Jean-Paul Olinger, director of the Union des entreprises luxembourgeoises (UEL), believes that partial unemployment should continue for a good part of 2021 and should be a response to the consequences of the crisis. Just like what is happening elsewhere in Europe.


The reaction of the UEL was not long in coming: “Quite simply not sustainable”. Calculations have been made, the increase will result in an additional cost of more than 60 million euros for companies in the country (salaries and indexed contributions), not to mention the impact on the general salary scale. “Because of course we will have to maintain the gap with the salaries that were just above and increase them too …”

And then, notes the Union des entreprises, which are the sectors that pay the most according to this SSM base? “Precisely the sectors which are most affected by the crisis”. Thus, the required effort would amount to a minimum of 8 million euros for hotel and catering companies, or even 15 million for trade and transport. What either kill them or nip in the bud any hope of an economic recovery because of this accentuated wage burden at a time when revenue is scarce.


Wirtschaft, ADEM, Arbeitsamt, Jugendarbeitslosigkeit, Arbeit, Job, ADEM Esch Alzette, (gestelltes Bild mit Einverständnis des Jugendlichen zu jedem Thema in Zusammenhang der ADEM) Foto: Guy Wolff / Luxemburger Wortenichendch Alzette Thema in Zusammenhang der ADEM) Foto: Guy Wolff / Luxemburger Wort

While Adem recorded an increase of barely 0.5% compared to September, this stabilization is in fact a sham, since over one year the number of job seekers has continued to rise sharply.


Suddenly, the multiple aids deployed by the government elsewhere to help small or large entrepreneurs no longer makes sense in the eyes of the UEL. No more than the support, announced in the wake of compensation to the employer of 500 euros per employee benefiting from the SSM (or qualified SSM). Finally, until the end of June 2021. And then, just for companies benefiting from the recovery plan (vulnerable sectors). “So a little consolation”, saddens the employers.

Also, UEL is not asking the government to adjust its proposal. The Union demands the outright withdrawal of the bill approved by the government council. But it is difficult to see how Xavier Bettel could turn back now. And even less how the increase cannot be approved by majority vote. “The social state works”, wishes to make known the Prime Minister. No matter what the cost to public power, he had promised in March. It’s up to the private sector to get up to speed now.


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