The timing is probably fortuitous. But factually, the Union des entreprises luxembourgeoises (UEL) published its greetings this Wednesday, following the announcement of the cordial and cautious conversation between prime minister (CSV) and the heads of two major trade unions, the OGBL with and the LCGB with , and before Fedil’s New Year’s ceremony organised with great pomp Thursday evening at Luxexpo The Box.
First, the UEL set the scene with five facts:
- “For two years, no new wealth has been created in Luxembourg. It should be pointed out that in October, Statec was still forecasting growth of 1.5% in 2024: this is a major revision!"
- “Since the turn of the century, Luxembourg has suffered from a lack of productivity gains, a worrying trend that deserves priority attention”;
- “No short-term improvement is envisaged, as shown by the employment prospects in the various sectors and the feedback from companies that are members of professional organisations: the workforce, while in demand, is often not available and its cost is very high, also in relation to the productivity and profitability prospects of their potential employers”;
- The [good] “public finance situation in 2024 can be explained in particular by non-recurring items, and in particular corporate income tax balances (more than €1.5bn--therefore relating to previous years--were collected over the first 10 months of 2024) and the interest margins of financial institutions resulting from the very high average interest rate situation in 2024,” but this will not last;
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- “In terms of competitiveness, Luxembourg, in 23rd place, has never been so badly ranked in the prestigious IMD rankings. The latest report from the National Productivity Council shows that productivity per person employed has fallen by 5% since 2010, while it has risen in other OECD countries.”
Thus, after having “played on personal taxation to improve the attractiveness of the territory for talent (in particular by adapting the participative bonus system and the impatriate system) and, more generally, to increase the purchasing power of employees,” while accepting 6.5 index brackets, and having “undertaken to exempt the social minimum wage, which it has also revalued by 2.6% at the beginning of 2025,” Luxembourg now offers the highest net minimum wage in Europe (by far), even expressed in purchasing power parity. Against this backdrop, the UEL believes that the government should make good on its promises to adjust the rate of corporation tax and municipal business tax to bring them at least close to OECD averages.
The labour framework: “outdated, outmoded and unsuitable software”
Businesses are calling on the government to modernise the labour framework, which they describe as “outdated, outmoded and unsuited to economic and social realities.” At the very least, the Union des entreprises luxembourgeoises is suggesting derogations to adapt to the realities of company size. At a time when the European Union is pushing for trade union representation, it invites the government to take account of the fact that 90% of companies are too small for a staff delegation, and that 50 out of 700 companies have a truly unionised delegation, and therefore to take account of this reality in social dialogue. A dialogue that does not necessarily have to rhyme with the “compulsory presence of trade unions.” The UEL will be putting forward proposals in the spring.
Absenteeism as “a constant inflation of new forms of leave, XXL extended leave, public holidays and additional leave as well as an increase in requests for part-time work and early retirement, often encouraged by generous salaries and pensions” are also in the sights of the bosses. The UEL is calling for stricter medical checks and a pilot institution, the Social Security Medical Inspectorate, in exchange for employee financial participation schemes.
It is already shaping up to be a tense year between unions and employers, perhaps against the backdrop of pension reform.
This article was originally published in .