Sickness fund stabilises after contributions are put up

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In November 1997, the general assembly of Luxembourg's sickness insurance funds decided by a majority vote to raise employers' and employees' contributions in order to restabilise the budget.

Following the collapse of "quadripartite" talks - involving representatives of government, employers' associations, trade unions and service providers - over Luxembourg's sickness insurance schemes (LU9711129F), the general assembly of the Union of Sickness Funds (Union des caisses de maladie, UCM) held on 12 November 1997 was obliged to find a way of restabilising the budget.

Employers' associations put forward a number of proposals, all of them designed to reduce benefits given to sick people. Two of these have been agreed by all the social partners and will reduce expenditure by about LUF 150 million. The agreement was only reached by majority vote (ie employee and small-farmer representatives against employer and Government representatives), and the partners were unable to agree on anything else.

Under the deal that was reached, the overall rate of sickness insurance contributions in respect of blue-collar workers goes up from 9.2% to 10.1%; as employers and employees fund this increase jointly, it is equivalent to a 0.45% increase for both sides. It should also be borne in mind that 0.8 points of this 0.9 point rise was necessary to cover increased expenditure on cash benefits for sick people. The overall contribution in respect of private sector white-collar employees goes up from 5.2% to 5.4%.

The final decision was heavily criticised by employers' associations and by the Government on the grounds that it adds an extra charge to global payroll costs.