Information for this page was compiled during December 2023 and January 2024. As Member States are currently transposing the EU minimum wage directive, national legislation can be subject to change. Eurofound intends to update these profiles in early 2025. Users are invited to contact Eurofound if they are aware of changes.
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The minimum social wage (SSM) was introduced on 30 December 1944, with varying amounts based on age, gender, and qualification. On 6 August 1948, the SSM was harmonised for all men aged over 21, with gender differences remaining in force. On 18 August 1951, a harmonisation of the minimum wage for women at 90% of the male rate was carried out, along with the first adjustment for changes in the cost of living. The minimum wage for both men and women was harmonised on 22 April 1963.
Further developments include the generalisation the sliding scale of wages and salaries (Law of 27 May 1975): instead of having fixed wages or salaries, which remain constant regardless of economic conditions, the wages or salaries are adjusted based on certain factors (economic indicators) such as inflation, cost of living, or productivity.
The Act of 31 July 2006 introduced a Labour Code, which included a reform of the SSM regulation. In the consolidated version of the Labour Code valid in 2024, the SSM is regulated by arts. L. 222-1 and following.
Currently, the SSM undergoes two types of revaluation (1. regular adjustments carried out every two years; and 2. adjustments based on an indexation mechanism), explained in more detail in the section ‘Process of setting the minimum wage’. The level of the SSM set by the regular adjustment which takes place every two years is provided in art. L. 222-9 of the Labour Code. To this rate, eventual indexation-based adjustments occurred after the last regular update must be added.
The last regular update has been carried out by Law 23 December 2022, that adjusted the rate from 1 January 2023. Subsequent indexations took place.
Minimum wage setting requires collaboration of multiple actors.
The Tripartite Coordination Committee conducts social negotiations related to minimum wages. Social negotiations involve the government and social partners, including representatives of employers and workers. These negotiations may result in agreements on minimum wages, which are then considered during the adjustment process. This committee has been created by Grand-Ducal regulation of 26 January 1978.
The committee is composed of:
The National Institute of Statistics and Economic Studies (STATEC) is responsible for publishing the consumer price index on a monthly basis. It can impact the wage scale and trigger a new indexation of the minimum social wage if the index increases or decreases by 2.5% in the preceding semester.
Other advisory bodies: The ‘Comité de conjuncture’ (‘Business cycle committee’) and the Economic and Social Council regularly review economic conditions. They may provide opinions or recommendations on issues related to minimum social wages, including adjustments based on various factors such as inflation and the cost of living. The members of the Conjuncture Committee represent employees and employers, as well as various ministries and government departments.
Government and social partners are therefore the main actors involved in statutory wage setting, through participation in the above-mentioned bodies and through
The mechanism of adjusting the minimum wage in Luxembourg strongly relies on social dialogue and consultation between social partners, which means that decisions on the minimum social wage (SSM) are often taken collectively, with the active participation of trade unions and employers’ organisations. Considerations leading to an adjustment of the SSM may be based on various economic and social factors, such as inflation, cost of living, productivity, labour market conditions and government policies on employment and social welfare.
The exact procedure of minimum wage setting may vary, but generally the government will propose an increase of the statutory minimum wage after examining relevant data and consulting with stakeholders. Trade unions and employers’ organisations may be invited to participate in negotiations or discussions to reach a consensus on the proposed increase. Once an agreement is reached, the government may formalise the increase in statutory minimum wage through legislation or regulation.
Concerning the timing, it can vary depending on the specific circumstances. The process generally involves several steps:
As mentioned in the section ‘Minimum wage regulation’, the SSM is adjusted in two ways:
| Criterion | How is this defined/operationalised? | Regulation or practice |
biennial adaptation of the SSM · Average wage or salaries · total wages of the reference population · Sum of the hours worked by the reference population | The reference population taken into account is represented by all employees aged 20 to 65 who are compulsorily affiliated to the National pension insurance fund as well as employees aged 20 to 65 in the public sector. This reference population, therefore, does not include self-employed workers, contributors on parental leave, ‘inactive’: unemployed, early retirees, beneficiaries of a re-employment allowance. The salaries taken into account include wages and all kinds of bonuses up to seven times the SSM. Replacement income linked directly to wages (e.g. cash sick pay or maternity pay) are treated as wages. But in this methodology, 20% of the lowest salaries and 5% of the highest salaries are eliminated in order to exclude the influence of an increase in the reference minimum wage during the wages observation period. The reference population is reduced to 75% of its initial size, resulting in a set of salaries that are not directly tied to the minimum wage. | Article 2 of the law of 12 March 1973: a new legal basis and a biennial adjustment. The data used come from the monthly declaration of wages at the Joint Social Security Centre (CCSS). |
wage indexation The consumer price index that impacts the wage scale | A new indexation is triggered when the semi-annual average of the Consumer Price Index, linked to the base date of January 1, 1948, rises or falls by 2.5% from the last expiration rating. The new application rating takes effect the following month, resulting in a 2.5% adjustment to wages, salaries, and pensions. In calculating this consumer price index, the fundamental principle is to track the monthly evolution of prices for the same product or service at the same point of sale, allowing for a relevant assessment of price changes. STATEC monitors prices for various brands, types, sizes, and across different stores. Before 2018, individuals physically inspected prices in stores (7,700 prices of various goods and services being recorded). Since 2018, electronic files are now directly transmitted by several supermarkets to STATEC. In 2023, an extra 90,000 varieties were included in the calculation of the Consumer Price Index. Henceforth, all wages and salaries in the private and public sectors, pensions, accident pension, apprenticeship & family allowances and the social inclusion income (REVIS) are adjusted to the changes in prices (Law of 27 May 1975 generalising the sliding scale of wages and salaries). | Law of 28 April 1972 (year of change). Adjustments were no longer based on a points system, but on a percentage system. From then on, each indexation bracket amounted to 2.5%. Law of 27 May 1975 generalising the sliding scale of wages and salaries. |
The minimum wage is compulsory for all companies established in Luxembourg, depending on the employee's level of qualification and age. Companies are not allowed to pay less than the minimum wage. This also applies where foreign employees are seconded to Luxembourg.
There are different rates, defined as percentage of the social minimum wage rate, according to age and qualification.
| Groups of workers | % of SSM full rate |
| Workers aged 15 to less than 17 years old | 75 |
| Workers aged 17 to less than 18 years old | 80 |
| Pupils and students during the school holidays employed in seasonal employment | 80 |
| Non-qualified workers aged 18+ | 100 |
| Employees with professional qualification aged 18+ (art. 222-4 (1) Labour Code) | 120 |
Art. L. 211-5 of the Labour Code provides that working hours may not exceed eight hours per day and 40 hours per week (except if the applicable collective agreement may set lower limits).
The social minimum wage is defined both at a monthly rate (i.e. 173 hours per month) and hourly rate (monthly rate divided by 173 – Article 222-9 of Labor code). Moreover, in Luxembourg, wages (included the SSM) are paid to workers over 12 months (except the applicable collective agreement provides otherwise), and they may also have in addition bonuses, gratuities, or payments spread over additional months.
Art. L. 221-1 of Labor Code stipulates that ‘The salary/wage stipulated is paid each month, at the latest on the last day of the relevant calendar month’ and Art. L. 222-9 of Labor Code says that ‘The hourly rate corresponding to the monthly rate provided for in paragraph 1 is obtained by dividing this monthly rate by one hundred and seventy-three’.
Employers in Luxembourg cannot pay an employee below the minimum wage, whatever the business activity and all the bonuses are in addition of the minimum wage.
In Luxembourg, benefits in kind (housing, company cars, free or subsidised meals, health insurance, etc.) can either be included in the salary or paid in addition to the salary. This depends on the employer's practice and the agreements between the employer and the employee. These benefits may be considered part of the employee's total compensation package or offered separately from monetary compensation. Specific terms and conditions vary according to company policy and any applicable collective bargaining agreements.
Every month, even if no revaluation occurred, the Ministry of Social Security and the General Social Security Inspectorate (IGSS) are publishing the social parameters valid from at least the current period.
The Employee Chamber of Luxembourg (Chambre des Salariés du Luxembourg, CSL) publishes every year a report providing an overview of the social situation in the country, in connection with the topic of minimum wage. One of them is dedicated to ‘poverty and inequalities’, and one section focuses on the population on social minimum wage.
In 2023, the employee chamber of Luxembourg undertook significant work by publishing a comprehensive report focusing on individuals earning salaries close to the minimum wage (SSM). This publication offers both descriptive and temporal analyses of this demographic. Furthermore, it includes a comparative examination of the unskilled minimum wage (SSM-NQ) at both national and European levels, clearly highlighting its insufficiency in meeting internationally recognized standards. Additionally, the report introduces two novel and insightful analyses previously unexplored in Luxembourg.
It's worth noting that a preliminary study with a similar title was conducted by an author from the General Social Security Inspectorate (IGSS) in 1996.