Salaries in the grand duchy have grown significantly over the past decade-and-a-half, but, based on purchasing power standards (PPS), not as fast as in neighbouring countries. Photo: Maison Moderne.

Salaries in the grand duchy have grown significantly over the past decade-and-a-half, but, based on purchasing power standards (PPS), not as fast as in neighbouring countries. Photo: Maison Moderne.

Growth in the purchasing power of Luxembourg salaries lagged those in Belgium, France and Germany by more than half between 2005 and 2022, Eurostat data has shown.

The grand duchy not only trails its neighbouring countries in terms of median equivalised income growth and purchasing power, but also exhibits stark disparities among household types: households with two adults, at least one aged 65 years or over, experienced the highest income growth since 2005, whereas single person and single person with dependent children households fared the poorest.

That is according to recently released figures from Eurostat, the EU statistics agency.

Luxembourg has experienced a steady increase in median equivalised income--which splits the population by income into two halves--over the past years, placing it ahead of other EU member states, Eurostat data showed. However, the overall median income growth between 2005 and 2022 was only 59.56%.

When considering the purchasing power standard (PPS), which accounts for price level differences, income growth drops to a mere 20.5% over 17 years.

Analysing different household types, retirees benefited the most, with median income for households consisting of two adults, with one of them aged 65 years or over, nearly doubling at a 94.92% increase.

On the other hand, single-person households and single-parent households experienced modest growth with increases of only 50.25% and 52.17%, respectively.

In contrast, households with three or more adults and with dependent children had the poorest median income growth at 39.7%. The situation worsens further when considering the PPS, as these households registered a meager 5.5% growth.

Compared to neighbours

When compared to neighbouring countries, Luxembourg falls behind in terms of median income growth.

While Luxembourg households saw a 59.56% increase since 2005, Belgium surpassed it with a growth rate of 64.74%. Moreover, Luxembourg’s household purchasing power showed the least improvement at 20.5%. In PPS terms, Belgium households experienced the highest growth rate of 55.41%, followed by Germany at 48.2% and France at 41.94%.

In absolute terms, Luxembourg households had a median equivalised income of €45,310 in 2022, compared to €27,293 in Belgium, €25,000 in Germany, and €23,053 in France.

In PPS terms, which reflects the average price level across the EU, Luxembourg households had an income equivalent of €33,214, compared to €24,124 in Belgium, €23,197 in Germany, and €20,575 in France.

Real wages

According to a recent OECD , real wage growth, which factors out inflation, declined by 0.8% between the first quarter of 2023 and the first quarter of 2022 in Luxembourg.

In comparison, Belgium saw a 2.9% increase in real wages, while France and Germany witnessed drops of 1.8% and 3.3%, respectively.

According to Eurostat’s data, Luxembourg highest for negative real wages--meaning inflation battered take-home pay in the grand duchy the most--in the third quarter of 2022 across the EU.

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