Background for Luxembourg

Luxembourg’s gross domestic product (GDP) per capita was almost three times higher than the EU27 average in 2022. With growth of almost 2.3% in 2019, Luxembourg’s economy is one of the strongest in the EU.

On 31 December 2023, Luxembourg had 672,050 inhabitants. The proportion of foreigners living in the grand duchy was high. On the same date, foreign residents accounted for 317,678 people, representing 47.3% of the total population.

Source: Statec, 2023a

The labour market remains very active, as, in addition to the 288,918 workers resident in Luxembourg, 227,623 cross-border workers cross the Belgian, French and German borders every day to work in Luxembourg (December 2023).

Employment situation 2021–2023

Note: People with a job in domestic employment in Luxembourg.

Source: Ministry of Social Security, General Inspectorate of Social Security (IGSS), 2023 (calculations by Luxembourg Institute of Socio-Economic Research (LISER))

The growth rate of total domestic employment between 2021 and 2022 (December) was 3.1%. For cross-border employment, it was 3.6%, and for the employment of Luxembourg residents (Luxembourgish and foreigner), it was 2.8%. The growth rate was lower between 2022 and 2023 (December) : 1.4% for all domestic employment, 1.7% for cross-border employment and 1.1% for the employment of Luxembourg residents.

In December 2022, 15,760 unemployed residents were registered with the National Employment Agency (Agence pour le développement de l’emploi, ADEM) as available for employment (ADEM, 2023a). This was a decrease of 3.9% compared with December 2021 (ADEM, 2023b). In 2022, the unemployment rate stood at 4.8% (adjusted for seasonal variations). To observe similar values, we have to go back to the end of 2008 and the beginning of 2009. A total of 18,198 unemployed residents were available for employment as of 31 December 2023 (unemployment rate of 5.5%), this represented an increase of 2,438 people (15.5%) compared with 31 December 2022. The latest data state that the number of resident jobseekers registered with ADEM was 17,654 on 31 March 2024 (unemployment rate of 5.6%), an increase of 2,322 (or 15.1%) compared with March 2023.

All labour legislation regarding employer representation, trade union representation and collective bargaining is included in the Labour Code. The legal working week is 40 hours, which can be extended to 48 hours. However, there was a major change in the Labour Code in 2016 concerning working time regulation, where a temporarily valid system of reference periods was replaced by a permanent one. This system enables the reference period to be extended up to four months under certain conditions and with certain constraints, or even up to 12 months by collective bargaining. In practice, this reform makes it possible to increase weekly working time beyond the established hours, provided that it remains less than 48 hours per week on average over a period of four months, or more depending on collective agreements.

Furthermore, the law reforming employee representation in companies progressively entered into force in 2016, and a reform of parental leave came into force on 1 December 2016.

Finally, the law of 25 April 2019 amending the Labour Code extended the minimum duration of statutory holidays to 26 working days per year, irrespective of the age of the employee – that is, one day more than before, to which is added a statutory public holiday on 9 May (Europe Day).

The concept of the ‘Luxembourg model’ is often referred to when discussing social dialogue or labour relations within the grand duchy. The model is of a social dialogue structure and culture capable of settling disagreements, and of bringing the main players from different backgrounds together to reach consensus on what measures will enhance the country’s economic and social well-being. This dimension continues to resonate greatly among those involved in social dialogue at every level. Another characteristic of Luxembourg’s social dialogue is its traditionally tripartite dimension, involving trade unions, employer organisations and the government. The state is regarded as a social partner in its own right. Most of the important agreements reached at national level – for example, on inflation control, budget balance, corporate competitiveness and the labour market situation – are negotiated by all three parties. Up to 2010, Luxembourg’s tripartite model was not questioned (Thill and Thomas, 2010). The first serious breach of tripartite dialogue happened in April 2010, when the Tripartite Coordination Committee (Comité de coordination tripartite) announced the failure of discussions about the competitiveness of Luxembourg’s economy, employment policies and public finances to result in agreement. However, the government, which has led the country since December 2013, has emphasised its commitment to social dialogue and aims to restore tripartite coordination. After signing a bilateral agreement with unions (in November 2014) and another with employer representatives (in January 2015), the government encouraged the social partners to return to the country’s former tradition of tripartite consultation (Eurofound, 2015). Despite the government’s commitment, social dialogue at national level has been slowing down since 2016. Several bipartite meetings were held, but there was no national tripartite bargaining on the agenda. It was only on 30 June 2019 that a tripartite meeting concluded with new agreements in the steel sector. Several tripartite meetings took place during the COVID-19 crisis to discuss the management of the pandemic and the implementation of measures to moderate the effects of wage indexation.