Between one in three and one in four employees have a low income. It all depends on how this threshold is established, and whether data from the General Inspectorate of Social Security (IGSS) or data from the Luxembourg Inland Revenue (Administration des contributions directes, ACD) is used.
According to the response provided by health and social security minister (CSV) and finance minister (CSV) in response to a parliamentary question from dei Gréng MPs and , among all employees who received--at least once--in 2023 an hourly wage close to the social minimum wage, “the proportion of those who have a low rate, and therefore an annual income of less than €28,121, therefore amounts to 25.6%. While referring to the biases noted by the ACD, the proportion of taxpayers in tax class 1 whose income reached a level lower than or equal to the unqualified social minimum wage, namely €27,591.27, amounts to 36%.”
According to the IGSS, in March 2022, 38,041 employees received the non-qualified minimum social wage (SSMNQ), which corresponded to 8.7% of the employed population in Luxembourg. However, this figure does not take into account civil servants, retirees and the self-employed, as well as the situation of the people concerned (single, in a couple, etc.).
43% risk of poverty
Based on the tool called Social Policy Analysis File for Luxembourg (Spafil) developed by the IGSS, the indicator used is the low standard of living rate, which represents the share of people whose annual standard of living is below the threshold of 60% of the median annual standard of living. This is only for residents affiliated to Luxembourg health and maternity insurance scheme.
The two ministers are therefore not talking exactly about the SSMNQ. In 2023, the low standard of living threshold is estimated at €28,121 per adult equivalent per year. As a benchmark, the annual disposable income of a single employee (tax class 1), working full-time for 12 months in 2023 for a salary equal to the unskilled social minimum wage and not having any other primary income is estimated at €28,398.18. With a difference of €277, single people in the SSMNQ therefore reach the threshold of low standard of living, according to the IGSS.
But we’re talking about a single person here. So what about single-parent families, for whom, according to a Statec study published last June, the risk of poverty soars to over ? Expressed in euros per year at household level, the low standard of living threshold is, for example, €42,181.5 per year for people living in a household with two people aged 14 and over, or €50,617.8 per year for people living in a household with three people, two of whom are aged 14 and over and one of whom is aged under 14.
In 2024, the low standard of living rate stood at 11.9% for the population as a whole, 9.7% for those belonging to a tax class 1 household, 17.0% for those belonging to a tax class 1A household and 11.4% for those belonging to a tax class 2 household.
64.5% for an adult with three or more children
In their response to the MPs, ministers Deprez and Roth backed up their comments with a table showing the rate of low living standards in 2023 according to various individual socio-demographic characteristics and tax class (in %). For example, for a household with one adult and one child, the low standard of living rate is 29.5% for the average of the country’s three tax classes (1, 1A, 2). For a household with one adult and two children, it is 38.5%, and for a household with an adult and three or more children, it rises to 64.5% (71.4% for tax class 1).
By way of comparison, for a household of two adults and one child, the rate is 8.1%, for two adults and two children it is 9.1% and for a household of two adults and three children it is 22.4%. The rate rises to 50.8% for a two-adult household with four or more children.
On the other hand, taking the other database cited in the response, according to data from salary and pension account statements (ECSP) declared by employers to the Luxembourg Inland Revenue (ACD), 36% of taxpayers in tax class 1 had an income lower than or equal to the unqualified social minimum wage in 2022. It is important to note that this calculation only takes into account professional income and does not take into account other sources of income. Furthermore, the ACD points out that the use of ECSP data may introduce certain biases, notably due to the difficulty in capturing the global income of non-residents and residents with income abroad.
This article was originally published in .