Luxembourg’s automatic wage indexation system, which adjusts salaries in line with inflation, is once again in focus as a potential pay rise could arrive as soon as April 2025. This mechanism, embedded in the country’s labour laws, ensures that wages, pensions and other benefits keep pace with the rising cost of living.

As of February 2025, Luxembourg’s rate stood at 1.7%, down slightly from 1.94% in January. Though this drop is marginal, it plays a crucial role in determining whether the next salary indexation will be triggered.

The threshold for indexation is determined by the national consumer price index (NCPI). Once this index surpasses a set level--typically reflecting a 2.5% increase in the six-month moving average since the last adjustment--the process kicks in, leading to a 2.5% wage increase the following month.

According to the latest figures from the national statistics bureau Statec, the NCPI, based on the 1 January 1948 index of 100, reached 1022.23 in February 2025. This pushed the six-month moving average to 1011.57. Statec confirms that once this average exceeds 1013.46, wage indexation will be triggered.

Paperjam calculates that if annual inflation in March reaches 1.79%--a realistic scenario--the indexation threshold will be crossed, triggering a salary increase in April 2025. However, if inflation falls short, the adjustment is likely to occur in May instead.

In our opinion, unless there is a significant shift in the macroeconomic circumstances, a salary increase in April 2025 remains a strong possibility.