Economy & Politics

Luxembourg salaries not so advantageous

Yes, the country offers the highest minimum wage or gross annual income in the European Union. But in terms of purchasing power in Luxembourg, the amount becomes less effective.



Yes, the country offers the highest minimum wage or gross annual income in the European Union. But in terms of purchasing power in Luxembourg, the amount becomes less effective.

Statec comes to undermine, with its latest study, the “myth” of the Luxembourg Eldorado. Indeed, when comparing European data, analysts note that it is not necessarily because companies offer the highest incomes, on average, within the European Union that residents find themselves there in terms of purchasing capacity. Nothing to complain about, however, because with a average gross salary of 64,932 euros / year, the country still offers the highest remuneration of the 27 member states.

Worker poses the gaskets prior installed a skyroof of a motorhome made from a Fiat"Ducato" van, in the factory of the Pilote group, in Longuenee-en-Anjou, western France, on May 05, 2021. - With its 680 employees, two production sites in France and one in Germany, the Pilote Group, which builds 5,800 campervans and converted vans each year, became in 2020 the number 1 in France in terms of registration, in a boosted sector by the health crisis, which plunges the holidays under the sign of uncertainty (Photo by JEAN-FRANCOIS MONIER / AFP)

In view of the evolution of inflation, Statec has revised the possible date of a next automatic reassessment of salaries. Thus, payslips could swell 2.5% by the end of the year.

But Statec wanted to see beyond this simple figure. Comparing what it was possible to consume with a euro earned in the Grand Duchy and in other countries. And this is where the situation deteriorates. Indeed, the cost of living in Luxembourg is such that the difference observed in the level of salary narrows if we take into account the real purchasing power provided by the salary paid. The windfall effect of the higher level of income offered thus systematically diminishes in comparison with all EU countries.

Make ends meet

For the Greater Region alone, when in France the average gross annual salary represents 58% of the same Luxembourg salary, the purchasing power standard (PPS) drops to 67%. In other words, with the same income received in France, a French employee can consume 9% more at home than a resident … Same difference noted in Belgium (71% of the average salary, but 80% of PPS), but much more on the German side (69%, against 84%).

Moreover, this gap between perceived salary and daily reality continues to increase the difficulties for the less well off employees. A recent study by the Chamber of Employees also pointed to the rise of “working poverty”. Thus, one in four Luxembourg households (26%) admit not being able to make ends meet at the end of the month …

This same observation is also noted by comparing the purchasing capacity of Europeans receiving the minimum wage. Of course, here again, Luxembourg employers are showing themselves to be the most generous in the EU, and even more since the increase on January 1. But it is clear that the gap is clearly narrowing in terms of spending capacity on the national territory of employees. And the “best example” is to be found on the other side of the Moselle. Because if the German minimum wage is equivalent to 90% of that paid in the Grand Duchy, it offers almost the same purchasing power behind the border.

Wachstum, Wohnungsbau, Baustelle, Baukräne, Immobilien.Foto: Gerry Huberty

Increase in the population (+ 24%), the number of cross-border workers (+ 32%) or even real estate prices (+ 56%). Between 2010 and 2019, the country will have experienced significant growth, underlines the Idea Foundation, which initiated a data compilation exercise. A useful quantified reminder to understand the challenges of tomorrow.

Statec even goes so far as to compare the situation by branch of activity. Tackling in passing another social legend which wants all trades to pay better in Luxembourg than among its neighbors. This turns out to be false, especially in a sector as essential as construction. The remuneration is almost equivalent there on Belgian sites but, important nuance, the purchasing capacity turns out to be higher – in summary – for a Walloon worker rather than an Esch employee. Based on the comparisons made, the same conclusion can be drawn for employees in the hotel and catering industry or administrative services. They would ultimately have little interest in moving from the kingdom to the Grand Duchy.

Even jobs in industry or commerce do not escape this surprising observation: if the pay in Luxembourg in this sector is slightly higher than the salary received in the same branch in Germany or in Belgium, the purchasing power of one euro is not to the advantage of employees living in Luxembourg. But it is not certain that these observations do not reduce the attractiveness of the country in terms of recruitment. The number of cross-border workers continues to increase, doubling in quantity from 2002 to 2019 to reach over 200,000 people now.

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