Economy & Politics

2021 in the Statec crystal ball

The statistical institute forecasts a year 2021 marked by stable inflation and wage costs but increasing unemployment. A scenario that hangs by a thread: the evolution curve of covid-19.



The statistical institute forecasts a year 2021 marked by stable inflation and wage costs but increasing unemployment. A scenario that hangs by a thread: the evolution curve of covid-19.

Very smart who can say what the coming year will look like. 2020 has proven how fragile forecasts can be. But Statec dares to suggest avenues for this future. Two hypotheses – high and low – which are based only on the degree of evolution of the covid epidemic in the country and in the world. Two scenarios that are based on a first truth: the expected decline in Luxembourg gross domestic product (national production) for this year from 3.5 to 4.5%.

Between March and September 2020, households saved 1.7 billion euros. According to the Banque centrale du Luxembourg, the share of private savings would reach 43.5 billion euros.

A decline in momentum, of course, but that analyzes qualify as “good resistance”. It is true that Luxembourg has resisted better than other states. By way of comparison, France and Italy are currently counting on a drop in their GDP of 9%; of the order of -5% in Germany or the Netherlands, against -12% feared in Spain … But for 2021, the dice are in the hands of covid-19 and its effects.

Statec thus speaks of “an expected growth of 4% in the favorable scenario” (progression of limited infections without too much impact on activity) or a decline of 0.5% in the pessimistic scenario (significant contamination and restrictions consequent). Such a margin proves that the coming months will be navigable by sight. And that each health decision will have its socioeconomic counterpart.

After the relative price maintenance this year (free transport and lower oil prices having played a positive role), 2021 could see inflation rebound. Going from + 0.9% to 1.8% next year.

The same rebound is also expected in the wage cost. Indeed, since March and the “social parachute” deployed by the Luxembourg government (mainly partial unemployment, various support for activity), the cost of labor for businesses has fallen. About 6%. The expected stoppage of certain government support lines should increase the price of labor by as much in the coming months (+ 6% announced).

An increase which will be limited, according to Statec, because the index (and therefore the revaluation of wages) should not fall in 2021. The institute also noting in passing that the revaluation, on January 1, of the minimum social wage “does not should cause only a very marginal acceleration of wages ”. A moderation which is not however to the taste of the Luxembourg employers who, in this period of crisis and uncertainties, did not hesitate to say so.

For 2021, Luxembourg is also unlikely to experience a spike in unemployment. Optimistic statisticians are counting on a number of jobs already on offer increasing this year (+ 2%) but also in the next twelve months. A growth in the need for manpower which would make it possible to contain unemployment in the Grand Duchy. So far, ADEM has not actually noted a sharp rise in the number of job seekers other than last April, at the very start of the crisis.

Politik, Tripartite, Chateau de Senningen, Xavier Bettel, Nora Back, Patrick Dury, Sylvain Hoffmann, Dan Kersch, Francois Bausch, foto: Chris Karaba / Luxemburger Wort

A few hours before the Prime Minister’s speech on the probable implementation of new restrictions intended to fight the pandemic, OGBL and LCGB are asking the government for an early meeting compared to the initial schedule.

Statec therefore considers that the unemployment rate will increase moderately, in 2021. With a rate dropping from 6.4% to almost 7% next year. Knowing that the last assessment, at the end of November, ADEM noted 17,971 job seekers registered.


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