Living and working in Luxembourg

In 2022, national-level tripartite bargaining was revived to address the challenges posed by rampant inflation. The subsequent year, 2023, witnessed significant changes, marked by national elections resulting in a change of government and rising tensions in industrial relations.

Following the October 2023 general election, the coalition government consisting of the centre-right Democratic Party (DP), the centre-left Luxembourg Socialist Workers’ Party (LSAP) and the Green Party failed to secure a parliamentary majority. Consequently, the Christian Social People’s Party (CSV) and the Democratic Party formed a new government, led by Luc Frieden from the CSV.

The newly established government announced its intention to reform the pension system and introduce flexibility in working hours. While employer organisations can be expected to support reforms in these domains, the proposed changes will most likely trigger contentious debates with the trade unions. The main union, the Luxembourg Independent Trade Union Confederation (OGBL), has already stated that it sees ‘significant potential for conflict’ with the new governing coalition.

The coalition agreement adopted by the new government states the following regarding collective bargaining:

'The legal provisions regarding collective agreements will be revised, among other things, to allow for work reorganisation and improvement in working conditions, especially concerning the balance between private and professional life. The objective is to facilitate agreements between employers and employees while ensuring that these discussions take place on an equal footing. In this perspective, social dialogue instruments will be reformed and improved. The legal provisions related to employee representation will also undergo reform.'

This suggests that the government might give elected staff delegations in companies the right to conclude collective agreements, which is a long-standing demand of the employer organisations. This would raise a question over the trade unions’ role as sole negotiators of collective labour agreements, one of the founding pillars of Luxembourg’s industrial relations system since 1936.

Against a backdrop of substantial inflation, 2023 saw three wage indexation tranches, each resulting  in a 2.5% increase in wages for all employees. Additionally, heated negotiations over wages led to two notable strikes: a 3-day strike at the Luxembourg air freight company Cargolux and a 25-day strike at a factory of the chemical manufacturer Ampacet.