Luxembourg’s first full tripartite session ended without an agreement on Tuesday, but with Prime Minister Luc Frieden agreeing to take up issues he had previously sought to keep outside the talks.

Frieden had said in May that the tripartite should remain focused on the consequences of the Middle East energy shock and should not become a forum for broader issues such as housing, healthcare or the social minimum wage. By Tuesday evening, he said Wednesday’s follow-up session would cover housing, the social minimum wage, business taxation and job protection.

The shift was visible in his own account of the next day’s agenda. Frieden said the government had proposed discussing “various aspects of housing policy” because “purchasing power and housing are closely linked” in Luxembourg. “We have also proposed to the social partners that we discuss aspects of the social minimum wage tomorrow afternoon, because that is a wish expressed by the trade unions,” he said.

Employer representatives, Frieden added, had asked to discuss “business taxation” and the support companies could receive under European rules.

That leaves the talks in a different place from where the government had tried to put them. Energy prices remain the trigger, but the next round will also take in issues unions had pushed from the start and employers’ demands on competitiveness and company support.

Energy remains the trigger

Frieden did not abandon the government’s original energy frame. He said the tripartite remained a crisis instrument, called because the conflict in the Gulf region had lasted longer than initially expected and was now creating direct risks for households, businesses, Luxembourg and Europe.

Statec presented updated scenarios at the start of Tuesday’s talks. Frieden said one of the short-conflict scenarios prepared several weeks earlier had already been overtaken, putting the country in a situation where a longer crisis had to be considered.

The government’s initial proposals focused on keeping energy prices under control, dampening inflation, supporting purchasing power, helping households renovate or switch away from fossil-fuel heating, and supporting agricultural businesses exposed to energy costs. “Inflation is bad for people, inflation is bad for businesses,” Frieden said.

The government also proposed tax measures to support purchasing power, after previous fiscal steps taken since it took office. Frieden said the aim was to ensure that support already given to households was not eroded by an external crisis.

The talks are also linked to jobs. Frieden said businesses and workers were closely connected, echoing a point later picked up by employers.

Unions hold their line

OGBL president Nora Back gave little away on substance, saying the unions would not discuss partial measures while negotiations were ongoing. “Everyone has stayed at the table,” she said, calling that already positive, but adding that the unions would continue to insist that every point in their package be discussed.

Those points include housing, social dialogue and job protection. Back said the talks were constructive, but that the unions would continue to hold their line in the coming days.

LCGB president Patrick Dury was more explicit about why unions had pushed beyond the energy frame. The tripartite had been called because of the war in Iran and its possible economic and social effects on Luxembourg, he said, but the union catalogue of proposals had been broader from the beginning.

For LCGB, unemployment has become a structural issue. Dury said Luxembourg tended to emerge from each crisis with unemployment stuck at a higher level, without then managing to bring it fully back down.

He welcomed the tone of Tuesday’s talks, saying social partners had spoken to one another in a way they had not done for two and a half years. “We spoke this afternoon as we had not spoken to one another for the last two and a half years,” Dury said.

The employer side wanted less time spent on perimeter-setting and more on speed. Michel Reckinger, chair of the Union of Luxembourg Enterprises (UEL), said employers had presented competitiveness as their main concern and warned that time was already part of the problem.

Every day or week lost would have an impact on inflation and could bring the next indexation tranche closer, Reckinger said. He called for rapid progress and suggested that the partners should try to secure a partial agreement on the energy and inflation measures households and companies were already feeling.

“Without businesses there are no employees, and without employees there are no businesses,” Reckinger said, describing that as the guiding logic for the talks. Companies needed to be strengthened so they could hire again and support growth, he said.

No fixed envelope

The question of indexation remains politically sensitive. Asked whether the government was proposing to postpone a possible second tranche, Frieden did not answer directly.

“We do not have a fixed envelope,” Frieden said, adding that the cost of agreed measures would be disclosed once an agreement was reached because they would have to be reflected in the budget.

He said the government’s objective was to protect people against high energy prices and rising inflation, while supporting purchasing power. The government’s approach, he said, would be guided by energy prices, inflation and purchasing power.

Frieden also said the government had not set a fixed budget envelope for the measures under discussion. Each proposal would have to be costed as negotiations developed.

Many of the measures would cost money and would ultimately be borne by the government and taxpayers, he said. But Luxembourg also had to preserve healthy public finances, keep debt and deficits manageable, remain within Maastricht rules and protect its Triple A rating.

The talks continue on Wednesday afternoon. By then, the question will no longer be whether the tripartite stays inside the government’s original energy frame, but how far the wider agenda is allowed to go.