Luxembourg saw a modest 3.8% increase in hourly labour costs in Q2 2024, a sharp decline from the 5.1% rise in the first quarter, indicating a slowdown in cost pressures across the economy. Archive photo: Romain Gamba

Luxembourg saw a modest 3.8% increase in hourly labour costs in Q2 2024, a sharp decline from the 5.1% rise in the first quarter, indicating a slowdown in cost pressures across the economy. Archive photo: Romain Gamba

Luxembourg’s 3.8% rise in hourly labour costs in Q2 2024 trailed the euro area average of 4.7%, as neighbouring countries like Germany and France saw stronger wage growth, Eurostat data shows.

Luxembourg’s hourly labour costs rose by 3.8% in Q2 2024 compared to the same period a year ago, lagging behind the euro area’s 4.7%, according to data from the statistical office of the European Union, Eurostat, on 16 September. In contrast, neighbouring Germany saw a notable increase of 5.1%, France rose by 3.7% and Belgium by 2.6%. While wage pressures in Luxembourg remained elevated compared to historical averages, the growth slowed from 5.1% in the first quarter.

Labour costs, which include wages and salaries, as well as non-wage costs, experienced marginally different developments. Wages encompass direct payments such as salaries, bonuses and in-kind benefits, while non-wage costs cover employers’ social contributions and employment taxes, minus subsidies.

In Luxembourg, wages grew by 3.8% and non-wage costs rose by 4.3%, a slower rate than in neighbouring Germany, which recorded a wage increase of 4.7% and a 6.2% rise in non-wage costs, indicating stronger upward trends. In comparison, although lower than Luxembourg, France’s wages rose by 3.4%, with non-wage costs up by 4.4% and Belgium saw respective wage and non-wage cost growth of 2.5% and 2.6%, both countries experienced increased growth compared to Q1.

Comparing business economies (which includes the private sector and education, but not agriculture and public administration), Luxembourg’s hourly labour cost growth was 3.9%, which was lower than the euro area average of 4.6%. However, Germany’s growth was 4.9%, France’s was 3.2% and Belgium’s was 2.5%, highlighting different regional labour cost dynamics. In the service sector, which has been performing strongly compared to other sectors, labour costs in Luxembourg increased by 3.6%. This was similar to France’s 3.0%, but significantly behind Germany’s 5.1% and the euro area average of 4.5%. Belgium recorded the lowest increase among the four countries, at 2.1%.

Luxembourg’s wage dynamics, although steady, reflect its more restrained labour cost increases compared to Germany and the broader euro area. Germany saw the most significant rise in the non-wage component, particularly with a 6.2% growth in non-wage costs in the whole economy, reinforcing its position as a key driver in regional labour cost inflation.

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