Study examines structure of earnings and pay in Luxembourg
Published: 27 March 1998
A recent study from the STATEC statistical service analyses the structure of earnings and pay in Luxembourg in 1995, looking at the effects of variables such as age, educational level, seniority, sector and company size.
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A recent study from the STATEC statistical service analyses the structure of earnings and pay in Luxembourg in 1995, looking at the effects of variables such as age, educational level, seniority, sector and company size.
A recent publication (Bulletin du STATEC No. 7/97) from Luxembourg's Central Service for Statistics and Economic Studies (Service central de la statistique et des études économiques- STATEC) examines pay and earnings and contains an analysis of the structure of pay in 1995.
Full-time workers' gross average monthly pay stood at LUF 109,600 in 1995 although this average figure conceals what are sometimes major differentials between employees. As in all countries, the distribution of pay is markedly asymmetrical, with a major concentration in lower pay levels. A third of all salaries lie within the LUF 60,000-LUF 80,000 band, and only 10% of employees receive more than LUF 175,000. Half of all employees earn LUF 94,900 or less.
Below we set out some of the findings of the STATEC pay research for 1995, looking at the variables of age, educational level, length of working life, seniority in the company, industrial sector and the number of employees in the employing enterprise.
Pay by age
Male gross average monthly pay increases regularly in line with age. Men's pay between the ages of 55 and 59 (LUF 143,500 per month) is twice as high as it is between the ages of 20 and 24 (LUF 71,100). By comparison, for women this differential is no greater than around one half ( 53%). However, for those aged up to 35, pay differences by gender are small, not to say non-existent. There are several possible explanations for this:
the negative effects that career breaks for family reasons have on pay are increasingly felt as people get older; and
the standard of education enjoyed by younger generations of women has clearly risen, and is often greater than that of male colleagues. For example, 31.6% of men and 44.2% of women in the 25-29 age-band have a secondary school (12/13-18/19 years) leaving certificate or a university degree.
Pay by level of education
The gross pay of university graduates and people holding comparable qualifications is on average twice that of colleagues who have completed only primary education (up to the age of 15 years); this applies equally to men and women. However, at each level of education, men's pay is higher than women's, with the most substantial differential to be found among university graduates ( 35%) The table below provides more details.
| Educational level | Men | Women |
|---|---|---|
| Graduates | LUF 184,500 | LUF 137,000 |
| Secondary school-leaving certificate | LUF 147,500 | LUF 118,500 |
| Completed first cycle of secondary education | LUF 105,900 | LUF 94,300 |
| No further than primary education | LUF 87,300 | LUF 68,400 |
Pay by length of working life
Male employees who have worked for more than 25 years earn on average 23% more than those who have worked for no more than four years.
The result of the study is not conclusive as far as women employees are concerned, since it does not take account of the various career breaks that stand in the way of regular pay rises.
Pay by seniority
The number of years spent in an enterprise has a positive effect on pay. A male employee with more than 20 years' service earns 45% more than a colleague who joined the company less than two years ago. This relative differential is as high as 65% among women.
A comparison between blue- and white-collar workers reveals that this seniority effect on male employees is almost identical for both categories: 39.1% for white-collar, 37.5% for blue-collar. However, the difference between the same two categories for women is much more marked: 54.4% for white-collar, 32.8% for blue-collar.
Pay by sector and company size
Pay is highest for both men and women in the banking and insurance sector - LUF 179,000 per month for men and LUF 137,000 for women. Next come companies that provide enterprises with services (LUF 123,000 for men), and then (figures are for male workers): transport and communications (LUF 119,000); manufacturing industry (LUF 111,000); commerce (LUF 90,000); construction (LUF 82,000) and hotels, catering and cafés (LUF 70,000).
It emerges that pay rises as the enterprise grows in size. Although average male monthly pay is no higher than LUF 96,000 in companies with fewer than 50 employees, this rises to LUF 129,000 in those with a workforce of 500 or more ( 34%). For women, the figures are LUF 86,000 and LUF 107,000 respectively.
Below, we examine the interaction of sectoral factors with employment category and a range of other factors.
Sector and employment category
Pay differentials between economic sectors may be made more acute by the composition of the sectors in terms of employment categories. Average pay in a sector where there is a large number of managers and technicians will be higher, other things being equal, than in a sector where there is a predominance of manual workers.
An examination of pay by sector and employment category shows that, irrespective of the latter, the sectors with the highest salary levels are banking and insurance, transport and communications and manufacturing industry.
A male manager in the banking sector earns on average LUF 233,000 per month while his counterparts in construction, commerce or hotels, catering and cafés will have difficulty in earning more than LUF 170,000. A skilled blue-collar worker in the manufacturing industry earns 20% more than his counterpart in construction, and 6.4% more than an administrative white-collar worker.
Service, sector and category
Pay differentials by length of service vary greatly from one sector to another. They are relatively small in manufacturing, commerce, and banking and insurance - in the latter sector, the reason for the relatively small differentials is probably the higher level of skills among recently recruited staff. However, the number of years spent in the company appears to be much more important in commerce, transport and communications, and in services to industry. Average monthly pay in manufacturing rises from LUF 85,400 after two years' service to almost LUF 121,000 after over 21 years ( 41.6%). The equivalent increase in transport and communications increases stands at almost 90%
Age, sector and category
If we look at employees' ages, career paths appear to be relatively flat in construction and in hotels, catering and cafés. At the end of their careers, workers in these sectors earn about 50% more than they did at the beginning. This difference is much greater in other sectors where average pay between the ages of 55 and 59 is about double what is earned by 20-24-year-olds.
Age and category
The "age" effect is much more pronounced among administrative staff, skilled blue-collar workers and unskilled employees.
If we look at the two age-bands at either extreme (20-24 and 55-59), the differential in average pay rises to 150% for managers, 190% for technicians and assimilated workers, 80% for administrative staff, 40% for skilled blue-collar workers, and 60% for unskilled workers.
The job performed is, unsurprisingly, one of the main variables explaining salary levels; on average, pay levels for male directors and senior managers (LUF 294,000 per month) are 4.2 times higher than those for unskilled blue-collar workers (LUF 69,000).
Commentary
The STATEC study provides a very interesting snapshot of Luxembourg's wages and salaries structure. Unfortunately, from an industrial relations point of view, it fails to differentiate between branches, sectors and enterprises in terms of whether or not they are covered by a collective agreement. Moreover, in the absence of comparative figures, it makes no comment on developments in inequalities in working time. The first shortcoming will probably be resolved by a study on "Pay rises resulting from collective agreements since 1985" which has just been undertaken by the Centre for Population, Poverty and Public Policy Studies (Centre d'Études de Populations, de Pauvreté et de Politique Socio-Économiques, CEPS) (Marc Feyereisen, ITM)
Eurofound recommends citing this publication in the following way.
Eurofound (1998), Study examines structure of earnings and pay in Luxembourg, article.
